How to Measure Performance in Financial Accounting

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Every employee faces performance evaluations in their workplace. Managers base these evaluations on the goals and performance of the employee. Together, the manager and employee create performance measures to use in future evaluations. This allows the employee to understand exactly how their performance will be judged. These performance measures need to address the requirements of financial accountants, such as the ability to meet deadlines, record accurate financial data or communicate with non-accountants. Financial accounting managers incorporate these unique performance measures into their evaluation process.

Things You'll Need

  • Computer
  • Spreadsheet software
  • Identify performance measures. Each financial accounting position fills different purposes for the company. Review the job responsibilities for the position you are evaluating. Make a list of each responsibility associated with the job which can be measured. Examples of these responsibilities include error percentages, number of late reports or time spent correcting errors.

  • Communicate performance measures. After making a list of performance measures for each position, schedule a meeting with each employee. Discuss the specific performance measures for their position. Explain how those measures apply to their job and what they need to do to succeed in their role.

  • Track performance measures for each employee. Create a spreadsheet for each employee. List each performance measure in the first column. Label the succeeding columns across the top with the ending date for each week. At the end of each week, review the individual performance measures and record the results.

  • Summarize the performance at the end of the period. To prepare for the employee performance evaluations, you need to convert your spreadsheet to manageable information. Calculate an average value for each performance measure in the spreadsheet.

  • Communicate the performance to each employee. Schedule a meeting with each employee. Review the purpose of each performance measure and how it relates to the position. Share the average value for each performance measure with the employee. Discuss whether the performance improved or declined since the previous performance evaluation.

Tips & Warnings

  • Performance measures need to fall within the employee's control for the measures to be effective. Performance measures employees cannot control discourage employees. If an employee's performance drops, allow the employee to explain the circumstances that led to a decline in performance.

References

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