The Importance of an Employee's Performance in a Company

Poor employee performance often increases company costs.

Employee performance affects a company at all levels, because all employees affect corporate costs and customers' perceptions by the way they perform their jobs. Companies that aren't growing and increasing profits may find some solutions to their problems by evaluating and improving employee performance.

Innovation

The performance of engaged employees can have a direct impact on a company's innovation. The website Gallup Management Journal defines engaged employees as people who are passionate about their work and feel a deep connection to their company. The journal indicates its research has shown that engaged employees usually are productive workers who look for ways to move their company forward. In turn, a company's best ideas may come from engaged employees, rather than from its research and development department.

Costs

Employee performance can affect expenses if companies skimp on providing workers with proper training. For example, a customer service representative who lacks the training needed to handle customers' questions and complaints can cost a company more than a thorough training program. The website HR World notes that a representative who can't handle a high percentage of customer inquiries will have to send those inquiries to more experienced and higher paid representatives and mangers, which drives up labor costs.

Quality

An employee's inattention to quality products and service can cause a business to lose customers to competitors and increase operating costs. Employees who don’t complete their work properly the first time have to do it over at additional expense. Service quality also can measure the performance of salespeople, because it's based, in part, on the percentage of customer inquiries that salespeople convert to the sale of products and services, according to HR World.

Policies

An employee's creativity and independent thinking can be a detriment if they result in deviating from corporate policies. HR World indicates that employees who make their own rules in the workplace demonstrate that their performance goals aren't in line with a company's goals. Opposing goals may hamper a company's image if an employee's disregard for policies results in behavior that puts the business in a bad light with its clients.

References

• Gallup Management Journal: Gallup Study: Engaged Employees Inspire Company Innovation
• HR World: 16 Ways to Measure Employee Performance

Resources

• Business and Legal Resources: Performance Appraisal