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Small Business Center

3 Ways to Measure Employee Performance

October 5, 2021

By Angel Cicerone, Tenant Mentorship
www.tenantmentorship.com

Retail sales is just that, sales! Your employees aren’t paid to simply check people out or stock the shelves. Their job is to sell! Same for restaurant servers. So it’s important to monitor employees’ sales performance.

There’s a bit of controversy about measuring sales by employee. How do you fairly track part time versus full time and compare those who work prime shifts versus off-peak times? The point is to benchmark each employee and monitor performance on a regular basis, even if you’re only comparing each against themself.

There are three ways to do this effectively. Use the method that best works for your business.

  • Sales by employee: Start by tracking total sales per employee. Look for dips and peaks in performance and do month-to-month comparisons. But to really drill deep and have an effective comparison, track the following.
  • Average sale by employee: To calculate, simply divide the total sales for an employee by the total number of transactions. For example, if John sold $4,000 in merchandise for the week with a total number of transactions of 150, his average sale would be $26.67. We’ll put this into context in a bit.
  • Sales by hour per employee: Just divide the total number of sales by the total numbers of hours worked. Using $4,000 per week in sales divided by 40 hours, the sales per hour is $100.

So, let’s look at how this might help in a business. Let’s say there a full-time manager and two part-timers and this is their weekly sales analysis:

Weekly Manager Part-timer No. 1 Part-timer No. 2
Sales by employee $4,000 $2,500 $1,000
Average sale by employee $26.67 $16.67 $12.50
Average sales per hour by employee $100 $125

$66.66

 

Here’s what we learned from this analysis.

Part-timer No. 1, who works 20 hours per week, had higher average sales per hour than the manager, although, at $16.67, his average sale was substantially lower than the manager’s $26.67. These figures tell us that Part-timer No. 1 is most likely an attentive salesperson but not as good as the manager at upselling. With some training, we can help him increase his average sale. It’s not unusual that a manager’s sales metrics are not as high as a good salesperson working prime shifts because often, managers are distracted by administrative or other management tasks. Finally, let’s talk about Part-timer No. 2’s stats. She works on Saturday and Sunday, one peak and one off-peak day. Nonetheless, her average sale and average sale per hour do not stack up to her colleagues’ and she needs training to improve these numbers or be replaced.

No matter which benchmark you use, the important thing to remember is to track and monitor so you can see if someone’s performance is improving, staying the same or declining. If there isn’t regular improvement, you’ll want to intervene with additional training or, if warranted, replacement.

This article originally appeared at https://www.angelcicerone.com/angels-blog.

Small Business Center

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