It's a commonly known fact that employees are the hospitality industry’s greatest asset. That means their performance plays a huge role in your business’ success. So, how do you measure employee performance in the best possible way? We’ve got you sorted!
Our article explains what employee performance is, and what the 4 F’s of successful performance reviews are. Then, we dive into setting the right objectives for your staff with our 9 sets of hospitality KPIs.
What Is Employee Performance, and Why Should You Measure It?
Employee performance management is the ongoing process of identifying, measuring, and improving individual results so they are consistent with the objectives of your hotel, restaurant, or resort. Effective performance evaluations can be tremendously beneficial for your staff. However, these evaluations are usually seen as unpleasant and time-consuming, but when correctly conducted, they help you provide staff with constructive feedback. This feedback assists them in their short- and long-term career goals, and improves the overall performance of your hospitality business.
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Now let’s look at the 4 F’s of successful employee performance reviews - Frequency, Focus, Feedback, and Future-oriented. 
- Frequency: Typically, staff performance assessments occur quarterly, semi-annually, and annually. But frequent meetings are better than yearly reviews for both workers and supervisors. People are 2.8 times more inclined to be involved at work if they regularly talk to their managers about their goals. This is why we recommend you to have weekly or monthly meetings with your employees specifically for coaching them and providing feedback. This consistency fosters employee development and offers a clear picture of their current performance level and areas of improvement.
- Focused: Both managers and employees must be clear on their expectations for successful performance evaluations. Setting SMART goals that are strength-based along with an accountability plan can enhance employee participation.
- Feedback: Feedback is a powerful tool that helps us look beyond our current state and pushes us to grow. As a manager, you can leverage the 360-degree feedback method that considers the observations, opinions, and evaluations of an employee's performance from their peers.
- Future-oriented: Performance conversations should concentrate on both past performance and future goals of the employee and your business. This will help you build a team of engaged, motivated, and productive individuals who can achieve their professional goals while contributing to your business’ success.
How Does Measuring Employee Performance Tie in With Rewards, Career Progression, and Motivation?
You can easily reward your employees by tying in their performance assessments with performance-based pay, along with providing expanded learning opportunities, and an engaging work environment. Businesses that are committed to rewarding workers can recruit, retain, and encourage more employees.
A well-designed reward system can attract performance-driven talent to your brand and boost your staff productivity. It can also foster a sense of ownership in your employees and help them focus on their long-term goals and areas of growth. 
How to Measure Employee Performance With Objectives
Peter F. Drucker coined the phrase management by objectives (MBO) in 1954 in his book The Practice of Management. It is based on the idea that when employees are personally invested in their company’s objectives, such objectives are more likely to be achieved.
MBO is a strategic approach that can help you improve your business performance by establishing objectives that are acceptable to both management and employees. This method uses a set of quantitative criteria to evaluate the performance of a company and its employees. Hospitality managers can identify problem areas, and increase efficiency by comparing actual employee performance with the objectives set beforehand.
Each hospitality employee will have different objectives to meet, however. A waiter's goal would be to provide the finest customer experience possible, whereas a chef's goal would be to cook delicious meals for guests while paying strict attention to hygiene and food cost reduction.
9 Sets of KPIs to Measure Employee Performance in Hospitality
We’ve broken down the most important objectives or key performance indicators (KPIs) to help you measure employee performance by department.
1. Management and Finance Staff KPIs
Hotel general managers tend to deal with both operational and financial aspects of a property. Their performance can be measured using the following KPIs:
- Actual expenses vs budget
- Finance error report rate
- Payment error rate 
- Guest satisfaction score (NPS score)
- Hotel occupancy rate
- Capital expenditure (CapEx) 
2. Food Preparation Staff KPIs
Food preparation employees must be skilled at producing tasty, high-quality meals while managing costs and adhering to hygiene and safety standards. For this reason, their KPIs consist of:
- Food cost per head
- Compliance with standard recipe cards
- Meeting HACCP rules and regulations
- Wait time limits
- Meal consistency and accuracy
- Menu item profit and popularity
- Production time per dish
- Waste output
- Total food cost
3. Food & Beverage Service Staff KPIs
Providing excellent customer service is the key in this department. You can see how well these staff members are doing by gauging KPIs such as:
- Food and beverage sales per guest
- Employee attitude
- Time per table turn
- Seating efficiency
- Wait staff tips
- Service reviews and ratings
4. Sales and Marketing Staff KPIs
Sales and marketing employees are responsible for attracting new customers, generating revenue, and growing the awareness of your brand. You can track their performance through KPIs such as:
- Website traffic
- Leads to customers conversion rate
- Number of inbound leads
- Number of outbound leads
- Number of Guest bookings
- Marketing and advertising costs
- Social media following
- Sales and costs: budgets to actuals
5. Housekeeping Staff KPIs
The housekeeping department is responsible for the overall appearance, sanitation, and hygiene of your hotel and its individual rooms. Housekeeping staff performance can be measured with the help of the following KPIs:
- Task Performance time
- Quality of service
- Client satisfaction reviews
- Training attendance
- Employee Initiative
6. Reservations Staff KPIs
Reservations employees are responsible for generating business for your hotel by answering phone calls, emails and in-person requests regarding bookings. They also make sure that hotel rooms are ready for guest arrival. You can measure their performance by:
- % of direct bookings per employee
- First response time per employee
- Number of walk-ins
- Total service volume per employee
- Average amount of sales per employee 
7. Purchasing Staff KPIs
These employees keep track of the hotel’s needs and inventory. You can measure their performance through KPIs such as:
- Purchase Order Cycle Time
- Average Cost of Processing a Purchase Order
- Purchase Orders Processed Electronically
- Supplier Compliance Rate
- Cost Reduction
- Total Procurement ROI
8. Event Planning Staff KPIs
These employees organise events for both hotel and external guests, so their KPIs may differ based on the event type. The following KPIs are common:
- Event ticket sales
- Event check-ins
- Social media engagement
- Guest satisfaction
- Guest loyalty
- Budget preparation and management
- Gross and net revenue per event
- Cost of event 
9. Human Resources Staff KPIs
HR department members know how to keep the business together through hiring, onboarding, training and development efforts. Their KPIs typically consist of:
- Cost per hire
- Recruiting conversion rate
- Job offer acceptance rate
- Employee satisfaction score
- Open job requisitions
- Absenteeism rate
- Turnover rate 
Making KPIs a Successful Approach
Measuring employee performance is an ongoing process that includes hiring the right set of people, establishing KPIs from the very beginning, and guiding them to achieve individual and business success through them. The 9 KPI sets mentioned in our article can help you understand and improve employee performance with simplicity. To ensure these objectives work for your hospitality business, we recommend:
- Choosing 3 to 7 KPIs per employee, depending on their role, seniority and responsibilities.
- Describing the KPIs in an unambiguous manner by using simple wording, and quantifying wherever possible.
- Making the KPIs inspiring and achievable. Each KPI must encourage employees to learn, grow and succeed. If they are too simple, employees will be uninspired to achieve them, whereas if they are extremely out of reach, employees will feel bogged down.
- Ensuring you’re measuring through an objective lens and data as much as possible. Nowadays, you can measure employee performance with the help of sophisticated performance appraisal software.
We hope this article has encouraged you to measure employee performance by conducting regular appraisals for your hotel, resort or restaurant staff.
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