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The Motivation Theory Of Employee KPI Tracking

Scholars have known since at least the 1980s that there is a strong positive link between employee job satisfaction and employee productivity. The happier that an employee is with their work environment the more productive they are and the better their performance overall.  

Unfortunately, when business admins and owners are looking for ways to boost employee productivity there is still a tendency to focus all their efforts on tracking only direct productivity metrics and utilizing the stick side of the equation without considering the potential value of the carrot. At this point the research is undeniable, carrots have always been more effective productivity boosters than sticks, and modern shifts in workplace culture and worker preferences are only going to make a switch to positive motivation strategies more important. 

Organizations with a rigid authoritarian style of management are struggling with employee retention as worker’s values have changed and more employees are placing a higher value on flexibility, growth opportunities, and psychological safety in the workplace. 

In this post we will take a look at the positive motivation theories that predict employee satisfaction and how to use both productivity and satisfaction KPIs to create Personal Development Plans that will empower employees to be their best, naturally boosting productivity and performance while improving the workplace culture for everyone. 

Motivational Theories

Business Team of Four Office Workers, Celebrating Victory

There has been a great deal of research conducted to determine the specific factors that had the biggest impact on motivating employees to perform at their peak. Over time a few top theories of motivation have risen to the top and are widely accepted as the most accurate guidelines companies can use to develop effective employee KPIs aimed toward maximizing employee satisfaction, employee performance, and employee retention.

Maslow’s Hierarchy Of Needs

You may be familiar with Maslow’s Hierarchy Of Needs in the basic framework of psychology and human happiness. However, Maslow’s theory can just as easily be applied to employee KPIs by considering how each level of need might impact employee motivation and performance and using these insights to inform appropriate employee KPIs to track how well the employee’s motivational needs are being met at each level.

Level #1: Physiological Needs

The first level of need, the physiological needs, addresses the basic survival requirements that humans must have to function at their full potential. In the original theory, these are food, water, and shelter. When viewed through a workplace lens, these are the basic needs an employee might require to consider working for your business. Think of a climate-controlled work environment, lunch breaks, and adequate compensation. 

Level #2: Safety Needs

Level #2, safety needs, is the need for employees to feel secure in their position, assured of a regular income that allows them to meet their obligations, and a workplace that is free of harassment, violence, or abuse. Employee KPIs should be designed to assess individual employee perceptions of job security, and psychological safety. You may also want to track objective KPIs that monitor the number of individual and location-based safety incidents if employees routinely perform activities with the potential to cause injury.

Team building bridge, business concept of cooperation

Level # 3: Social Needs

Level 3, addresses human social needs. Employees who feel as if they are a valuable part of a team and contributing to the health of the company are far more likely to give their best effort and go the extra mile when needed. The social strength and support of your teams can be measured by monitoring KPIs like Employee Peer Recognition Rates and Average Query Response Time Between Employees. These metrics track the level of positive recognition and support that employees express for each other in the internal and company communication and social media channels, and how quickly employee questions are answered by colleagues. Both of these employee KPIs provide a good idea of the temperature of team relationships. 

Level # 4: Esteem Needs

Level four centers on the human need for respect and acknowledgment. Employees want to know that their hard work, extra effort, or out-of-the-box creative ideas are being noticed. Choose KPIs that assess employee perceptions of recognition and feeling seen by team members, as well as administrators. Track the number of available opportunities for advancement, growth, or education made available to individual employees and which ones seem to grab their interest. This can help you to know your employees’ interests better and may guide you to the best choice when promoting from within. 

Level #5: Self-Actualization Needs

Level five is Maslow’s highest level of need, and this is the need for self-actualization. This is the human need to find purpose and meaning in their life. For most in the Western world, the work that we do can play a significant role in our view of ourselves as useful and valuable. Of course, this need for purpose and fulfillment is a constantly moving target so employees will also need to be challenged to avoid stagnation. Consider surveying employees to gather their perceptions of their purpose and value within the organization. Track KPIs to determine the amount of unstructured free work hours that employees have to pursue passion projects and professional growth, and make sure this time is balanced fairly between all employees.

Team strives to reach reward

Vroom’s Expectancy Theory Of Motivation

Victor Vroom’s Expectancy Theory of Motivation posits that individuals are motivated to work toward achieving a goal when the following are true:

  • The individual believes that their efforts will likely produce a positive performance
  • The individual believes they will earn a desirable reward for good performance
  • The individual believes that either the reward or the outcome itself will satisfy an important need or make the efforts worthwhile

Essentially, Expectancy Theory asserts that employees are motivated by the expectation that attainable goals will earn them some meaningful reward for putting forth the effort to produce a good performance. Businesses can easily transform the principles of Expectancy Theory into effective employee KPIs using the strategies below.

Draw A Clear Line From Effort To Performance To Reward

Expectancy Theory is based on the idea that employees are motivated by their beliefs or expectations that their effort will produce a satisfactory performance and result in a desirable reward. All three of these elements  When setting KPIs, organizations should ensure that there is a clear link between the effort employees put into their work, their performance, and the rewards they will receive. This can help employees see the value in achieving their KPIs and increase their motivation to work towards them.

Metrics Should Be Meaningful

While employees are motivated by desirable rewards, they are more likely to maintain their motivation when they also believe that their efforts contribute to a larger value for the team, the organization, or the customer. The most effective KPIs are likely to be those that show the employee’s progress toward earning a reward but also paint a clear picture of how the employee’s efforts are helping the team or the business reach its goals as well.

A Little Support Goes A Long Way

Employees must believe that they will be able to reach the performance goal or they will not be motivated to try. This means that target KPIs should be challenging but not so difficult to achieve that employees might question whether they will be able to earn the reward. This also means that employees must know that they have all the tools, and resources that they will need to reach their goal. Avoid creating KPIs that depend on several variables to achieve. Employees are less likely to be motivated by KPI targets that they do not have direct control over the outcome. This can leave them with uncertainty as their efforts may not be rewarded if some element that is not within their power to control is not completed or delivered.

Employee growing team

Employee Net Promoter Score (eNPS)

The Employee Net Promoter Score (eNPS) is a simple one-question metric that measures employee job satisfaction and loyalty to the business by asking them to rank their willingness to recommend job openings within the company or agency to others on a scale of 1 to 10. Employees who give higher eNPS tend to have a higher degree of personal job satisfaction and feel more plugged into the workplace culture than employees who give lower eNPS. Administrators should dig deeper to understand the reasons behind the lowest eNPS as this is generally a strong indicator that the employee may be experiencing problems in the workspace.

Employee Satisfaction Index (ESI)

The Employee Satisfaction Index (ESI) measures how satisfied an individual employee is with a particular aspect or general area of their work. This KPI might be used to monitor the quality and frequency of feedback the employee receives, or how many career opportunities the employee was able to access vs. how many they applied for. This KPI is frequently used to evaluate employee satisfaction with compensation, vacation, and benefits packages as well.

Turnover Rate

The Turnover Rate KPI tracks the number of employees who leave the company during a specific timeframe. This number can then be compared to the previous measurements in preceding periods, as well as industry trends. A sudden spike in the turnover rate that is not mirrored in the industry as a whole can be a strong indicator of a serious issue in workplace satisfaction and employee morale.

Successful Hires: Post-Trial Period

The Successful Hires: Post-Trial Period KPI measures the percentage of new hires who are still employed in good standing with the organization after completing the training and probationary period. This KPI is an excellent way to gauge the effectiveness of your hiring and training practices. This KPI can be combined with other Quality Of Hire metrics that provide information on the contributions and performance of new hires to provide even greater insight into the strength of the recruitment, hiring, onboarding, and training process.

Employee getting internal promotion climbing ladder to desk

Internal Promotions

The Internal Promotions KPI can be used to keep track of the percentage of employees who take advantage of internal promotion opportunities by submitting a resume or application package. This metric is useful for assessing employee engagement and drive. You might also choose to use this KPI to measure the number of employees who succeed in securing one of these internal promotions. In that case, the KPI would provide insight into the strength of employee training and career development practices in preparing employees to advance into higher roles.

Online Company Ratings

Monitoring Online Company Ratings on websites like or industry trade forums that solicit input from employees to provide an insider review of company culture, is a great way to gather candid employee opinions. These metrics are often anonymized but you will often find detailed descriptions of the largest problems in the workplace along with a ranking of overall employee satisfaction.

Gallup Employee Engagement Survey

The Gallup Employee Engagement Survey is a comprehensive survey tool designed to solicit direct responses from employees detailing their perception of workplace factors like compensation, internal communication, leadership, training, growth potential, and interpersonal dynamics.

Voluntary Attrition Rate

The Voluntary Attrition Rate tracks the percentage of employees who quit or resign from their jobs voluntarily. This KPI differentiates between employees who are separated from the company due to being laid off or fired. By honing in on voluntary departures, administrators can take action if they begin to see an upward trend in employees choosing to leave as this would indicate that they are escaping an unpleasant work environment or leaving to take advantage of a more lucrative offer. Either way, you will need to stay on top of this number to ensure you remain competitive enough to attract the top talent.

 Team building KPI plan

Bringing The KPI Tracking Plan Together

At the end of the day, the most effective employee KPI tracking programs will provide the perfect blend of KPIs designed to measure employee performance, productivity, and value alongside KPIs that offer insight into how your employees feel about the company,, their coworkers, and the work that they are doing. Communication is the key to crafting an employee KPI tracking system that works for each individual employee, addressing their unique strengths and weaknesses. 

When you are in the early stages of putting your employee KPI program together you will need to plan plenty of informal and formal meetings with the team, as well as one-on-one with employees to come up with KPIs that meet company objectives, and present a meaningful challenge for the individual employee. Once your system is fleshed out, it should take little effort to gather and review results.

If you are looking for the easiest way to implement a KPI tracking program, you can’t go wrong with the Daybeam Time Tracker. We built the platform from the ground up with the idea of offering a simple, easy-to-set-up and easy-to-use task management, employee performance monitoring system that business owners could have up and producing data in no time at all. If you haven’t moved your team over to Daybeam yet, what are you waiting for? Get started for free today!