Performance review KPIs (Key Performance Indicators) are measurable metrics that objectively evaluate employee performance, productivity, and goal achievement. They include quantitative indicators such as revenue per employee and goal achievement rate, as well as qualitative factors like competencies and teamwork. The most important KPIs should be formulated according to the SMART method and aligned with individual tasks and company objectives – experts recommend 4-7 focused KPIs per employee.

What Are Performance Review KPIs?

A KPI (Key Performance Indicator) is a key metric that makes success or progress toward achieving a goal measurable. Unlike general metrics, KPIs are strategically important and directly linked to company objectives. In the context of performance reviews, KPIs serve to objectively assess individual performance and identify development potential.

Why Are KPIs Important in Performance Reviews?

According to a 2023 Gallup study, lack of employee engagement resulted in $8.8 trillion in economic losses worldwide – equivalent to 9 percent of global GDP. KPIs help make performance transparent, clarify expectations, and develop employees in a targeted manner. They enable managers to make objective decisions and base development conversations on facts rather than gut feelings.

The Most Important KPIs for Performance Reviews

Selecting the right KPIs depends heavily on the role, area of responsibility, and strategic company goals. KPIs can generally be divided into three categories:

Quantitative KPIs: Numbers, Data, Facts

Quantitative KPIs are number-based and objectively measurable. They show the "what" of performance:

• Goal Achievement Rate: Percentage indicating how far an agreed goal has been achieved. Example: With a goal of $100,000 in revenue and actually achieving $85,000, the goal achievement rate is 85 percent.
• Revenue or Profit per Employee: Particularly relevant in sales or revenue-generating roles.
• Productivity: Number of completed projects, processed tickets, or units produced per time period.
• Project Completion Rate: How many projects were completed on time and within budget?
• Error Rate: Number of errors relative to total performance (e.g., in development, production).

Qualitative KPIs: Competencies and Soft Skills

Qualitative KPIs describe the quality of work and are often based on observation or feedback. They show the "how" of performance:

• Technical Competencies: Depth and breadth of professional knowledge, technical skills.
• Communication Strength: How clearly and effectively does the person communicate?
• Problem-Solving Ability: Creativity and efficiency in solving complex tasks.
• Leadership Qualities: Only relevant for managers – e.g., employee development, delegation, conflict resolution.
• Cultural Fit: Does the person fit the company culture and team values?

Tip: Qualitative factors can be objectified through 360-degree feedback or scientifically validated assessments. This makes soft skills measurable too.

Behavioral KPIs: Collaboration and Initiative

Behavioral KPIs measure how employees act within the team and contribute to company culture:

• Initiative and Accountability: Does the person proactively take on tasks?
• Willingness to Learn: Does the person participate in training? Do they develop continuously?
• Teamwork: How well does the person work with others?
• Customer Satisfaction: For customer-facing roles: NPS (Net Promoter Score), customer feedback, complaints.

SMART Goals: How to Formulate KPIs Correctly

The SMART method is a proven framework for goal formulation developed by George T. Doran in 1981. SMART stands for:

The SMART Method in Detail

S – Specific: Goals must be formulated concretely. Instead of "sell more," it should be: "Increase revenue in product area X by 15 percent."

M – Measurable: Define a measurable metric. Example: "15 percent revenue increase" or "80 percent completion rate."

A – Achievable: The goal must be realistic based on available resources and framework conditions.

R – Relevant: The goal must fit the role, departmental objectives, and company strategy.

T – Time-bound: Set a clear deadline: "by Q3 2026" or "within the next 6 months."

Practical Examples of SMART Goals

Sales Example:"Increase revenue in the software licensing product area by 20 percent by the end of Q2 2026 through acquisition of 10 new customers and upselling to 15 existing customers."

Marketing Example:"Increase lead generation by 30 percent by year-end through SEO strategy optimization and launch of two new content campaigns."

HR Example:"Reduce time-to-hire from an average of 45 to 30 days by Q3 2026 through implementation of a new applicant tracking system and process optimization."

Measuring KPIs Objectively: Tips for Practice

The biggest challenge with KPIs in performance reviews is objectivity. Here are proven strategies to reduce subjective evaluations and unconscious bias:

Bias Reduction in Performance Evaluations

Unconscious biases can massively influence decisions. Typical forms of bias include:

• Halo Effect: One positive trait overshadows other aspects.
• Confirmation Bias: Confirmation of existing assumptions instead of objective evaluation.
• Recency Bias: Only the most recent events are evaluated; earlier performance is ignored.

To reduce bias, you should rely on structured processes: Use uniform evaluation criteria for all employees and rely on data-based decisions instead of gut feelings. Training on unconscious bias in recruiting sensitizes managers to unconscious prejudices.

Data Sources for Objective Measurement

Use multiple data sources to get a holistic picture:

• Numbers and Facts: Sales figures, project completions, error rates, customer reviews.
• 360-Degree Feedback: Feedback method where input is gathered from supervisors, colleagues, employees, and sometimes customers to obtain a comprehensive picture of performance.
• Scientifically Validated Assessments: Objective competency measurement through diagnostic tools like the digital platform Aivy. Companies like Callways report that conversations are "significantly better and more to the point" through objective data foundations. Also works with executives: better and more focused conversations through selection of truly interested candidates. Learn more about scientifically validated talent assessment.
• Structured Conversation Guidelines: Ensure all employees are evaluated according to the same criteria.

Common Mistakes in KPI Selection

Many companies make typical mistakes when selecting KPIs that undermine the effectiveness of performance conversations:

Too Many KPIs: When employees need to track 15 different metrics, focus is lost. This leads to overwhelm and increasing administrative effort. The PwC study recommends: 4-10 KPIs are sufficient for most companies.

Non-Measurable Goals: "Be a team player" is not a KPI. Better: "Participation in at least 80 percent of team meetings and active involvement in two team projects per quarter."

Irrelevant KPIs: Metrics must fit the role. Sales figures as a KPI for IT developers don't make sense.

Only Quantitative: Neglecting soft skills and behavior leads to a one-sided picture. The balance between quantitative and qualitative KPIs is crucial.

Lack of Connection to Company Goals: KPIs must be strategically relevant and contribute to the big picture.

Frequently Asked Questions About Performance Review KPIs

What KPIs should be discussed in performance reviews?

The selection depends on the role, but generally a combination of quantitative, qualitative, and behavioral KPIs is recommended. Quantitative KPIs include goal achievement rate, productivity, revenue or profit per employee, and project completion rate. Qualitative KPIs include technical competencies, soft skills like communication and teamwork, leadership qualities, and problem-solving ability. Behavioral KPIs measure initiative, willingness to learn, collaboration, and customer satisfaction in customer-facing roles. Experts recommend 4-7 focused KPIs per employee.

What is the difference between quantitative and qualitative KPIs?

Quantitative KPIs are number-based and objectively measurable, for example revenue, number of completed projects, or error rate. Qualitative KPIs describe the quality of work and are often based on observation or feedback, such as communication strength, creativity, or cultural fit. Both are important: Quantitative KPIs show the "what," qualitative KPIs show the "how." Tip: Qualitative factors can be objectified through 360-degree feedback or validated assessments.

How do I formulate SMART goals for performance reviews?

The SMART method helps you define clear goals. S (Specific) means formulate concretely – not "sell more" but "increase revenue in product area X." M (Measurable) requires a measurable metric like "15 percent revenue increase" or "80 percent completion rate." A (Achievable) ensures the goal is realistically attainable based on resources and framework conditions. R (Relevant) means the goal fits the role, departmental objectives, and company strategy. T (Time-bound) requires a clear deadline like "by Q3 2026" or "within the next 6 months."

How many KPIs should be defined per employee?

The recommendation is 4-7 KPIs per employee. According to the PwC study, 4-10 KPIs are sufficient for most companies. Too many KPIs lead to overwhelm, loss of focus, and increased administrative effort. Too few KPIs don't allow for comprehensive evaluation and important aspects are overlooked. A proven rule of thumb: 2-3 quantitative plus 2-3 qualitative plus 1-2 behavioral KPIs.

How can I reduce subjective evaluations and bias?

Use objective data sources: numbers, facts, and documented achievements instead of gut feelings. Gather 360-degree feedback to get multiple perspectives from colleagues, supervisors, and possibly customers. Use scientifically validated assessments for objective competency measurement through diagnostic tools. Use structured conversation guidelines so all employees are evaluated according to the same criteria. Create awareness of unconscious bias through training on confirmation bias, halo effect, and recency bias.

What are typical mistakes in KPI selection?

Common mistakes include: Too many KPIs overload the conversation and dilute focus. Non-measurable goals like "be a team player" aren't KPIs – better is "participation in 80 percent of team meetings." Irrelevant KPIs don't fit the role, such as sales figures for IT developers. Only quantitative neglects soft skills and behavior. Lack of connection to company goals means KPIs aren't strategically relevant.

How do I document KPIs in performance reviews?

Document in writing: KPIs, target values, deadlines, and milestones. Create a conversation protocol with agreed goals, actual and target values, and development measures. Use digital tools like HR software (for example Kenjo, Factorial, or Personio) for continuous tracking. Review and adjust KPIs regularly – quarterly or semi-annually. Ensure the protocol is accessible to both sides: manager and employee should have access to KPI documentation.

Which KPIs are suitable for different roles?

In sales, relevant KPIs are: revenue, conversion rate, new customer acquisition, and customer satisfaction (NPS). Marketing measures lead generation, marketing ROI, website traffic, and engagement rate. Development and IT focus on code quality, bug rate, on-time project completion, and innovation (new features). HR evaluates time-to-hire, cost-per-hire, employee satisfaction, and turnover rate. Managers are measured by team success, employee retention, departmental goal achievement, and employee development.

Conclusion

Performance review KPIs are essential for objective performance evaluation and targeted talent management. Key insights: Formulate 4-7 focused KPIs according to the SMART method, combine quantitative, qualitative, and behavioral indicators for a holistic picture, and reduce bias through objective data sources such as numbers, 360-degree feedback, and validated assessments. Avoid typical mistakes like too many or non-measurable KPIs and ensure metrics are strategically relevant and fit the individual role.

Performance management expert Dick Grote emphasizes: Clear expectation communication improves performance immediately. With the right KPIs, you create transparency, develop in a targeted way, and strengthen candidate experience – for existing employees as well.

Want to learn more about objective, data-driven performance analytics? Discover the possibilities of the digital platform Aivy.

Sources

• Gallup Inc. (2023): State of the Global Workplace Report 2023. https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx
• Doran, George T. (1981): There's a S.M.A.R.T. Way to Write Management's Goals and Objectives. Management Review, Vol. 70, Issue 11.
• Grote, Dick (2011): How to Be Good at Performance Appraisals. Harvard Business Review Press.
• PricewaterhouseCoopers (2007): Guide to Key Performance Indicators. PwC Whitepaper.
• Kenjo (2022): Key Performance Assessment Indicators. https://blog.kenjo.io/key-performance-assessment-indicators
• Sage (2026): HR Metrics & KPIs Overview. https://www.sage.com/de-de/blog/hr-kennzahlen-kpis/
• Factorial (2025): HR Metrics. https://factorialhr.de/blog/kennzahlen/