How to Monitor Employee Performance: 10 Tips & Best Practices

Most companies approach employee performance monitoring the wrong way. They either: 

• Track too much, which leads to micromanagement and employee resentment
• Track too little, so productivity issues go unnoticed until they become costly problems.

You need an approach that can help you understand who’s actually delivering value, whether they’re three desks away or three time zones apart.

Whether you’re trying to find who needs support, who deserves the promotion, or who’s quietly struggling, this guide provides practical tools to understand and improve employee performance.

10 Ways to Monitor Employee Performance

Monitoring employee performance is a balancing act. Too little oversight misses critical issues, but too much kills motivation and trust.

Let’s look at the proven approaches that strike that balance – these are the methods that help you spot both problems and potential without making your team feel like they’re under constant scrutiny:

1. Set Clear Goals for Each Employee

Any meaningful performance monitoring system needs a foundation of documented objectives. And while SMART goals might be a cliché, they do get the job done. Here’s how you should use them:

• Specific: Not “improve customer satisfaction” but “reduce ticket response time to under 2 hours.” You need to break down vague objectives into concrete actions that leave no room for misinterpretation.
• Measurable: If you can’t measure it, you can’t improve it. Every goal needs concrete numbers and data points to track progress, whether that’s revenue targets, customer ratings, or project milestones. For example, “demonstrate leadership” becomes “mentor two junior team members to project-ready status by Q3.”
• Achievable: Setting impossible goals kills motivation faster than no goals at all. Look at past performance, available resources, and market conditions to set targets that stretch skills without breaking spirits.
• Relevant: Every goal should tie directly to your company’s bigger picture. If a target doesn’t move your organization forward or align with your team’s purpose, it’s usually just busywork masquerading as progress.
• Time-bound: Set milestone checks instead of just end dates. You can break longer-term goals into smaller checkpoints. For instance, if the goal is to “launch new product feature by Q4,” set monthly milestones for design approval, beta testing, and user feedback collection.

It’s also a good idea to set up a mix of these three goal types:

• Performance goals: Core job metrics (sales targets, project deadlines). These are your bread-and-butter metrics that directly tie to business results. For example, developers can track feature delivery timelines and bug resolution rates, while marketers can measure lead generation growth and campaign ROI.
• Development goals: Skills and capabilities (“master advanced Excel modeling”). These goals future-proof both your employees and your organization. Each quarter, outline 1-2 key skills that will make the employee more valuable. You can include both technical and soft skills in this category.
• Behavioral goals, while frequently disregarded, are essential for career advancement and enhancing team dynamics. Concentrate on actions that can be observed instead of personality characteristics. Rather than stating “be more proactive,” consider saying, “recognize and highlight possible project obstacles during daily standup meetings.”

You can go for a 60-20-20 split between these categories. While performance goals naturally take priority, neglecting development and behavioral goals is a common mistake that leads to short-term wins but long-term stagnation.

2. Measure Success with Key Performance Indicators (KPIs)

The most common monitoring mistake is tracking what’s easy to measure instead of what actually matters. Start by outlining true success metrics for each role.

For sales teams, that might mean conversion rates, revenue per client, and pipeline health. For customer service, it could be response times, job satisfaction scores, and issue resolution rates.

Here’s how you can then structure effective KPIs:

• Primary metrics: The 2-3 core numbers that directly reflect job success. For sales, this might be revenue, deal closure rate, and churn.
• Supporting metrics: The activities and milestones that lead to primary metric success. This may include prospecting calls, proposal quality scores, or follow-up response times.
• Health metrics: Numbers that ensure primary metrics aren’t being achieved at the expense of long-term success. This could include team collaboration scores or customer satisfaction trends.

But be careful not to drown your team in data. Too many metrics create noise and confusion, so pick 3-5 KPIs that truly matter for each role.

And make sure these KPIs are accessible to your team in real-time through dashboards or regular reports. When employees can see their own performance data, they’re more likely to take ownership of their results.

PRO TIP : Teramind’s comprehensive reporting suite provides real-time dashboards for your team’s KPIs, so both managers and employees can track progress transparently. These visualizations make performance data accessible and actionable. 

3. Review Work in Progress Regularly

The most effective performance monitoring happens in real-time, not just during scheduled reviews. While annual performance reviews have their place, they should be a summary of ongoing conversations, not the conversation itself.

With regular check-ins, you can:

• Track progress: Discuss progress towards goals and outline any potential roadblocks. Use this time to understand what’s behind schedule and why. Often, the real insights come from understanding the obstacles rather than just the delays.
• Provide direct Feedback: Don’t sugarcoat or delay necessary conversations. Tackle performance issues immediately with specific examples and clear expectations for improvement.
• Offer support: This might include connecting them with resources, setting up new mentorship opportunities, or working together to develop new skills.
• Adjust your goals: Review and update goals quarterly based on changing business needs and employee capabilities. Document changes and make sure everyone understands the reasoning behind them.
• Recognize achievements: Celebrate both major wins and small victories during check-ins. Public recognition for key achievements helps motivate the whole team and sets standards for success.

Schedule these check-ins consistently – whether it’s 30 minutes every Tuesday or bi-weekly on Thursday afternoons. And track key points and commitments in a shared document that both manager and employee can reference.

This creates a clear paper trail of discussions, decisions, and progress over time. When meetings need to be rescheduled, try to keep them within the same week to prevent issues from piling up.  

4. Schedule Regular One-On-One Meetings

The most valuable 30 minutes you’ll spend each week isn’t in your team meetings or strategy sessions but in your one-on-ones.

Here’s how to make them count:

• Two-way communication: Turn these meetings into real conversations, not just status reports. Start with open-ended questions like “What’s on your mind this week?” or “Where do you need help?” The idea is to give your team members the space to lead the discussion.
• Performance feedback: Use this time to drill into specific behaviors and outcomes. Instead of vague praise or criticism, focus on recent examples that demonstrate what’s working or needs improvement. Frame feedback as a chance to grow together: “I noticed X happened – let’s talk about how we can approach that differently next time.”
• Work environment discussions: Address team dynamics, workload balance, and potential burnout before they become problems. Sometimes a casual “How are you managing your energy?” reveals more than a formal performance discussion.
• Problem-solving: When issues come up, resist the urge to jump straight to solutions. Instead, guide your team member through the problem-solving process – “What solutions have you considered? What’s holding you back? How can I help remove those barriers?”
• Personal connection: While staying professional, show genuine interest in your team members as people. Understanding what motivates them, what causes them stress, and how they prefer to work makes you a more effective manager.

Schedule these meetings for 30-45 minutes every week or two. Keep them even when things are busy – that’s often when your team needs them most. A structured performance review tells you if goals are being met, but one-on-ones tell you why and how to help.

5. Integrate Peer Reviews

The view from the trenches usually reveals performance insights that managers miss. Your team members work closely together every day and they see the collaboration, communication, and contributions that might not show up in metrics or status reports.

Here’s how to make peer reviews work:

• Set up clear guidelines: Don’t rely on the vague “rate your teammate” exercises. Create specific evaluation criteria that focus on observable behaviors and measurable impact. For example, instead of asking about “teamwork,” ask about specific instances of cross-functional collaboration, knowledge sharing, or project support.
• Make it anonymous to share: Anonymous feedback through a secure platform or HR-managed process lets people be candid without fear of damaging relationships. This is especially important for surfacing constructive criticism that might otherwise go unsaid.
• Provide training: Most employees aren’t natural feedback givers. Teach reviewers how to be specific, objective, and constructive. You can run workshops on how to focus on behaviors rather than personalities, how to support feedback with examples, and how to frame suggestions positively.
• Keep it evidence-based: Ask reviewers to support their points with recent examples. “Always” or “never” statements are red flags – look for specific situations that illustrate patterns of behavior.
• Integrate with other performance data: Combine peer insights with manager observations and self-assessments and look for patterns across different perspectives. Sometimes the gaps between these views reveal the most important areas for growth.

You can run peer reviews quarterly or semi-annually – frequent enough to catch important feedback but not so often that it becomes a burden.

6. Set up a Clear, Transparent, and Regular Performance Review Process

Your performance review process sets the tone for how your organization values and develops talent. So, skip the annual anxiety-fest and create a system that actually drives growth.

Here’s how you should structure the process:

• Clear: Strip away the mystery and bureaucracy from performance reviews. Create a detailed guide that outlines performance evaluation criteria, rating scales, and the exact steps in the process. Share examples of what “meets expectations” versus “exceeds expectations” looks like for each role.
• Transparent: Share how decisions are made, what data is considered, and how ratings translate to opportunities and rewards. Tackle biases head-on with calibration sessions across managers and document the rationale for decisions. Nothing kills motivation faster than the suspicion that reviews are arbitrary or political.
• Regular: Create a calendar of touchpoints throughout the year, from weekly check-ins to quarterly progress reviews. This prevents the dreaded “recency bias” among employees, where only the last few weeks matter.
• Documented: Develop a clear paper trail that serves both present and future needs. Document not just ratings and feedback, but also context, commitments, and development plans.
• Consistent: Apply the same standards and processes across the board. You need review templates that ensure every employee gets the same depth of feedback and opportunity for discussion. 

7. Encourage Employees to Self-Monitor

The best performance insights often come from within. When employees actively track their own progress, they can spot improvement opportunities before you do and take action immediately.

Here are some tips on how to build an effective self-monitoring system:

• Provide tools and resources: Put performance data directly in your team’s hands. Whether it’s a sales dashboard showing daily numbers, a customer service portal tracking response times, or a performance management system measuring milestone completion, you should give employees the same visibility you have into their metrics.
• Create self-review frameworks: Create simple templates for weekly self-reviews. Have your team log their key wins, current challenges, and progress toward goals.
• Peer learning systems: Set up channels where your team can share wins and lessons learned. This could be a weekly team huddle, a shared Slack channel, or regular lunch-and-learns. When people see how others tackle challenges, they get better at polishing up their own approach.
• Create a culture of feedback: Encourage employees to actively seek input from peers and stakeholders. Show them how to ask for specific, actionable feedback – “What’s one thing I could do differently next time?” instead of “How am I doing?”

The best performers probably already do this naturally, but you should make it the norm for everyone else as well. 

PRO TIP 💡: Teramind can provide employees with their own productivity dashboards and give them direct insight into their work patterns, active vs. idle time, and application usage. This transparency can help employees identify and self-correct productivity drains without manager intervention.

8. Use Self-Reported Surveys

While KPIs and performance data can show your team’s productivity trends, they don’t always reveal how employees feel about their work, challenges, and progress.

Self-reported survey initiatives can bridge this gap and give employees a structured way to reflect on their own performance and provide insights that traditional tracking methods might miss.

Here’s how to create surveys that actually tell you something useful:

• Monthly pulse checks: Keep surveys short and focused. Ask about current project challenges, resource needs, and collaboration pain points. Five targeted questions will get you better data than twenty generic ones.
• Project impact surveys: After each major project, you can ask something like “what percentage of your time did task-switching eat up?” “Which team dependencies slowed you down the most?” “Rate the clarity of requirements from 1-5.” These specifics help you fix process problems that kill productivity.
• Customize questions by role: Sales teams care about different things than developers, so make sure you customize your questions to cover actual role challenges. You can use “how often did you have to work around missing documentation?” for engineers, or “what customer objection caught you off guard this month?” for sales.
• Act on the insights: Close the feedback loop and take visible action on survey results. Share key findings with the team, develop action plans for major concerns, and regularly update on employees’ progress. Nothing kills survey participation faster than the feeling that feedback goes into a black hole.

9. Track Employee Performance Trends Over Time

Performance trends tell you more than snapshots ever will. Looking at patterns over time helps you spot rising stars, catch declining performance early, and make smarter decisions about promotions and team development.

Here’s how you can approach it:

• Build performance timelines: Map key metrics over months and quarters, not just review cycles. Track things like project completion rates, customer satisfaction scores, and peer feedback ratings. When you see a consistently high performer suddenly trending down, or a struggling employee steadily improving, you can act before it escalates further.
• Look for pattern triggers: Connect performance shifts to potential causes. Did productivity drop after a team restructure? Did quality improve following a training program? Did collaboration scores change with remote employees’ work?
• Compare multiple metrics: Don’t fixate on single numbers. When sales numbers are down but customer satisfaction is up, or when productivity rises but quality drops, you’re seeing the real story of what’s happening.
• Identify early warning signs: Create alerts for concerning patterns. Three missed deadlines in a month, two negative client interactions in a week, or a steady decline in peer feedback scores could all signal bigger issues brewing. The earlier you spot these trends, the easier they are to address.

PRO TIP 💡: Teramind’s detailed activity tracking creates comprehensive performance timelines that reveal long-term patterns not visible in traditional performance reviews. These insights help managers differentiate temporary productivity dips and concerning trends that require intervention.

10. Use Specialized Technology

Specialized tools transform how managers track and evaluate employee performance. They replace your manual tracking with smart solutions that deliver instant insights and data-driven results.

Instead of guessing or relying on basic spreadsheets, these tools give managers exactly what they need to monitor performance effectively.

Here are the key tools that can make a difference in your organization:

• Employee monitoring tools: Modern monitoring solutions should track both activity and impact. Look for tools that analyze work patterns (What times are people most productive? Which processes eat up unnecessary time?), measure meaningful outputs (quality scores, completion rates), and spot potential burnout signs. The goal is to understand how work gets done, not just watch over employee shoulders.
• Time tracking tools: Key features should include project time analytics, automatic categorization of activities, and integration with your other business tools. Accurate time management helps teams optimize their day, plan better estimates, and outline what activities drive results.
• Task-management tools: With task-management tools, you need features for planning sprints, tracking dependencies, and measuring progress against milestones. These platforms provide data on task completion rates, workload distribution, and individual contributions, so that work is progressing as expected and no tasks fall through the cracks.
• Project-management tools: Pick solutions that balance detail with usability. Must-haves include resource planning, risk tracking, and progress monitoring. They help managers monitor deadlines, milestones, and individual contributions, which makes sure that projects stay on track.

For organizations that want a comprehensive solution, platforms like Teramind combine these capabilities into a unified system.

Our employee performance tracking provides detailed insights into how teams work, measuring everything from task time and application usage to web activity and productivity patterns.

Teramind’s User & Entity Behavior Analytics (UEBA) solution establishes baseline work patterns for each role, so managers can quickly identify when someone needs support or when unusual activity might indicate potential insider threats.

This is particularly valuable for hybrid workplaces, where Teramind helps managers oversee both office and remote employees effectively. Apart from basic monitoring, Teramind’s behavioral analytics provide deeper insights into productivity opportunities and process improvements. 

Best Tools for Tracking Employee Performance

Raw productivity doesn’t necessarily equal real impact. And traditional performance metrics often miss the nuances of how employees drive value. Below, we’ll cover some of the best tools for tracking employee performance that you should consider:

Employee Monitoring Software

Employee monitoring software helps organizations track, analyze, and boost productivity through digital surveillance of employee activities. 

These platforms typically monitor computer usage, application time, website visits, and similar digital touchpoints to provide managers with insights into how employees actually spend their time and resources.

While some solutions focus purely on activity tracking, more sophisticated platforms incorporate productivity analytics, project tracking, and performance metrics to create a comprehensive view of employee output.

Key benefits of employee monitoring software include:

• Captures data about employee computer usage, including active/idle time, application usage, and website visits, so you can easily outline productivity patterns.
• You’ll get visual context about how employees interact with different tools and complete their work.
• Automatically associates employee activities with specific projects or clients to improve billing accuracy.
• Productivity scoring algorithms analyze activity patterns to find peak performance periods and potential areas for workflow optimization.

Time-Tracking Software

Companies use time-tracking software to record and analyze how employees spend their working hours across different projects, tasks, and clients.

These tools provide insight into employee productivity, billable hours, and workflow efficiency, so they’re especially useful for freelancers, agencies, and companies that manage remote teams.

Key benefits of time-tracking software include:

• More accurate payroll processing reduces administrative overhead and ensures employees are compensated fairly for their time (especially for hourly workers and overtime).
• Granular productivity insights reveal peak performance periods and potential bottlenecks so teams can optimize their daily schedules and workflows.
• Managers can see who’s overloaded and who has the capacity, which helps them distribute work more evenly across the team.

Task Management Tools

Task management tools help teams and individual employees organize, prioritize, and track work progress. They help break down big projects into bite-sized tasks, so it’s clear who’s doing what and how every task is progressing.

Managers can use them as a central hub to assign work, monitor progress, and spot potential issues before they impact deadlines.

Key benefits of task management tools include:

• Clear accountability and ownership prevent important work from falling through the cracks and it’s easy to see who’s responsible for specific deliverables.
• Managers can spot potential delays before they become real problems, so they can adjust plans and redistribute work as needed.
• Instead of lengthy status updates, team members can check task progress in real-time through the platform.

Project Management Tools

Project management tools handle everything needed to run major projects – from planning and scheduling to budgeting and reporting. They’re particularly valuable for understanding how well teams perform under pressure, manage deadlines, and work together on more complex projects.

Key benefits of project management tools include:

• Managers can evaluate team members based on how they handle complex projects and contribute to company goals, not just how they complete individual tasks.
• It becomes clear how each person’s work ties directly to broader business objectives and project success.
• Leaders can see how well people work across departments when managing major projects.
• Managers can see which team members are particularly good at spotting and solving potential project issues.

Measure Employee Performance with Ease with Teramind

Teramind transforms how organizations monitor and optimize employee performance, with granular insights into employee productivity, behavior, and potential risks.

With so many organizations now operating hybrid workplaces, Teramind can help managers track and support employees whether they’re working from the office or remotely.

Here’s what Teramind brings to your organization:

• Employee performance tracking: You’ll see exactly how your team works with detailed analytics on task time, application usage, and web activity. This helps your managers understand work patterns and see where people might need support or guidance. Instead of just measuring basic output, it looks at how engaged and efficient people are in their work.
• Remote work management: Remote work often makes it harder to see who’s truly contributing. Teramind gives you clear visibility into remote work patterns and productivity, so you can maintain accountability without any micro-management. You’ll be able to track actual work time, spot potential distractions, and keep your distributed team aligned and productive.
• Productivity optimization: Identify where time gets wasted and workflows break down. Teramind’s granular activity analysis helps you spot issues, streamline processes, and ensure your resources are used effectively.
• Insider threat detection: Teramind’s advanced behavioral analytics can help protect your organization’s sensitive information. The platform automatically flags suspicious activities that could indicate data theft or intellectual property risks, so you can address these threats before they escalate into more serious problems.
• Compliance monitoring: Teramind helps you stay compliant with industry regulations and internal policies through automated activity monitoring. Particularly important for finance, healthcare, and other regulated industries, the platform maintains compliance without creating extra work for your team.
• Behavioral analytics: You can also understand your workforce at a deeper level through sophisticated pattern analysis. Teramind analyzes these behavior patterns to outline both productivity opportunities and potential security risks. Companies can see not just what the team does, but why and how they actually work.
• User and Entity Behavior Analytics (UEBA): Our UEBA tools establish normal work patterns for each role and team. When someone deviates from these patterns, you’ll know immediately – whether it’s a security concern or a performance issue that needs attention.
• Reporting and analytics: Teramind’s comprehensive reporting suite can turn workforce data into winning strategies for your organization. You’ll be able to generate detailed visualizations and trend analyses that inform everything from performance reviews to resource planning.

Teramind brings together comprehensive workforce analytics, security monitoring, and productivity tracking in one unified platform. Whether you’re looking to support remote employees, protect sensitive data, or optimize team performance, it provides the insights you need to make informed decisions about your workforce.

And it can easily adapt to your organization’s specific needs, whether you’re managing a small team or overseeing enterprise-wide operations.To see how Teramind can support your organization’s specific goals, you can request a demo and explore its features and pricing options.