Performance measures clause: Free template
Introduction
A performance measures clause defines the specific metrics and criteria used to evaluate the performance of a party under the agreement. This clause ensures that both parties have a clear understanding of what is expected in terms of performance and provides a framework for assessing success. Performance measures are essential for setting standards, tracking progress, and ensuring accountability, particularly in long-term agreements or complex projects.
Below are templates for performance measures clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard performance measures clause
This version outlines general performance measures.
The Parties agree to the following performance measures to evaluate the Seller’s performance under this Agreement:[Performance Metric 1]: [Description of the metric and how it will be measured].[Performance Metric 2]: [Description of the metric and how it will be measured].[Performance Metric 3]: [Description of the metric and how it will be measured]. The performance will be assessed at [specified intervals], and both Parties will review the results to determine compliance with the performance standards outlined herein.
Performance measures clause with specific goals
This version defines measurable performance goals.
The Seller agrees to meet the following specific performance goals:[Goal 1]: [Measurable target, such as response time or delivery rate].[Goal 2]: [Measurable target, such as customer satisfaction or defect rate]. Performance will be reviewed every [specified time period], and failure to meet these goals will trigger a corrective action plan.
Performance measures clause with penalty for non-performance
This version includes penalties for failure to meet performance standards.
If the Seller fails to meet the agreed-upon performance measures, the following penalties will apply:[Penalty 1]: [Specify penalty, such as a monetary fine or reduction in payment].[Penalty 2]: [Specify penalty, such as a delay in payment or reduced scope of work]. A failure to meet performance measures for more than [specified number] consecutive periods may result in termination of this Agreement.
Performance measures clause with performance review meetings
This version specifies the frequency of performance reviews.
The Parties will conduct performance review meetings at [specified intervals], during which the performance measures will be assessed. During these meetings, both Parties will discuss progress toward the agreed-upon goals and identify any necessary adjustments or corrective actions. Any required performance adjustments will be implemented within [specified number] days of the review meeting.
Performance measures clause with corrective action process
This version includes a process for addressing underperformance.
If any performance measure is not met, the Seller agrees to implement a corrective action plan within [number] days of notification. The plan will include:A detailed analysis of the causes of non-performance.Specific actions to remedy the situation.A timeline for completing the corrective actions. Failure to implement an approved corrective action plan within the specified time may result in additional penalties.
Performance measures clause with bonus for exceeding goals
This version includes a reward for exceeding performance targets.
The Seller will be eligible for a performance bonus if the agreed-upon performance measures are exceeded by [specified percentage] during any review period. The bonus will be calculated as follows:[Bonus Calculation 1]: [Description of how the bonus will be determined]. If performance exceeds all agreed measures, the Seller may receive a bonus of up to [specified amount or percentage].
Performance measures clause with third-party verification
This version involves third-party verification of performance.
The performance of both parties under this Agreement will be verified by an independent third-party auditor, who will assess compliance with the following performance measures:[Metric 1].[Metric 2].[Metric 3]. The results of the performance audit will be provided to both parties within [number] days of completion. If performance does not meet the required standards, the Seller will be required to take corrective action.
Performance measures clause with key performance indicators (KPIs)
This version defines specific KPIs to assess performance.
The following key performance indicators (KPIs) will be used to measure the Seller’s performance:[KPI 1]: [Description of the KPI and its measurement method].[KPI 2]: [Description of the KPI and its measurement method]. These KPIs will be assessed at [specified intervals], and both parties will collaborate to ensure that performance consistently meets the established targets.
Performance measures clause with flexibility in goals
This version allows for flexible performance targets.
The Parties acknowledge that circumstances may change during the term of this Agreement. If either party believes that the performance targets should be adjusted due to changes in the market or operating conditions, the performance measures may be modified by mutual written consent. Any changes will be based on revised, mutually agreed-upon targets.
Performance measures clause with no performance measurement
This version clarifies that no specific performance measurements are used.
The Parties agree that no formal performance measures will be applied under this Agreement. However, both parties will maintain open communication to ensure that expectations are met, and adjustments will be made as necessary to accommodate changing needs or circumstances.
Performance measures clause with service level expectations
This version defines expectations for service levels.
The Seller agrees to meet the following service level expectations as part of this Agreement:Response time for support requests: [specified time].Uptime for delivered services: [percentage]% per month. These service levels will be reviewed quarterly, and failure to meet these targets will trigger discussions for corrective actions.
Performance measures clause with performance audits
This version includes regular audits to assess performance.
The performance of the Seller under this Agreement will be audited every [specified time period] by the Buyer or an independent third-party auditor. The audit will assess the Seller’s adherence to the agreed-upon performance metrics, and any identified discrepancies will require corrective action to be implemented within [number] days.
Performance measures clause with milestone-based targets
This version ties performance to project milestones.
The Seller’s performance will be assessed based on the achievement of the following milestones:Milestone 1: [Description of milestone]Milestone 2: [Description of milestone] Payments and continued performance under this Agreement will depend on meeting these milestones within the agreed timelines.
Performance measures clause with volume-based targets
This version sets performance metrics based on volume.
The Seller agrees to meet the following volume-based performance measures:Deliver [specified amount] of goods/services per [time period].Achieve [specified percentage] completion rate for [task]. These metrics will be reviewed every [specified period], and failure to meet them will result in corrective actions or penalties.
Performance measures clause with ongoing training requirements
This version ties performance to ongoing training for the Seller's team.
The Seller will ensure that all personnel involved in the provision of goods/services under this Agreement undergo ongoing training to meet the following performance measures:[Training Requirement 1][Training Requirement 2] Performance will be assessed based on the Seller’s adherence to the agreed training standards.
Performance measures clause with customer satisfaction benchmarks
This version ties performance to customer satisfaction.
The Seller agrees to maintain customer satisfaction at a minimum benchmark of [specified percentage]. This will be measured by customer surveys and feedback at regular intervals. If satisfaction falls below this threshold, the Seller will implement corrective actions within [number] days.
Performance measures clause with productivity targets
This version includes productivity targets as part of the performance evaluation.
The Seller agrees to meet the following productivity targets for the services provided under this Agreement:Complete [specified number] tasks per [time period].Maintain a [specified percentage] productivity rate. These targets will be reviewed on a quarterly basis.
Performance measures clause with defect-free delivery requirement
This version ties performance to defect-free delivery.
The Seller agrees to deliver goods/services that meet the following criteria:Zero defects or failures upon delivery.Products/services must meet [specific standards or certifications]. Any defects or failures will require immediate corrective action, including replacing the goods or re-performing the services at no additional cost to the Buyer.
Performance measures clause with efficiency improvement targets
This version includes efficiency improvement as part of the performance evaluation.
The Seller agrees to implement efficiency improvements throughout the term of this Agreement. Performance will be evaluated based on:A [specified percentage] reduction in time to complete [task].A [specified percentage] improvement in cost-efficiency. Regular assessments will be conducted to ensure continuous improvement.
Performance measures clause with compliance with industry standards
This version ties performance to adherence to industry standards.
The Seller will ensure that all services and products meet the relevant industry standards, including but not limited to:[Industry Standard 1].[Industry Standard 2]. Performance will be assessed based on compliance with these standards, and failure to meet them may result in penalties or termination of the agreement.
Performance measures clause with quality control inspections
This version includes quality control inspections as part of performance evaluation.
The Buyer reserves the right to conduct quality control inspections at any time during the performance of this Agreement. These inspections will assess the quality of goods/services delivered and whether they meet the agreed-upon standards. The Seller will be required to address any issues identified during the inspection within [number] days.
Performance measures clause with environmental impact targets
This version includes environmental impact as a performance measure.
The Seller agrees to reduce the environmental impact of the services/products provided under this Agreement. Performance will be evaluated based on the following criteria:Reduction in carbon footprint by [specified percentage].Use of sustainable materials in the production of goods. Performance reviews will occur annually, and adjustments will be made based on the results.
Performance measures clause with on-time delivery requirement
This version focuses on on-time delivery as a key performance measure.
The Seller agrees to meet an on-time delivery rate of [specified percentage]. Deliveries that are delayed beyond [specified time] will be subject to penalties, including a [percentage]% reduction in payment for every day the delivery is late.
Performance measures clause with communication response time expectations
This version defines response times for communication as a performance measure.
The Seller agrees to respond to all communications from the Buyer within [specified time period]. Failure to meet this response time will result in a penalty of [specified amount] per day of delay, or a reduction in payment for services rendered during the affected period.
Performance measures clause with data security standards
This version includes data security as a performance measure.
The Seller agrees to implement and maintain data security measures that comply with the following standards:[Data Security Standard 1].[Data Security Standard 2]. Performance will be assessed based on compliance with these data security standards, and failure to comply will result in penalties or termination of this Agreement.
Performance measures clause with employee performance assessments
This version ties performance to employee evaluations.
The Seller agrees to provide the Buyer with quarterly reports on employee performance for the team working on this Agreement. The performance will be assessed based on key performance indicators, including:Task completion rate.Quality of work. Any employee not meeting performance expectations will be required to undergo retraining, or replacement may be requested.
Performance measures clause with risk mitigation targets
This version ties performance to the identification and mitigation of risks.
The Seller agrees to identify and mitigate risks associated with the execution of this Agreement. Performance will be evaluated based on the following:Identification of [specified number] key risks.Implementation of [specified number] mitigation strategies. Failure to identify or mitigate risks may result in penalties, and corrective actions must be taken within [specified number] days.
Performance measures clause with innovation and improvement targets
This version includes innovation as part of performance evaluation.
The Seller agrees to implement innovative solutions and improvements throughout the term of this Agreement. Performance will be measured by:Introduction of [specified number] new technologies or methods that improve efficiency.Improvement of existing processes by [specified percentage]. These innovations will be assessed at regular intervals, and failure to meet these targets will result in a review of the Seller’s performance.
Performance measures clause with cost savings targets
This version defines cost savings as a performance measure.
The Seller agrees to achieve a cost savings target of [specified percentage] over the course of this Agreement. This may be achieved through efficiency improvements, reduced material costs, or other cost-saving measures. Failure to meet this target will result in penalties or reduced compensation for services rendered.
Performance measures clause with regular progress reports
This version requires regular progress reports from the Seller.
The Seller shall provide the Buyer with progress reports every [specified period], detailing the status of deliverables, milestones reached, and any issues encountered. These reports will be reviewed during scheduled performance review meetings.
Performance measures clause with availability of support services
This version includes performance related to support services.
The Seller agrees to maintain support availability during business hours, with a maximum response time of [specified time] for customer inquiries. Failure to meet the support availability target will result in [specified penalty].
Performance measures clause with percentage of defect-free products
This version includes a performance metric for defect-free products.
The Seller shall ensure that [percentage]% of the goods delivered under this Agreement are free from defects upon receipt by the Buyer. A defect rate above this threshold will result in corrective actions at the Seller's expense.
Performance measures clause with employee retention goals
This version ties performance to employee retention.
The Seller agrees to maintain an employee retention rate of at least [specified percentage] for the duration of this Agreement. A lower retention rate will require the Seller to provide an updated workforce plan to meet the required level.
Performance measures clause with budget compliance
This version measures performance based on adherence to budget.
The Seller agrees to deliver services within the approved budget, and any cost overruns exceeding [specified percentage] must be justified and approved by the Buyer in advance. Failure to comply with the budget will result in penalties or contract renegotiation.
Performance measures clause with specific task completion rate
This version tracks task completion rates.
The Seller agrees to complete [specified number] tasks per [time period] at an efficiency rate of [specified percentage]. Failure to meet this completion rate will trigger a review of the Seller’s processes and may lead to contract adjustments.
Performance measures clause with customer feedback ratings
This version measures performance based on customer feedback.
The Seller will maintain an average customer satisfaction rating of [specified score] or higher. Any feedback rating below this threshold will require the Seller to submit a corrective action plan within [specified period].
Performance measures clause with project timeline adherence
This version ties performance to project timelines.
The Seller shall adhere to the following project milestones and timelines:[Milestone 1]: [Due date].[Milestone 2]: [Due date]. Failure to meet these deadlines will result in penalties or a renegotiation of the timeline and associated costs.
Performance measures clause with quality control standards
This version establishes quality control standards.
The Seller agrees to maintain quality control standards that meet the following criteria:[Quality Standard 1].[Quality Standard 2]. The Buyer will conduct periodic quality control checks, and failure to meet the required standards will lead to penalties or contract termination.
Performance measures clause with on-time performance assessment
This version evaluates performance based on timeliness.
The Seller agrees to deliver all goods and services within [specified time period] of receiving the order. Any delays will be subject to penalties of [specified percentage] per day of delay, unless the delay is due to a force majeure event.
Performance measures clause with compliance to safety regulations
This version ties performance to safety standards.
The Seller agrees to comply with all relevant safety regulations in the performance of this Agreement. Failure to comply with these safety standards will result in a review and potential suspension of the Seller’s performance until corrective actions are taken.
Performance measures clause with timely invoice submission
This version includes timely submission of invoices as a performance measure.
The Seller agrees to submit invoices within [number] days of completing work or delivering goods. Late invoices will incur a delay penalty and may result in payment suspension until the correct invoicing procedures are followed.
Performance measures clause with sustainability targets
This version includes sustainability goals.
The Seller agrees to meet the following sustainability targets:Reduce waste generation by [percentage].Use [percentage]% of recycled materials in production. Failure to meet these targets will result in a review and potential renegotiation of the Agreement.
Performance measures clause with workforce diversity targets
This version incorporates diversity goals for the workforce.
The Seller agrees to meet workforce diversity targets of [percentage]% representation from diverse groups within the team working on this Agreement. If the target is not met, the Seller must submit a corrective diversity plan within [specified time period].
Performance measures clause with energy efficiency goals
This version includes energy efficiency as a performance measure.
The Seller agrees to reduce energy consumption by [percentage]% per unit produced or service delivered. The Seller will provide quarterly energy consumption reports for review, and failure to meet this goal will lead to penalties.
Performance measures clause with product return rate limit
This version ties performance to product returns.
The Seller agrees that the product return rate will not exceed [percentage]% of the total sales volume. If the return rate exceeds this limit, the Seller will address the underlying causes and provide corrective actions within [specified period].
Performance measures clause with post-delivery support expectations
This version ties performance to post-delivery support.
The Seller agrees to provide post-delivery support for [specified period] after the goods are delivered or services are completed. Support shall include [details of support]. Failure to meet these support expectations will result in corrective actions or a penalty.
Performance measures clause with financial stability requirement
This version ties performance to financial stability.
The Seller must maintain financial stability throughout the term of this Agreement. If the Seller’s financial stability deteriorates to the point of impacting performance, the Buyer reserves the right to terminate the Agreement or seek a replacement.
Performance measures clause with technical skill assessment
This version ties performance to skill assessments.
The Seller agrees to maintain a qualified team with the necessary technical skills to perform the services outlined in this Agreement. Technical skill assessments will be conducted every [specified period], and failure to meet the required proficiency levels will result in retraining or replacement of personnel.
Performance measures clause with adherence to contract amendments
This version assesses performance based on adherence to amendments.
The Seller agrees to adhere to any amendments made to this Agreement. If the Seller fails to perform according to any amended terms, the Seller will be required to take corrective actions, including a revised work plan or timeline, as agreed upon by both parties.
Performance measures clause with payment and performance bond requirement
This version includes the requirement for a performance bond.
The Seller shall provide a performance bond equivalent to [specified amount] to guarantee performance under this Agreement. If the Seller fails to meet the agreed performance standards, the bond will be used to cover any costs incurred by the Buyer.
Performance measures clause with customer retention targets
This version ties performance to customer retention rates.
The Seller agrees to maintain a customer retention rate of [specified percentage] annually. If this target is not met, the Seller will be required to provide a detailed report on the causes and a plan for improving retention.
Performance measures clause with sales growth targets
This version includes sales growth as a performance measure.
The Seller agrees to achieve a sales growth target of [specified percentage] year-over-year. Failure to meet this target will trigger a review of the sales strategy and may require adjustments to pricing, marketing, or service delivery.
Performance measures clause with transparency in reporting
This version ensures transparency in reporting performance.
The Seller agrees to provide transparent, detailed reports of performance every [specified period], including data on [performance metrics]. These reports will be reviewed by both parties, and any discrepancies or issues will be addressed promptly.
Performance measures clause with contract compliance audit
This version includes audits to ensure compliance with the contract.
The Buyer reserves the right to conduct an audit of the Seller’s performance every [specified period] to ensure compliance with the terms of this Agreement. The Seller agrees to cooperate fully with the audit process and take corrective actions if necessary.
Performance measures clause with on-site inspections
This version includes on-site inspections to assess performance.
The Buyer reserves the right to conduct on-site inspections of the Seller’s operations at any time during the term of this Agreement to verify performance against the agreed standards. The Seller agrees to make their facilities and staff available for these inspections.
Performance measures clause with regulatory compliance tracking
This version ensures regulatory compliance as part of performance.
The Seller agrees to track and comply with all applicable regulatory requirements related to the goods and services provided under this Agreement. Failure to comply will result in corrective actions, and the Buyer reserves the right to terminate the Agreement if compliance is not restored.
Performance measures clause with supplier performance evaluation
This version evaluates performance based on suppliers.
The Seller agrees to evaluate and report on the performance of their suppliers every [specified period], ensuring that the suppliers meet the same performance standards outlined in this Agreement. Non-compliance by a supplier will result in corrective actions, which the Seller will be responsible for implementing.
Performance measures clause with service disruption penalties
This version applies penalties for service disruptions.
The Seller agrees to minimize service disruptions to no more than [specified percentage] per year. In the event of a service disruption exceeding this limit, the Seller will incur a penalty of [specified amount] per day of disruption until the service is restored.
Performance measures clause with sustainability certification requirement
This version includes a requirement for sustainability certification.
The Seller agrees to obtain and maintain sustainability certifications related to [specific certifications, e.g., ISO 14001] throughout the term of this Agreement. If the Seller fails to maintain certification, performance will be reviewed and corrective actions must be taken within [specified time].
Performance measures clause with seasonal performance expectations
This version ties performance to seasonal expectations.
The Seller agrees to meet the following seasonal performance targets:[Performance Metric] during [season].[Performance Metric] during [season]. These metrics will be reviewed after each season to ensure compliance and adjust future performance goals accordingly.
Performance measures clause with environmental impact reduction targets
This version ties performance to reducing environmental impact.
The Seller agrees to reduce environmental impact by [specified percentage] over the course of this Agreement, including reductions in emissions, waste, and energy usage. Failure to meet these targets will require the Seller to provide a detailed remediation plan.
Performance measures clause with warranty compliance
This version includes performance based on warranty compliance.
The Seller agrees to honor the warranty terms specified in this Agreement. Performance will be evaluated based on the number of warranty claims made by the Buyer. Exceeding the specified claim rate will result in a review and corrective actions.
Performance measures clause with marketing performance targets
This version ties performance to marketing goals.
The Seller agrees to achieve the following marketing performance targets:[Target metric, e.g., lead generation].[Target metric, e.g., conversion rate]. Failure to meet these targets will require a revised marketing plan to improve performance.
Performance measures clause with on-demand availability
This version measures the Seller’s availability on-demand.
The Seller agrees to be available for on-demand services within [specified time period] of a request. Failure to meet this performance target will result in penalties based on the length of delay or non-availability.
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