Measuring employee productivity requires careful consideration of various factors, including internal and external influences. By analyzing key metrics, businesses can optimize operations, enhance performance, and maintain profitability without increasing effort.
By Brad Nakase, Attorney
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In an increasingly globalized economy, organizations are grappling with the age-old challenge of how to reliably gauge worker productivity. Beyond the obvious “output,” there are many internal and external elements, as well as the organization’s current demands, that must be considered when attempting to quantify productivity. Businesses and their workers have always looked for methods to maximize productivity with little investment of time and effort. It also needs to be measurable in order to be proven.
How can we demonstrate the worth of our employees’ work by measuring their productivity? That is the true question. How and why is productivity measured? Let’s take a look.
One way to tell if your company needs to make changes to have better results is to look at its productivity. Here are a few more reasons why productivity metrics are important:
To determine employee productivity, one can use a basic universal formula:
Productivity = Output / Input
How do you actually put this into action, though?
Example 1
As an example, consider a company that makes laptops. Forty workers put in eighteen days and nine hours a day over the course of six months to produce more than two hundred thousand laptops.
Use this formula to determine your total input:
We put in 40 workers times 9 hours of work per day times 6 months times 18 days worked in a month.
You get 38,880.
Productivity is 5.14, calculated as 200,000 divided by 38,880.
That works out to 5.14 units of output per hour. Simply put, the hourly production rate was 5.14 laptops.
Example 2
So, imagine for a moment that the company has decided to bring on an operations manager whose specialty is streamlining and improving workflow. While the amount of effort remains the same, the number of laptops produced increases significantly.
Your final product would be 6.8!
As a result of just one hire, the production increased by 1.66 times. When you have all the information you need, even a small adjustment can have a big effect on your productivity and production.
While the aforementioned method does provide some insight into productivity, it is by no means exhaustive. The truth is that it works best when the output is crystal clear. Some positions, for instance, do not seem to be as output-driven in that their contributions are not easy to quantify. There is no universally accepted metric for evaluating human resources (HR) and similar roles. In different contexts, you can evaluate productivity in the following ways:
Thanks to modern technology, monitoring staff output is now possible at the touch of a button and at any time. This is suitable for any position that necessitates working online or in an environment that uses timesheets. Online time tracking software includes products like ActivTrak, Hubstaff, and ProofHub.
Asana and Trello, two popular project management apps, are also quite useful. Especially for remote or geographically separated teams, these are highly helpful.
Be wary of coming out as overly controlling or “spying” on your employees when using these kinds of technologies.
360-degree feedback
Getting input from coworkers is another excellent way to gauge productivity. In order to make sure it’s comprehensive, 360-degree feedback seeks input from people in your immediate and indirect hierarchy, as well as any important outside parties.
As far as those around them are concerned, it’s a solid indicator of how well an employee is doing and whether or not they are reaching their goals. This is most effective in settings where there is frequent teamwork and open dialogue. If an employee only communicates with their colleague once or twice a year, the feedback they receive will be lacking.
For a successful rollout of 360-degree feedback, refer to these guidelines. Asking just one or two questions about productivity will enough.
Management based on goals
This method involves outlining specific objectives for an employee and then providing them with the resources they need to reach those objectives. The provision of technology, training, incentives, etc., is essential in order to achieve a goal; for instance, if the objective is to raise sales by 50%.
By checking in at regular intervals, you can see exactly what’s holding you back from reaching your goals and how you may overcome them. Additional important milestones to monitor how effectively staff are accomplishing objectives include bi-monthly, quarterly, and mid-year assessments.
In management by objectives, these frequent reviews are crucial. Without frequent check-ins, an end-of-year evaluation is useless and can lead to concerns about procedural fairness.
Keep in mind that not all businesses work in the same way. It is easier to estimate productivity in settings where figures are readily available, like production or sales. Take the IFC’s presentation of the global measure for customer service call response time: at least 80% of the time, it should be under 20 seconds. The details vary because some businesses are more complicated than others. On the other hand, certain sectors use metrics that are less concrete. Management by objectives and 360-degree feedback are very helpful in this situation.
Using external benchmarks is one way to gauge employee output in relation to organizational goals. An industry’s average hourly sales or the percentage of unfinished sales calls could serve as examples. Having said that, not every position requires this. Setting internal standards and organizational targets is a good idea, especially for service-related occupations.
The two terms must be defined and measured in order to arrive at an accurate understanding of the relationship between efficiency and production. Productivity measures the amount of work done over a period of time, while efficiency measures the quality of that work. When given the same amount of time, one person may come up with three sales presentations and another may come up with twenty.
Make use of technology to streamline mundane processes. This may be especially useful in human resources, where it can automate interview scheduling, onboarding document signature sequences, and more. Upskill workers in other ways while they’re getting their jobs mechanized. Once again, in the HR field, this could entail assisting them in honing their business acumen or HR strategy and leadership techniques. By doing so, you will be able to guarantee an increase in production.
Engage your staff. It will pay dividends in the form of increased productivity. Employee engagement is something that needs constant attention if you value productivity in the workplace. According to studies, engaged workers can outperform their non-involved peers by as much as 17%. If you calculate it for the full organization, it’s a very significant difference.
Everyone has to know what it means to be productive, so make sure you define it clearly for each team and role. It also involves establishing specific objectives. As we’ve previously discussed, this will vary greatly between positions, and hence, the metrics used to evaluate performance will likewise vary.
In addition, think about taking stock of workplace efficiency once a year. Get a bird’s-eye view of the company and how everything works together. Hiring an outside analyst to give an objective view of the current state of affairs and potential roadblocks to productivity could also be beneficial. As a result, you’ll be able to boost efficiency and quality in the workplace.
Although it may appear straightforward, improving productivity necessitates gathering a large amount of data and monitoring it frequently. Also, don’t generalize about all personnel; instead, take into account their unique qualities. Equally important are the many variables that affect employee productivity, such as level of education, amount of stress, and years of experience.
With a framework in place, tracking employee productivity trends and creating interventions to accomplish goals becomes a breeze.
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