Numerous surveys claim that actively disengaged employees cost their employer a considerable sum of money every year in lost productivity. And it’s not hard to see why.
In our increasingly fast-paced and competitive world, businesses must find ways to get more work done with fewer resources while maximising employee productivity and efficiency.
But how do you do that?
One way is to measure employee productivity. Measuring productivity can help you understand what’s working and what’s not, identify problems and solutions, and track progress over time.
What is productivity in business?
Productivity is a measure of how efficiently employees use resources to generate output. In the business context, productivity measures how well employees use their time, skills, and knowledge to produce results that contribute to the company’s bottom line.
While different businesses might have different definitions of productivity, there are some standard measures that you can use to assess it.
Some of the most common measures of employee productivity include:
- Output per hour – This measures the number of units or tasks produced by employees in a given time.
- Output per unit of time – This measures the average output generated by employees per unit of time, such as minutes, hours, or days.
- Sales per employee – This measures how much revenue each employee generates.
- Cost per output unit – This measures how much it costs to produce a given output unit.
- Customer satisfaction – This measures how satisfied customers are with the products or services provided by the company.
Why does it matter to measure productivity?
There are many reasons why it’s important to measure employee productivity. Here are some of the most important:
To improve efficiency and effectiveness
Measuring productivity can help identify areas where employees are wasting time or not working effectively. You can use this information to make changes that improve efficiency and effectiveness.
To identify training and development needs
If you see a drop in productivity, it could be due to a lack of training or development opportunities for employees. Identifying these needs can help you invest in resources that will improve performance.
To monitor progress
Measuring productivity over time can help you track progress and identify trends. You can use this information to set goals and objectives and track whether or not they’re being met.
To allocate resources
Measuring productivity can help you understand how to allocate resources best. For example, if you see that a particular department is not meeting its goals, you might invest in additional resources for that department.
To motivate employees
Setting goals and measuring progress can be a powerful motivator for employees. When they see that their efforts are making a difference, they’re more likely to be motivated to continue working hard.
Top conventional approaches to measuring employee productivity
There are several conventional approaches to measuring and managing employee productivity. However, most of these approaches and methods have some limitations.
Let’s take a look at some of the most common approaches:
The 9-5 work schedule
The 9-5 work schedule is the traditional approach to work hours. Employees are expected to work for eight hours a day, five days a week. This approach doesn’t consider that employees have different work styles and needs.
The Ford Motor Company initially established the 8-hour workday in the early 1900s as part of its assembly line production process. However, this work-hours approach is no longer relevant in today’s world.
Research has shown that the 8-hour workday can be counterproductive and decrease productivity.
Management by objectives method
The management by objectives (MBO) method is a popular approach to managing employee productivity. Under this approach, employees are given specific goals to achieve and are evaluated based on their performance.
While the MBO method can be effective, it has some limitations. It can be challenging to set goals and measure progress. This approach can be time-consuming and may not be appropriate for all types of businesses. This might not work for some companies that include rapidly changing or complex products or services.
Measuring quantitative productivity
Many businesses measure employee productivity by tracking quantitative output, such as the number of units produced or sales generated. While this approach can be helpful, it has some limitations.
For example, it doesn’t consider the quality of the output. Additionally, this approach doesn’t believe the time and effort required to produce the output. As a result, it may not provide an accurate picture of employee productivity.
Measuring productivity by profit
Another common approach to measuring employee productivity is by tracking the profit generated. This approach has some advantages, such as its ability to consider the quality of the output.
Nate Tsang, Founder and CEO of WallStreetZen says, “If you want to succeed in business, you have to watch the money. Everything else, from employee productivity to customer satisfaction, will follow.”
However, this approach also has some limitations. For example, this approach doesn’t consider the time and effort required to generate the output. Additionally, it may be challenging to track and compare profits across different departments or businesses accurately.
Balanced scorecard method
The balanced scorecard (BSC) method is a popular approach to measuring employee productivity. Under this method, businesses track various factors, including financial performance, customer satisfaction, employee satisfaction, and operational efficiency.
This approach has some advantages, such as providing a holistic view of employee productivity. It can be time-consuming to track all different factors. Additionally, it may not be appropriate for all businesses.
7 Simple ways to measure employee productivity
While complex methods of measuring employee productivity can be effective, they can also be time-consuming and challenging to implement. As a result, many businesses choose to use more straightforward methods.
Here are seven simple ways to measure employee productivity.
Establish a baseline
The first step in measuring employee productivity is to establish a baseline. A baseline will help you to track progress and identify areas of improvement. Ensure that you set a realistic and achievable baseline and that your employees can easily understand it.
The best way to establish a baseline is to work together with your employees to set specific goals that both parties can agree on.
Define and measure tasks
The second step in measuring employee productivity is to define and measure tasks. This will help you understand which tasks are the most important and take the most time and effort.
Chelsea Cohen, Co-Founder of SoStocked, states that the “measurement of the targets related to specific tasks is more comprehensive for the employees, in the first place. This allows them to understand better what is expected of them and aids in better performance.”
Set clear objectives
Setting clear objectives is also an easy way to measure employee productivity. By setting clear objectives, you can ensure that your employees work towards specific goals and that their efforts align with your business objectives. Make sure that your objectives are:
- specific: goals should be clear and concise
- measurable: you should be able to track progress towards the objectives
- achievable: objectives should be realistic and something that employees can reach with effort
- relevant: the goals should relate to your specific industry or business
- time-bound: employees should be able to reach the goals within a deadline
Collect client feedback
The fourth step in measuring employee productivity is to collect client feedback. This will help you understand how your employees perform and whether they are meeting their clients’ expectations. Clients will be happy to provide feedback if they know it will help improve your business.
Emphasise work quality
The next step in measuring employee productivity is emphasising work quality, specifically high-quality work. To do this, employees first need to understand your definition of high-quality work. You can help them with this by providing clear guidelines and expectations.
Additionally, you need to be willing to give feedback and guidance if necessary, possibly through employee surveys. Once they understand your definition, they can strive to meet or exceed your expectations.
Monitor employee progress
The sixth step in measuring employee productivity is to monitor employee progress, which will help you identify areas where employees are struggling and need assistance.
You can measure their progress by tracking their results against the objectives you have set for them. Additionally, you can use tools such as time tracking software to help you monitor their progress.
Logan Mallory, VP of Motivosity, suggests that “measuring employee productivity should be an ongoing, real-time activity, not a one-time event. By using recognition and appreciation programs and measurement tools, you can keep employees striving to do their best.”
Measure using time management
Finally, the last step in measuring employee productivity is to use time management techniques. This will help you understand how employees use their time and identify areas where they can improve. There are a variety of time management techniques that you can use, including time tracking software, time logs, and time cards.
It doesn’t matter so much what tool you use, but instead that you are using a tool to help you measure employee productivity.
“Time management is key to employee productivity and can be used as a measurement tool,” president and co-founder of Eventys Partners Roy Morejon suggests. “By understanding how employees spend their time, you can help them focus on the most important tasks and improve their productivity while accurately depicting where time is being spent.”
Measuring employee productivity is essential for business growth. By setting clear objectives, collecting client feedback, emphasising work quality, monitoring employee progress, and using time management techniques, you can ensure that your employees are productive and that your business is growing.
This will help you achieve your goals, but it will also help improve employee satisfaction and productivity throughout your company.
About the Author
Erika Rykun is a career and productivity copywriter who believes in the power of networking. In her free time, she enjoys reading books and playing with her cat Cola.