How to Measure Employee Productivity

9 min. read

Measuring productivity in an objective way makes it easier and more reliable for managers to analyze performance.

As a manager of teams, or anyone in a leadership position for that matter, you wouldn’t be the first to consider ways of measuring your team’s performance. Measuring employee productivity is a vital component of leadership. Any part of your workforce that is not measured in an objective way cannot be treated as a metric, and therefore cannot be improved.

The main problem that managers face is that job performance itself is sometimes a little vague and not easily measurable, mostly due to a lack of specifics when it comes to what is required of a particular job or position and various other subjective factors that enter the equation.

Your HR department and those in charge of managing teams — particularly nowadays when remote teams are a relatively new and interesting beast to tame — are constantly in search of best practices for measuring employee productivity.

What is employee productivity?

Productivity is defined as “the quality or state of being productive”.

Ok, so let’s dig a little deeper. What does Productive mean?

Productive: having the quality or power of producing especially in abundance. Effective in bringing about.

Alright. How about the meaning of Producing?

There are a few definitions, but for our purposes this is one that fits nicely: To cause (something) to exist or happen : to cause (a particular result or effect).

Simply put, employee productivity is the making or causing of a result (or product) by an employee. A product is something which is created by way of a process, that can be sold or exchanged and has value. Obviously not all employees make things which can be sold to your end consumer or customer, but they certainly are responsible for at least part of the whole which contributes to the end product, and do or make things which are valuable in their own right.

A crude example of this is a box packer. The responsibility of this position is the packing of boxes. The duties include stacking and preparing those boxes, gathering materials that go inside the boxes, and then the actual packing of materials into those boxes so that they can be safely shipped, and then passing those boxes to their final positions, ready for the shipping department. The valuable product of this position is boxes well packed and ready to be shipped.

Another example is an employee who is responsible for taking client calls and has duties of addressing client concerns and delivering excellent customer service which result in a valuable product of happy customers. A bad client call can result in a dissatisfied customer. And such a customer can do a lot of damage to the company in the public forum, whether on social media or otherwise.

So then the question remains, how does one measure these products to gauge performance by an employee? The question becomes a lot easier to answer when you consider the above and ask yourself “What is this employee supposed to be producing?” Once you answer that (packed boxes, happy clients) then you can more easily measure those things.

The problem with subjective metrics

By definition the word subjective means “based on feelings or opinions rather than facts.” So immediately we can see the problem with this method of quantifying performance. An employee can be the most popular member of the team because they’re likable and gregarious, communicate well and get along with everyone else in the office, and this might add to company morale or raise the spirits in the organization somewhat, but unless they’re actually doing something to contribute to the overall success and output of valuable, measurable things that the company produces which can then be exchanged with the public, it remains a matter of opinion.

Of course, that’s assuming that this person’s job description isn’t being an office cheerleader, in which case you can measure that person’s performance by how many smiles they inspired per day, or some such other metric.

Objective metrics can be used to determine how well employees are performing, free of any subjective measurement, but many businesses base part or all of their performance evaluations on subjective concepts. This leaves the door open to performance evaluation reflecting what you think of an employee’s work.

In an abstract way, this is like looking at a painting, and asking “Do you like it?”. You might ask ten different people that same question, and get ten different answers and reasons why. But if you look at a painting and ask, “Did this artist paint a circle?” you can gather much more reliable data upon which to base you performance review.

An obvious risk of objective measuring

In a utopia of well-intentioned employees and no corner-cutting or questionable morals, we can safely skip through our business dealings, free of any skepticism and without any worries in the world. But this is real life and we need to be realistic about what goes on in people’s lives.

Someone might have hit her sales goals through unethical tactics, excessive discounting or behaviors that may hurt your long-term interests; they sure look good on paper but in the real world, they might be getting up to no good.

Circumstances may have dictated that one employee may have missed their numbers because of events outside of their control or because they were pulled away to help in other areas. So to mitigate this risk, one has to take a holistic view of the situation and not be chained to purely metrics and metrics alone. One has to take into account that ethical standards and company core values need to be maintained in order to reliably lean on an objective numbers-based philosophy of job performance review.

Measurement Method and Statistics

When done properly, all kinds of interpersonal and intra-office politics fall away in the face of management using numbers and statistics.

Example: You might have a brash salesperson who rubs another salesperson the wrong way (figuratively speaking). To make it easier, let’s give them names. Joe and Bob. Bob comes to you, the manager, with a complaint — “Joe is loud and obnoxious and just an awful person! He needs to go!”

Ok, let’s see how we can resolve this. First, let’s pull up the sales numbers for the past month, and the past year on both of these employees. We might notice that Joe has terrific sales results and Bob (the complainant) has less-than-average results.

Joe is actually your top salesman — your most productive member of that team by a long way! And Bob might be your least productive. So are you really going to waste everyone’s time by pulling Joe in to your office and having a conversation with him about not bothering Bob, or tiptoeing around Bob so as not to offend his sensibilities? Probably not. You're more likely to give Joe a well-deserved bonus!

You’re not about to fire this person, or get in the way of him continuing to do a great job, are you? Bob on the hand could be taken aside and asked, “Listen, Bob, Joe is doing a great job for us. I'll maybe have a chat with him and ask if he wouldn't mind keeping it down for you... but first, your numbers are floundering a bit here. What can we do to help you improve?”

You might find that Bob is having trouble with his calls because Joe is too loud, so you can move Bob to a quieter part of the office. Or you might find that Joe is a reminder of someone in Bob’s personal life that he’s having trouble with outside of the office. The reasons could be a million things. But you wouldn’t know where to look and inquire, unless you had some reliable numbers in front of you first.

Not all employees have the same tasks and duties, responsibilities, etc. So it is difficult to measure all by one generalized metric. This is why it is important to monitor success and productivity individually by objectively measuring how well an employee is producing valuable products over time.

To do this effectively, one has to take a look at individual performance, measured against achievable goals over time, as well as team goals, department goals, and overall company goals — and how all of these contribute as benchmarks of the organizations success.

As an example, a company is tasked with building a house. You have teams of architects, landscape designers, builders, bricklayers, electrical engineers, plumbers, general contractors, inspectors, department managers, and executives of the company as a whole. Each area, composed of multiple individuals, has indicators of forward progress and criteria for advancement toward the final product of a house which has been well-built.

You can therefore measure these indicators by tracking them over time. How many bricks were laid today compared with yesterday? How many walls were erected today compared to yesterday? The accounting department can track how much income was received today vs yesterday, and so on through the departments.

Once you have your measurable items named, you can then track them over time to see how they are performing, on a comparative timeline, or a graph. This gives you valuable insights into where things improved and where they dipped off, so that you can investigate and correct or improve any areas that need attention.

In the graphs above, you can see that in June, the company had a great month, with income soaring to above-average levels. With this information in hand, you can then go and talk to the sales team and find out what precipitated this uptick so that you can strengthen and improve those things which directly led to your success.

Likewise, you can go and have a chat with your bricklayer and find out what happened in Week 3 of their progress. You might find that they didn’t have a lot of supply that week, and that will lead you to a supply chain conversation with your procurement department. Alternatively you might find out that there was a flu going round that week and the head of the bricklayers department needed to single-hand the work for a while, which led to the dip in statistics.

No matter what the reason was, until you look at the numbers, you won’t know where to start your search for areas of improvement, or areas to strengthen. But with this data, you can expand and thrive like never before.