How to Measure Productivity of Employees

10 min. read

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Productivity levels are always a concern for managers who are saddled with the concern of how to measure productivity in the workplace. When it comes to your team productivity and the measurement of how successfully your individual employees are contributing to the success of the company as a whole, there are a number of ways to measure and track performance.

Positive effects of measuring employee productivity in the workplace

Being able to accurately measure productivity in the workplace puts you in a much better position as an employer, but the benefits – for your business as well as your employees – are many.

For the business

Ensuring productivity in the workplace can sometimes be challenging. A Gallup survey revealed that 70 percent of U.S. workers are disengaged from their workday. Distracted by smartphones, social media, personal emails and the demands of their personal lives, most employees find it hard to focus consistently and produce the best work they can. Be that as it may, there are still measures of productivity that can be put in place so you can not only know where the strongest areas of the office are, but also where support is needed in the weaker areas.

For the employee

As a team member, it's really important to know your role, and what is expected of you when it comes to your duties. What metrics are being applied when it comes to employee performance review, and what are your baseline and benchmark targets for measuring how well you're doing on the job? These are all key things to know, otherwise you could be drifting around in a fog of "Am I doing a good job?"

Employee productivity measures are never simple input/output

Measuring employee productivity can bring vital changes to how a company operates. It positively influences both the micro (employee) and the macro (company) level of work.

Production is the quantity of output based on the input. So calculating how much output you get based on the time, resources, and money invested is actually not productivity. Productivity is more accurately described as how efficiently the resources, money, and time are being used to produce the output.

There would also be different ways of measuring productivity depending on the type of work being done. For example, a manual job would best be measured by taking count of the completed tasks or targets met having to do with those manual labors. Number of bricks laid, or number of houses built, etc. One could also stipulate that those bricks laid and houses built should be done correctly without the need to later spend an amount of time redoing the work to make it right.

Quality and quantity come into play here. Where intellectual or creative work is measured, this is particularly the case. Some examples include education (number of students isn’t as important as the quality of knowledge a teacher or instructor transfers). While they are given tools to work with, knowledge workers are responsible for their own learning, skill sharing, innovating, and are given more autonomy. And when they leave a company, the knowledge they gained goes with them.

Ways to measure productivity of employees

There are a number of ways to measure productivity of employees, and here we'll outline some of them.

1. Statistics

Measurement by statistics is an accurate barometer of performance when done right. Essentially you need to know what is being measured first, and then you can track or graph those metrics over time. A brick layer placed 10 bricks today, as opposed to 12 yesterday. The number of bricks went down, so that gives you an insight into an area that could use some improvement. A salesperson made 20 more sales this month compared to last month. Maybe the number of calls to potential clients was way up, or maybe a better sales pitch was used. Gross income for the company is up by $100,000 this year compared with last year. That is cause for some celebration And so you start to see how measuring using statistics over time can be a useful tool.

The trick is what to measure and how to interpret the stats. If things are going fairly evenly in a gentle upward trend, then not much needs to be changed. If there is a sharp decline in performance, then you'd better get involved and see what went wrong. If there is a sharp increase, then take a close look and see what caused the uptick and how you can strengthen it so as to maintain the success.

When it comes to the task of what to measure – the question to ask is "What is this position responsible for producing?" A graphic designer produces finished images and graphics. A writer produces pages or articles written. A brick layer produces walls constructed. A teacher produces well taught students who can use and apply the knowledge, and so on. What are your deliverables, and what is the most accurate measure of output of your productivity?

Once you have that nailed down, then you can track the numbers over a period of time and see where and when to get involved and make improvements.

2. Time measurement

Keeping track of the number of hours your employees work is only as useful as those hours are spent actually doing productive work and not goofing off or busying themselves with unproductive tasks. However if you are tracking time taken to complete tasks then it becomes a more insightful method.

For example, in an industry where tasks are fairly consistent, such as an automotive factory, or some other workflow that churns out the same product routinely, then you can measure the time taken to produce that same product from one to the next. If a team takes 20 hours to complete one vehicle, and then 30 hours to complete the same product, you have 10 wasted hours that might need investigating. On the other hand if the same vehicle only cost you 15 man hours then you might take a look at how the streamlined activities can be supported and implemented into standard workflows that support better time management.

3. Input vs output

This method uses the simplest productivity formula – the ratio of input to input. As mentioned above, there are other factors that need to be considered in many cases, but it is possible to calculate and show the ratio of a single input, for example, employee time that it takes for an architect to design a building or a house. In this case labor hours are your input, and a design for a house or building is your employee output. Time spent on tasks and using time frame as a common key indicator of employee productivity falls into the method above of time measurement. The use of timesheets is a common practice to measure these key performance indicators.

Depending on your industry and work environment, specific tasks, number of tasks, and what your products are, there are a number of inputs that can be considered and compared to their relevant outputs for employee efficiency. For example, a shipping company wouldn't necessarily measure time spent, unless that time comes into play for the delivery of their product – shipping lanes becoming clogged up, or trucking time slowed due to weather, etc.

A more accurate input/output for this example would be measuring the cost of fuel, vehicles, and manpower that it takes to get a successful delivery of goods to the required destination. Similarly, a construction company can measure the cost of materials and hours of work it takes to get a job done. If they then complete the job in less time, while still maintaining quality of delivery, their profits have increased as a result, and that is something worth measuring and paying attention to. Incentives might even be put in place to encourage better efficiency and quality.

Be sure you also know when & how to measure quality of work!

As a note worth mentioning, work is only as valuable as it is done well. Incomplete or unsatisfactory work requires correction and quality control to step in. This should be kept in mind since it is equally as important that quality of work is high quality – as well as efficient. When asking yourself ”how can I evaluate employee productivity” while also keeping quality in mind” the answer lies in the question.

If you have a carpenter who constantly turns in poor quality work that needs correction and additional work to fix, then it's all very well that this carpenter is building desks or woodwork projects very quickly, but they're useless to you if the customers are always complaining about shoddy handiwork. Poor quality results in double work, and that cuts into your efficiency equation quite heavily, which in turn cuts into your bottom line.

Key takeaways on how to measure work productivity

Productivity levels will vary from one company and industry to the next. Small businesses and entrepreneurs may measure their employees differently than a Fortune 500 company and may employ differing project management tools and approaches. But when it comes to your team productivity and labor productivity, there are applicable ways to measure how efficient an individual employee is performing on the job, as well as how well the company's productivity is as a whole.

It would be wise to take stock of overall productivity on regular evaluations, using productivity metrics that provide insights you can use to not only measure total output but also the achievement of company goals.