How to Measure Employee Productivity

We’ve written at length about employee wellbeing, and how it can result in increased employee productivity – along with many other benefits!

But how will you be able to tell if your employee wellbeing program is working as it should? Well, you could talk to your employees, conducting interviews and surveys. You could try to soak up the blissful atmosphere of a business in which everyone’s happy, and everyone gets along.

Or you could measure your employee productivity.

After all, if your employees are getting better at doing their jobs, then you must be doing something right!

But this isn’t the only reason why it’s a good idea to measure employee productivity. This process will help you identify what’s going well and what’s not going so well. So you’ll be able to find areas where you can make improvements, and offer help to any employees that might need it.

So measuring employee productivity will let you know how good things are while showing you how things could be better.

In this post, we’ll explore how you can measure employee productivity in your business.

Are you measuring employee productivity in the right way?

For decades, business owners have calculated productivity by simply dividing output by input. The question was always – how much is being produced in a set period of time? And how can we increase output without increasing input?

But things were never really as simple as this. This way of thinking ignores the fact that not all workers produce “output”, and not all “output” has the same value. It also ignores the difference between quantity and quality.

Think of a factory worker who, feeling inspired, manages to produce 100 products in a day. Brilliant! But if those products aren’t made to a sufficient standard, you’re looking at a huge waste of time, money, and materials.

Or think of your sales team. Say one salesperson manages to make 50 sales in a day. Fantastic! But what if they’re all small sales? Would not his time have been better spent pursuing a smaller number of much bigger sales?

It’s a question of quality vs. quantity, and how you answer it will vary depending on who you are and what you do.

Measuring quality is hard. Some might even say it’s not something that’s quantifiable at all. But “quality” isn’t the only measure of productivity that you might struggle to quantify. Another big question to consider is – what’s the best use of time for any employee at any given point?

In the space of an hour, an employee could pursue a new sale, or address a complaint from an unhappy customer. One task might win you more business. The other might help with reputation and customer retention. So which task is the most productive use of time?

These aren’t easy questions to answer! That’s why your first step in measuring productivity is to establish a baseline.

1. Identify your baseline

Stop thinking of “productivity” in the abstract and instead think of it in numbers. Your first task is to establish some baseline metrics to measure against.

For every position in your company, from top to bottom, identify expected work outputs. For some members of the team, such as sales staff, this won’t be too difficult. But you might struggle to identify work outputs for those who work in support roles, like your admin team and your receptionists.

It’s important, though, to set expectations for every role. Not only will this help you to effectively measure productivity, but it will also help to reduce stress in the workplace. One thing that really stresses employees out is not knowing just what’s expected of them. A little clarity goes a long way.

2. Measure and define employee tasks

Not everyone can think in terms of time and motion, and for certain roles, it’s all but impossible to measure output.

So why not base your measurements on key functions of every job? For your accounting team, it could be the number of invoices sent out. For your warehousing team, the number of orders dispatched. For sales, the number of sales called made. And so on.

Next, it’s time to set clear objectives and goals for everyone. Make it clear how every role helps work towards the company’s goals. This will make all employees feel like part of something bigger – shared visions are essential for increasing employee engagement, motivation, and wellbeing.

You can evaluate how everyone’s progressing during your regular performance reviews. Assessing Progress on these goals will also help you to identify any employee training needs that might help improve productivity.

3. Monitor absence trends

Keep on top of absenteeism in your business and you’ll get some good insights into just how productive each member of your team really is.

There are a few things you need to pay attention to when looking at your absence trends. A big one is the growing issue of presenteeism. This is where employees show up to work even when they’re ill. Obviously, this is bad for health and bad for productivity.

Look out for any employees who haven’t taken any sick leave, or very little leave. How are they feeling? Are they carrying on through ill health? If so, something’s wrong. Schedule a chat and get it sorted – for their own good and for the good of everyone.

On the other side of the coin are employees who take a lot of sick leave. An employee might be exemplary while they’re at work. But if this high output is accompanied by excessive sick leave, then it might mean that their work’s making them stressed and unwell. Again, this will be bad for productivity, so get a chat scheduled and try and find a way you can make things better.

Compare your absence data to your performance data will give you a good measure of the relative productivity levels in your business. Our absence reporting system makes recording and monitoring absence simple.