Everything You Need to Know About Employee Productivity


Business owners cannot afford to ignore employee productivity while disengaged employees cost United States businesses $450 to $550 billion in wasted productivity every year.

What is Employee Productivity?

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To properly address employee productivity in relation to existing business operations, we must understand the definitions of both efficiency and productivity. Efficiency is the system that uses the fewest amount of input to produce the greatest output quantity. Productivity is the process of being efficient, productivity is efficiency in practice. Both efficiency and productivity are measured relative to the average metrics of employees doing similar labor.

In the workplace context, productivity is the process of ideally using accessible resources to produce the highest quantity of quality goods or services. In a business context, resources are variable, ranging from labor to inventory. Depending on your business, your product or service includes any objects or operations that generate business profit.

There are seemingly endless resources, services, and products that are dependent on each individual business that business professionals must consider. Business owners can improve employee productivity by gaining a better understanding of both efficiency and productivity and the ways in which they affect the business bottom line. Regardless of the specific industry, employee productivity is indispensable to every business's success and durability.

Why Does Employee Productivity Matter?

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Employees are the most important asset and investment that any business possesses. In order for employees to be considered a good investment, they must produce more money than their wages cost the company. If employees are not productive, they will likely not return as much income to the company as they cost and many times can actually end up costing the company money. Taking this into consideration, business owners realize that improving employee productivity directly reflects in their profitability and translates into a more successful and longer-lived company. Additional benefits of productive employees include-

  • Motivation- Employees who are productive can help to motivate other employees to rise up to their level. Employees who are acknowledged for their hard work will often boost morale and overall company culture
  • Customer service- Productive employees are more likely to provide faster and better customer service than unproductive employees. Pleasant people will make your customers feel more comfortable reaching out for assistance and will likely result in more referrals and future business propositions
  • Growth- As a result of increased revenue and more efficient employees, companies will have more resources available to direct towards expansion and growth

Is Efficiency or Productivity More Important for Business Success?

Although the definitions of efficiency and productivity may appear very similar at surface level, they have much different functions. Great companies focus more heavily on productivity rather than efficiency. While efficiency is about producing the same with less, productivity is about producing more with the same. Efficiency is more focused on decreasing, such as by cutting employee hours or onboarding less new talent. On the other hand, productivity focuses on expanding output. By doing more with the resources they have, businesses can optimize and continue to grow, instead of downsizing.

Business professionals who are focused on efficiency will look for wastefulness to eliminate and minimize wherever possible. Business professionals who are focused on productivity will look for places to improve and grow. It is nonsensical to project long-term sustainable profit boosts if the managerial focus is on cutting down instead of expansion. Topline company growth is improved when threats to productivity are confronted, and effort is focused on expansion instead of restriction.

How to Measure Productivity

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Productivity can be measured in the workplace through the use of productivity calculators and various feedback systems. Productivity is fairly difficult to measure as there are often many factors to consider in understanding the complete picture. Some tasks, projects, and goals are difficult to quantify and translate into in the productivity equation.

For example, how can the productivity of a lunch meeting be quantified in comparison with the same time spent organizing the office space? It can be difficult to understand the long-term versus short-term effects of certain actions. Measuring the quality of an employee's work is much more difficult to do than measuring the quantity of it. The following tips will assist professionals in measuring productivity in the workplace-

  1. Performance reviews- Use consistent performance reviews in order to acknowledge reached benchmarks and analyze overall progress
  2. Feedback surveys- Providing customers with an opportunity to evaluate their customer service experience will help business owners to recognize which employees have room for improvement, and which employees deserve special recognition
  3. Clear expectations- To increase performance, an employee must be sure what their role responsibilities and expectations are
  4. Analyze tasks completed over time spent- Instead of focusing on hours spent on individual tasks, it helps to analyze productivity on a broader level by looking at a variety of tasks and a group of employees instead of individuals

How to Improve Productivity

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Business professionals can apply productivity tips into business operations to promote employee efficiency, effectiveness, and accountability. Below are tips on how to improve employee productivity-

1. Practice and promote self-care- The top-rated source of stress for Americans is job stress. Stress has massive implications on the physical and mental health of both yourself and your employees. Job stress leads to burnout, high turn over rates, and a decrease in overall workplace productivity.

  • Take care of yourself in order to take better care of your employees and your business. Make sure you get enough quality sleep, eat a healthy diet, and exercise routinely
  • Set aside free time to spend doing non-business activities you love every day. This time is fundamental for sustaining physical and mental health
  • Actively promote employee self-care to enhance work satisfaction and productivity
  • Allow balanced social media use at work, trusting in your employee's self-control
2. Engage staff-
  • Recruit new hires that compliment your existing staff and company culture
  • Purposefully and adequately train during the onboarding process
  • Invest in employee growth and skill development
  • Make sure you check in routinely with existing employees to affirm they still feel challenged by and engaged with their work
3. Communicate effectively-
  • Avoid unnecessary emails whenever possible
  • Institute and maintain standard communication etiquette
  • Invest in communication software and apps
  • Decrease redundant and nonessential notifications
  • Practice mindful communication
  • Decrease communication gaps
  • Focus on the future instead of the past
  • Positively reframe setbacks and missteps as learning opportunities whenever suitable
  • Model positive, consistent, and honest communication
4. Encourage autonomy- Both psychologists and productivity specialists have determined workers are strongly motivated by autonomy. Empowering employees to self-manage when appropriate will-
  • Reduce managerial workload
  • Avoid unproductive micromanagement
  • Hinder unproductive power dynamics among managers and employees
  • Decrease unhealthy workplace relationships
  • Reduce workplace disputes

Employee Productivity and Motivation

Business professionals must understand what motivates their employees in order to maximize productivity. Motivation refers to the needs, wants, desires, or urges within a person. In the workplace, motivation can be harnessed to increase employee productivity by encouraging employees to actively work towards their business's goals.

Motivated employees are more satisfied and productive. There is also a butterfly effect, motivated employees will likely motivate other employees and improve overall company culture in a positive way. Likewise, a friendly and happy work culture will help to further motivate employees. There are many ways that employees feel motivated, range from financial compensation from the perception of working in a safe and stable environment.

How to Motivate Employees

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Many business owners are very motivated people who have a strong tie to their vision and the ideas surrounding the success of their business. Unfortunately, this same motivation is harder to come by with employees, who may lack the same investment in a company's profitability and longevity.

Studies have found that only 69% of employees feel they are putting all their efforts into their work. Fortunately, there are many ways to motivate even the most unambitious employees, including-

1. Incentivizing- Establishing an employee reward program boosts overall profits by an average of$104,000 each week. 85% of employees report that they feel more motivated when offered an incentive for exceptional work. Incentives can come in many different methods. Some examples include-

  • Salary raise
  • Cash bonus
  • Gift cards
  • Additional paid time off
  • All-inclusive vacations or cruises
  • Meals out
  • Team building retreats
  • Award ceremonies

Employees can be incentivized individually or departmentally. Incentivizing on a team or department level helps your team work towards a common goal that they will all reap the benefits of accomplishing together. As a result, team members will likely be more motivated and accountable in their roles and responsibilities

2. Setting realistic goals- Develop goals that embody your company culture, core values, and mission statement. Clear-cut goals go a long way to help employees keep productivity, morale, and accountability high. Instead of shooting for an unrealistic long-term goal, instead, try setting many smaller goals that will eventually get you to your long-term objective.

Consider using the SMART goals method. SMART stands for Smart, Measurable, Attainable, Relevant, and Time-bound. Make sure that established goals meet the defined criteria of the words included within the acronym

3. Communicate clearly- Communication is essential to productivity. Remember to consider the implications of communication that is not directly correlated with business duties, deadlines, and goals. Avoiding unnecessary communication mitigates the danger of employees being flooded with unproductive notifications, keeping your workforce focused. Business professionals should aim to distribute only pertinent information on a timely basis, appropriately incorporating both progress updates and check-ins.

Communication should be effectively practiced to help team members understand their responsibilities. Clearly communicated expectations encourage transparency and promote feedback. Established effective communication protocol will decrease communication gaps and greatly increase employee productivity

4. Radiate respect- Regardless of someone's position or role in the company, it is important that they feel included and valued. Consider having an open-door policy and letting your employees know that you are easily accessible to them. Employees will be much more likely to give honest feedback and to feel motivated in their work when they feel respected by their company and leadership


  • While efficiency is the method of using the lowest amount of input to produce the greatest output quantity, productivity is the process of being efficient
  • Both efficiency and productivity are estimated using a metric of the average of employees doing similar labor
  • Employees who are not engaged cost United States businesses $450 to $550 billion every year
  • Employees are the most important asset and investment of a business, their productivity determines your business's profit
  • The three main benefits of improving employee productivity are increased motivation, customer service, and growth potential
  • Although they are often used interchangeably, efficiency and productivity are very different. The most successful companies focus more on their business's productivity rather than its efficiency
  • Business professionals can measure productivity in the workplace with productivity calculators and feedback systems
  • Psychologists and productivity specialists agree that employees are strongly motivated by autonomy, which reduces managerial workload and curbs unproductive power dynamics between managers and employees
  • The term motivation encompasses the needs, wants, desires, and urges found within an individual. In the workplace setting, motivation increases employee productivity and encourages employees to actively work towards your business's goals. Understanding what motivates employees will help business owners maximize productivity
  • Only 69% of employees feel they are directing all their efforts into labor at their jobs. Methods to motivate employees range from incentivizing to cultivating a culture of respect