How to Accurately Measure Employee Productivity

Measuring Employee Productivity April 29, 2022

Dakota Sheetz

Writer

Introduction

As a business owner or manager, your job is to keep operations running smoothly. For that to happen, you hire staff and manage their needs along with your expectations. But are you able to accurately measure employee productivity? Do you know how your team is spending their time?
Productivity is how you achieve profit. Therefore, it's worth learning the tracking process and its importance.

Why Tracking Employee Productivity is Important

When you hire someone to do a job, you usually know and trust that it will get done. However, when you've got dozens or hundreds of workers, it's a little harder to keep track. The work is getting done, so why do you need to check?
The reality is, not measuring productivity is a missed opportunity. There are many benefits associated with using employee productivity apps and software.
Conserving and Redirecting Resources
The costs of running a business are ever-increasing. The natural response to rising costs is for a business owner to work out where they can cut them. That might involve redirecting resources or conserving them where possible.
That might seem like an impossible job without analyzing workflows and tracking workloads. If you can't track your output versus in your input, how do you know what changes to make?
That's why having a system in place to monitor the completion of tasks and their costs can be of such great benefit. Every step of the way, you can have your finger on the pulse of how your business operates, and how it could be better.
It Can Boost Achievement
When carried out appropriately, employee productivity measurements can boost achievement. You and your employees can sit down and work out where you can make changes.
These don't necessarily have to be employee-focused. For example, you may notice that meetings could become a company-wide email, instead. This small change can free up time and resources.
It Can Improve Workplace Communication
The goal of measuring employee productivity is to ensure your business operates efficiently. A happy side effect is that you can work with employees to fix issues they might have.
They may be unhappy with countless interruptions throughout their day. They may also be frustrated with an archaic record and filing system. When you highlight these blips, your workplace dynamic can change for the better.

How to Measure Employee Productivity

With improved relationships and financial benefits, you might see value in productivity measurement. But how do you go about doing it?
Measure Your Productivity Correctly
It's easy to make the mistake of involving wages and salaries in productivity. Of course, higher salaries can present problems, but not in the way you might think.
The problem is not about paying workers too much. It can often be that they produce too little in return. To measure output correctly, focus on labor dollars per product, not dollars per hour.
An excellent formula to follow is- Productivity = units of input/ units of output
One of your best employees may not always be the one that's paid the most. They may be the one that produces the most significant profit margin in the products you create.
Set a Baseline
Every job is different, which means how you measure productivity might be too. You can often gain an understanding of business performance by setting baselines for each role. With those base metrics to measure against, you can at least gain an understanding of minimum work output.
Of course, this may not be useful for all positions, such as administrative staff. But for sales and even hospitality, it can put you in good stead to measure accurately.
Measure Tasks, Rather Than Hours
Productivity software is an excellent way to get a grasp on business input and output. Still, you can also take it one step further by measuring tasks, as opposed to hours. Focus on critical functions of a job and see how they compare.
For example, you may like to focus on the time spent serving customers, how many sales calls your team makes, and the number of invoices they send out. With consistent data analysis over several months, you can start to see patterns playing out.

Key Takeaways

Productivity and profit go hand in hand, which means you can't typically have one without the other. Measuring employee productivity can be how you get the most out of your team and keep standards high.

Tracking employee productivity can provide a baseline and minimum expectation.
It allows you to redirect and conserve resources.
You can analyze whether your output to input ratio is healthy.
It can have the welcome benefit of promoting workplace communication and improved achievement.

When you go about measuring productivity in the right way, with software and beneficial formulas, you can set your business up for success. Never be afraid to analyze your business in a way that futureproofs it.