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How to measure employee productivity

How to measure employee productivity

Gauging staff efficiency and productivity is fundamental for any prosperous enterprise. While the measure can look a bit different based on types of business models, organizations can learn how to measure the productivity of employees by doing things like assessing employee performance, setting improvement goals, measuring output, or gathering feedback to ensure optimal outcomes. It’s not always easy to know where to start when measuring employee productivity, but we can help. 

Keep reading as we look at critical steps to take when measuring employee productivity — from establishing a baseline and defining objectives to conducting skills assessments and gathering feedback — so you can foster and improve employee productivity and reach short- and long-term goals for your business.

1. Establish a productivity baseline

Establishing a productivity baseline helps employers and employees better understand company goals and objectives. It also provides clarity regarding evaluating quantity and quality of work, conducting skills assessments, gathering employee feedback, and analyzing company culture.

Businesses should consider qualitative and quantitative measures when setting targets for specific tasks or projects. In addition, companies must evaluate subjective and objective criteria when setting goals — things like customer satisfaction ratings, hours put in per week, and duration of individual job or team assignments accomplished. 

The time spent assessing these individual aspects is well worth it, too. For example, though it feels counterintuitive, research shows that working longer hours doesn’t necessarily equate to more team productivity — one study found productivity sharply declines when people work more than 50 hours per week. Companies must also look at how efficiently resources are used to ensure maximum ROI.

As baselines are set, you can leverage data-driven productivity metrics such as key performance indicators (KPIs) to rate progress against pre-established objectives and pinpoint improvement areas. 

KPIs might include:

  • Completion rates for particular tasks or projects within stipulated time frames
  • Accuracy levels attained when executing specific types of tasks
  • Customer service ratings
  • Response times
  • Turnaround times
  • Cost savings realized through process optimization efforts

The above can provide insight when measuring employee productivity relative to established benchmarks.

2. Define the goals and objectives of your business

Defining goals is critical in measuring employee productivity and efficiency. Objectives help determine where your organization needs to improve or increase overall productivity to achieve desired results.

Once goals are set, begin asking: 

  • What are the key performance indicators (KPIs) that will help you measure progress? 
  • Are there any benchmarks particular to your field or industry that should be considered? 

Once these have been identified, it’s time to set realistic but challenging targets for each metric. 

You should also consider how employees can contribute towards achieving those goals. For example, if customer satisfaction is a key goal, setting expectations around service delivery times or response rates can help ensure everyone understands their role and how to meet their objectives. Similarly, if increasing profitability is a priority, look at ways staff can reduce costs while maintaining quality standards.

3. Evaluate the quantity & quality of work

Evaluating employees in terms of both quantity and quality of output is critical for any business to ensure personnel is achieving maximum results. 

Measure the outputs against the input

To evaluate the quantity and quality of work, it’s important to first understand the basic productivity formula: output divided by input.

Output can be measured in terms of time or volume. Input refers to resources used to complete a task, such as labor hours or materials.

A simplified real-world example of the productivity formula is a company generates $100,000 in products to be sold (the output). Doing so took 2,000 hours of labor (the input). Therefore, you calculate labor productivity by dividing 100,000/2,000, where productivity rate = 50.

Consider the weight of quality

The weight of quality should also be taken into consideration when evaluating employee performance. Markers can be determined through things like:

  • Customer feedback
  • Reviews from colleagues 
  • Supervisor or manager evaluations 
  • Objective measures like accuracy rates 

While it’s important to strive for high-quality results to maximize efficiency, keep in mind that more work doesn’t mean better work. In fact, research tells us that multitasking — doing two things at once, usually to try and get more done in a shorter time — cuts the efficiency and quality of both tasks.

4. Conduct a skills assessment

Conducting a skills assessment ensures that workplace productivity measures up. Use skills assessments to spot areas where employees may need extra training, support, or resources. In addition, by assessing the skills of their workforce, businesses can better allocate resources and create opportunities for advancement.

The first step in assessing skills is establishing a baseline of current performance levels. By taking stock of what employees are currently doing, it’s easier to determine whether they’re meeting goals and objectives. Once the existing proficiency has been ascertained, it’s possible to appraise the amount and excellence of labor generated by each worker or team member.

5. Garner employee feedback

Employee feedback is an invaluable tool when measuring productivity. Asking employees about their experience will help identify issues that could hurt team productivity, like lack of resources or inadequate training.

To ensure accuracy, it’s important to use multiple methods for gathering employee feedback, including: 

  • Anonymous surveys
  • Focus groups
  • Interviews with individual employees

Ask questions that cover various topics related to job satisfaction and performance expectations. For example, inquire about employees’ perceptions of their workloads and the assistance they get from management and supervisors to get a sense of how enthusiastic the team is and if modifications are necessary for improved productivity. 

6. Look into company culture

Knowing how to measure the productivity of employees means looking at company culture, which has a significant impact. Poorly managed and unhealthy cultures can lead to decreased motivation, low morale, and, ultimately, lower employee output. 

Some research suggests that companies with positive cultures and high engagement rates have a 21% higher productivity rate than those without. By contrast, other studies show that toxic corporate environments are 10x more likely to contribute to attrition. 

How can you enhance corporate culture? 

A focus on mental health is key. Creating an environment where employees feel comfortable discussing mental health concerns is essential for maintaining workplace well-being. Offering access to mental health services like Talkspace online therapy can be beneficial in creating an open dialogue and ensuring employees receive the support they need.

It’s also vital to understand how job satisfaction plays into employee productivity. According to one study, happy workers are 13% more productive than unhappy ones, so ensuring your workforce is satisfied with things like work conditions and benefits packages pays off. By offering flexible working hours or providing wellness programs, you can create an environment where team members feel valued and appreciated, resulting in increased employee engagement and productivity across the board.

Ensure your workforce’s productivity measures up with Talkspace

Wondering how to measure employee productivity? It’s no small task. First, it’s important to establish a baseline and set goals and objectives that align with a company’s culture. Evaluating the quantity and quality of work and conducting a skills assessment is also key. Additionally, garnering employee feedback can provide insight into areas needing improvement or adjustment. Finally, recognizing productivity is also essential since research indicates that not acknowledging performance could be the number one factor in driving out productive employees. 

With Talkspace, employers have access to an innovative mental health solution that helps improve employee productivity while providing employees with access to on-demand therapy for employees anytime, anywhere.

By investing in mental health solutions like Talkspace for their workforce, employers will see real results: happier employees who feel supported at work, leading directly to greater overall workplace productivity levels — a win-win for everyone involved.

Sources:

  1. Pencavel, John. “The Productivity of Working Hours ,” April 2014. https://docs.iza.org/dp8129.pdf. 
  2. “Multitasking: Switching Costs.” American Psychological Association. American Psychological Association, March 20, 2006. https://www.apa.org/topics/research/multitasking. 
  3. Harter, Jim. “Employee Engagement vs. Employee Satisfaction and Organizational Culture.” Gallup.com. Gallup, April 17, 2017. https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx. 
  4. Sull, Donald, Charles Sull, and Ben Zweig. “Toxic Culture Is Driving the Great Resignation.” MIT Sloan Management Review, January 11, 2022. https://sloanreview.mit.edu/article/toxic-culture-is-driving-the-great-resignation/. 
  5. “Happy Workers Are 13% More Productive.” University of Oxford, October 24, 2019. https://www.ox.ac.uk/news/2019-10-24-happy-workers-are-13-more-productive. 

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