How to Measure the Productivity of Employees [GUIDE]
Employees‘ productivity determines what your company and team can achieve. Ultimately, it’s what determines if your business is successful or not.
If you’re in a leadership role, the above statement is no news as you’re always searching for a productivity formula and employees’ productivity overall.
And while you might be familiar with measuring employee productivity and individual goals, do you know how to measure employee productivity thoroughly?
Dive into this article to find out how.
Tracking time together with your team helps to understand where your time goes
What is team productivity?
Productivity measures and indicates how well the team or an individual performs.
It is, in essence, a measure of efficiency – either of an employee, a machine, a system, or others – in converting inputs into outputs.
You can typically think of a ratio of the output generated (such as marketing materials, targets achieved, etc.) to the input invested ( time, resources, etc.) to determine the degree of productivity.
But how can you measure productivity with more precision? How can you truly know if your team is being productive and if you will achieve specific objectives?
Contrary to what you might think, measuring employee productivity shouldn’t require much mental gymnastics, but let’s explore that next!
Read also: Ways to improve employee productivity
How to measure employee productivity in the workplace
Accurately measuring employee productivity is a critical step of job management, along with understanding it correctly.
Productivity data will create an accurate picture for you and will inform your company’s productivity, performance, and overall profitability.
Depending on your team’s work, there are different ways to measure productivity.
By measuring your team’s productivity, you’re calculating how much work a team can produce over a given time, such as a month or a year. The team’s productivity depends on many factors, such as KPIs or productivity levels of each employee, as well as their skills and knowledge.
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Many other factors, such as team communication, work environment, company culture, and motivation levels, also profoundly impact their individual efforts and how they feel.
You’ll find the best methods to track progress and calculate productivity in many guidelines, but remember that every company and team is unique. It would be best if you selected the effective ways that suit your workplace the most.
Considering these differences, it is evident that productivity measures will also be different.
So, if you’re a manager trying to measure your team’s productivity, ask yourself the following questions:
- What type of performance can you tag as productive?
- Is there a sales or production quota that a team must meet?
- What are the most important goals of each team?
Even though there are many ways you can track your team’s productivity, let’s see how you can do it.
1. Time management at work
Managing time is the process of organizing, managing, and prioritizing it. When taking it one step further, one needs to control their time and energy for this process to be effective.
The reason for which having a good relationship with time directly impacts productivity can be deducted without any intricacies:
This way, you’d be able to maximize your time on specific tasks or projects so that you can achieve more in less time or simply achieve certain objectives faster.
Whatever the size of your business, you can monitor the productivity of your employees based on how they manage their time. Some smaller tasks, such as checking an email, may not be considered important enough to be tracked. However, numbers show the exact opposite.
According to a McKinsey Global Institute Analysis study, on average, 28% of work time is spent on email, we check email on average 11 times per hour, and 84% keep email open in the background while working.
Summing up that time, can you imagine how many hours are spent on emails in a year and never tracked and, therefore, never accounted for?
Note: I’d not suggest you measure productivity by setting specific time limits for email, but rather encourage employees to be mindful of time spent on email as a first step.
How time tracking facilitates time management
To improve your time management skills, you can add time-tracking to your routine or for your team.
If you and your employees have a hunch that you need to improve productivity but don’t know where to start, tracking time spent on all your tasks can be the first practical step.
“I’ve doubled my revenue thanks to Timeular and managed to halve how much I work.“ Valdemar Alfred, Owner of Valdefar
A time-tracking app will work as your employee productivity calculator without manual interference. It will inform your decisions with data on the following:
- job performance, as well as work performance;
- labor costs;
- company’s profitability ( including project profitability);
- productive hours employees work at;
- if you should assign tasks differently;
- administrative work that takes too much time and needs automation.
To better understand how time-tracking helps you in measuring productivity process, here are some features of Timeular, a time-tracking tool:
- It allows automatic time tracking: captures app, website, and document usage, ensuring 100% control and GDPR compliance (note: your data is stored only locally).
- With AI, it gives you automated suggestions and reminders to fill your calendar with a click based on your calendar events.
- As a time reporting system, it generates reports effortlessly with productivity trends app usage, and this way, you’ll identify patterns. You’ll then understand how to increase productivity before implementing other automated processes.
- Billable and non-billable hours tracking allows you to track non-billable and billable hours with a click.
- Leave tracking and work hours tracking, including paid and sick leave, can be done with one-click requests and automatic overtime calculation.
A productivity tracking tool can even be necessary if you work remotely or have a hybrid setup.
Your productivity measurements will boost your employee’s productivity and provide crucial information to keep your projects running smoothly. Moreover, it can ensure greater accountability among employees.
To accurately determine employee productivity, you need to know how much time was spent producing the total output, and you need to know as precisely as possible.
Curiosity: Did you know that Timeular is one of the best productivity apps?
2. Quality vs. Quantity
Steve Jobs already said it, so it’s not me:
“Quality is more important than quantity. One home run is much better than two doubles.”
Without getting into the academic definitions, let’s first establish simply what quality and quantity mean:
quality is “how good or bad something is,” meaning quality is a measure of excellence
the quantity represents “the amount or number of something, especially that can be measured,” meaning quantity is the extent, size, or sum of something – a numerical value.
But how does all this fit into work
It’s fairly common for management to measure employee productivity based on quantity. But this way of measuring productivity is limiting, both for an employee’s performance and as well for the company’s performance overall.
If you’ve been measuring productivity in the standard way, here are some methods you can start using (I’ll get into more details later on):
performance metrics, quality control checks, customer satisfaction and feedback, peer reviews, error rates, the efficiency of the work process and output, innovation, and improvement capabilities.
Want to understand the differences between productivity and efficiency for more clarity?
3. Clear KPIs and goals
To determine if your team is productive, you can compare how your employees completed their work goals individually and as a team.
Check your team’s productivity by looking at their goals and those they failed to achieve. This is one of the reasons why setting goals is essential to your team; it’ll allow you to compare expected vs. actual performance.
If your team fails to reach its goals consistently, an effective and direct measure should be old-fashioned, well-done, and clear communication.
Remember, making your employees put in more labor hours is not indicative of increasing productivity; it’s rather counterproductive. The amount of time someone spends at work is not the same as the number of hours they’re working.
So, how do you proceed from here, and what do you communicate?
Reiterate their goals and KPIS. Employees who are more familiar with their goals are proven to be more productive than employees who are less informed on the topic.
An employee feels a deeper connection with their company and has a greater sense of purpose and belonging when they know what is expected from them.
Increasing your team’s productivity may be as simple as reminding them about your organization’s goals and breaking the achievement of those objectives into smaller tasks.
- Check out: Best productivity podcasts
4. Performance tracking
Keeping track of your employee’s performance is an objective and practical instrument for measuring employee productivity.
So, measuring productivity in this case can be assessed by checking (depending on the role):
sales targets, customer service ratings, project milestones, bugs fixed, code quality, marketing strategy effectiveness, and others.
Keep in mind that many external factors can lead to poor results at times, so have a holistic approach to assessing.
Nonetheless, performance tracking involves different indicators than goals and is much easier to gauge. For instance, it accounts for whether your employees have a good relationship with their peers and contribute to the organization’s culture.
5. Planned-to-done ratios
The planned-to-done ratio measures the percentage of tasks that were completed to those that were assigned.
By analyzing your employee performance against a given list of tasks, you will get some deep insights into your team’s capacity and potential for productivity.
Productivity software, such as Timeular, is a practical tool for getting this information.
Let’s suppose your team has a lot of work in the pipeline. They must complete ten tasks monthly to meet the deadlines and given objectives. However, if they could only meet five tasks a month, the planned-to-done ratio is 50%.
Therefore, if you have a low planned-to-done ratio, it may be time for you to hire more team members to finalize the workload, reduce the current amount of work, or rework your planning process to make it efficient.
TIP: Use one of the top employee time-tracking apps to measure employee productivity and increase business efficiency.
The benefits of gauging your team’s productivity
A study from SHRM shows 95% of managers are unhappy with how their company conducts performance reviews.
This frustration has led to some companies altogether abandoning annual reviews. However, managers must understand the importance of it and how it can benefit both the employee and the company.
Here’s a list of the four most significant benefits of measuring productivity and performance.
1. Enables employee growth and development
Managers who don’t accurately and carefully measure their employee’s performance will be out of touch with their teams’ successes and failures.
It essentially makes it impossible to provide constructive feedback and get results. Without valuable feedback, employees will be less able to improve, grow, and develop, and that will make them move on.
To be a great leader, increase employee satisfaction, and enable people to grow within their roles continuously.
According to a study from HBR.org on giving and receiving feedback, 92% of the respondents agreed with the assertion, “Negative (redirecting) feedback, if delivered appropriately, is effective at improving performance.”
The truth is that people want to know how they’re performing to know how they can grow. Therefore, accurately measuring employee performance helps you deliver accurate, targeted, specific feedback if it’s done right.
2. Create goal alignment
Working with no specific goal in mind is dull. Everyone working with no particular purpose ends up feeling frustrated and unmotivated.
Employees do perform better when they have goals to strive for and work towards. Measuring employee performance will allow any manager to adjust and regulate those goals by providing insight into whether someone is performing well or not.
However, goal setting must be a conversation about what the company needs and how the employee can contribute, not set only by managers with no employee input.
When goals are set without employee input or performance data, they can be too ambitious and won’t allow the company to grow. Also, it can burn out people and make them feel unmotivated. On the other hand, when employees have goals that are too easy, the company needs to tap into their full potential.
So, if you’re leading a team or want to build a high-performing team, you should regularly measure employee performance and discuss with employees about their projects, goals, and ambitions.
This way, they are less likely to be confronted with burnout or disengaged teams and more likely to have employees who meet goals.
3. Cost reductions
When you accurately track your time and measure your team’s productivity, you have a better sense of where you should invest.
What is making your company lose money?
When you calculate labor productivity using the output ratio and the money you invested in the production process, you can identify things that require a more significant or minor investment.
Once you’ve analyzed all the information, you might be surprised by how much money you can save by tracking and comparing productivity metrics over time or smartly investing elsewhere. This is one of the smartest ways to improve business efficiency
4. Create a fair culture of recognition
Sadly, many companies don’t pay much attention to this. If you accurately measure your team’s performance, you also accurately compensate employees with promotions, internal role changes, or other things.
By analyzing every employee’s performance, you can ensure that you fairly compensate top performers by giving them the recognition they deserve and supporting your low performers. Improving individual performance helps employees contribute to the company’s success, but it also helps with employee work-life balance. Keep in mind that work, in general, can produce effects on someone’s mental or physical health, too.
When employees think that low performers are tolerated without consequences, it can cause frustration and an unpleasant environment.
Read our blog and find the best ways to keep your team motivated to be more productive
“I’ve doubled my revenue thanks to Timeular and managed to halve how much I work.“ Valdemar Alfred, Owner of Valdefar
Conclusion
Hopefully, this article equipped you to carry out a thorough productivity measurement process and helps enhance your company’s productivity.
Keep in mind that different teams perform differently within a company, so it is impossible to evaluate their overall productivity on the same criteria. For example, what makes a marketing team successful will differ from what you expect from a software development team.
Moreover, some standards might also differ if your team works in the office full-time or remotely.
However, understanding how well your employees perform is essential for evaluating your business development and improving results.