Employee productivity is one of the key indicators of a company’s success. The more productive your employees are, the more products or services they can produce, and the more you have to sell to the marketplace, while holding at least one factor of production—the employee—constant.
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Companies, therefore, would obviously want to increase employee productivity. The challenge many of them face, though, is how to measure productivity in the first place.
If you have a production company where each employee is solely responsible for his or her own output, this is relatively straightforward. However, that’s not the situation most businesses actually face.
In this post, we’ll discuss how to develop metrics for measuring employee productivity. In a follow-up post, we’ll discuss how to encourage employee productivity in the measurement process.
HR Technologist suggests some steps for developing such metrics.
Establish a Baseline
Before you can measure improvements in employee productivity, you need to have a starting point from which to measure improvement. “Calculate the achieved output for an average day of work for a team, function, and pan-organization, dividing it by a number of employees. Make sure you consider outlier contributors who outperform and underperform to know where the action is needed,” HR Technologist writes.
Enlist your employees in the process as they have a vested interest in demonstrating their own productivity and know their work—and related outputs—best.
Identify Benchmarks
If you were the only company in your industry, it would be difficult to determine how well you are doing in terms of employee productivity. But that is almost certainly not the case. Take a look at your competitors and use their productivity as a benchmark for your own.
These types of data can be found through secondary sources, often available through industry trade organizations and associations that may track data in the aggregate.
Define Tasks
“Tasks are of two types, i.e., tangible (for example assembly line production) and intangible (for example managerial output),” says HR Technologist. Ideally, your tasks will be defined as objectively as possible in terms of inputs and outputs.
For intangible types of tasks, like managerial output, it can be helpful to think about the results (or outcomes) you’re looking for. For instance, one desired outcome of managerial output might be length of employee tenure; another might be related to specific questions on an employee engagement survey.
Develop Comparison Rules
It’s important to define the proper “output” when determining productivity. For example, should a commercial artist be measured by how many pieces of art he produces? Or the value of the art produced? Should a grant writer be evaluated based on the number of grant proposals written—or the amount of funding attained?
Employee productivity is a key goal for any business. The first step in improving that productivity is measurement. Here, we’ve discussed how to develop metrics for such measurement. In a follow-up post, we’ll discuss how to get your employees actively engaged in helping to implement those metrics.