How to Measure Employee Productivity

How to Measure Employee Productivity

August 16, 2021

Measuring employee productivity can bring many benefits to any business. However, bringing actual positive changes to your business practices requires a deep understanding of productivity itself, setting up goals, and seeing them through. We are here to bring you the best productivity measurement tips and tricks, and help you grow your business.

Defining Productivity

The most bare-bones definition of being productive would be doing things quickly and efficiently. In other words, a productive employee is a worker who does more work in a set period, while not sacrificing the quality of the final result.

Therefore, employee productivity measurement should account for both the quantity and quality of the work being done. This begins with defining what productivity means in your specific case. After all, productivity in an IT company is something completely different than productivity on a building site.

Likewise, productivity means different things depending on the position of the employee and their job description. Hence, you should be flexible both in measuring productivity and the methods to increase it.

Labor and Employee Productivity

When it comes to manual labor, productivity is proportionate to the ratio of input vs output. In other words, labor productivity measures the time, energy, and material resources against the quantity of the final product. The productivity rises with the number of products produced and decreases as time, energy, and resources increase.

There are multiple solutions to how to calculate the employee productivity ratio of manual labor. The two most commonly used ones are

  • multifactor labor productivity: finished product divided by the sum of hours worked and capital invested (product/(hours + money))
  • total labor productivity, which accounts for all means invested in a product: (total products/(hours + money + energy + material + other production expenses)

Other Ways of Measuring Employee Productivity

We live in a technologically advanced world, with a variety of occupations that don’t have a physical product as a result. Additionally, even the companies that focus on production have a variety of tasks that don’t result in a product. This is especially prominent in the IT and creative industries. Other examples include education, finances, the medical field, etc.

This, naturally, means the abovementioned methods don’t apply. That is why many organizations have to apply different methods for employee health and productivity tracking. First and foremost, you will need to define the results of your work. These are called units of service and apply to the vast majority of non-labor employees.

Units of service depend on the job and can be vastly different. Their measuring is also varied and has factors like quotas and benchmarks. Others, like teaching, can only be tracked, as their measurement only reveals itself when standardized tests are conducted.

We cannot go into the specifics of each industry, but our solutions can be applied to a broad spectrum of office jobs.

Can Time Tracking Define Employee Productivity Measurement?

The integration of computers and smart devices in our everyday lives made tracking different metrics accessible to any employer and employee alike. Modern time tracking is immensely different than the old clock-in approach. Most tracking programs include measuring factors other than time. In other words, different time tracking platforms can be used to assess and increase employee productivity.

There are a lot of software solutions out there, but before you choose the one you will be using, you should get acquainted with some basic practices for successful time tracking. Then you should devise a plan and define the metrics that are the most important to you. These metrics differ from one company to another, but the most commonly used ones include

  • Output volume
  • Time estimation vs actual hours worked
  • Profit vs resources (material and otherwise) you’ve invested in a project

employee productivity

Once you know what to look for, you can choose your preferred software and start tracking time. Getting realistic results will take some time, and the initial estimates may be highly dependent on the nature of your current jobs. Hence, you should take the time to get enough data to build a clear picture of your strong suits and shortcomings. Only then can you reconsider the way you work and implement new business practices.

Which Time Tracker to Choose?

There are many factors to keep track of if you truly want to increase productivity. You may think precision is the key, but this doesn’t always have to be the case. While automatic time trackers will be precise down to the second, they don’t always bring accurate data.

Some trackers will track employees’ every keystroke, and even take screenshots at random times. This will bring you a lot of data that gets increasingly overwhelming to go through. This doesn’t mean you should forget the idea of time tracking software. This is true because regular Excel sheets employees fill themselves can also get confusing and a pain to go through.

In other words, you need to consider your employees as well. Tracking every move and forcing them to be accountable for every second of their workday isn’t going to make them more productive. Moreover, it is more likely to make them resentful, since they’ll feel like you don’t trust them, or they’re not doing enough. This is bound to put a lot of pressure on them and create an unpleasant work environment.

On the other hand, analyzing the timesheets employees submit on their own takes a lot of time and energy. Your project managers will have to be on top of everyone’s work at all times, as well as project health. This can work in a smaller organization, at least for a while. However, as your business scales up this will get overwhelming.

To put it plainly, the best way to get the accuracy you will need to draw important and correct conclusions is to combine a great time tracking software with the human factor. Electronic timesheet software emulates the best qualities of Excel sheets while also doing the necessary calculations and noticing trends in the background.

How to Improve Employee Productivity Through Time Tracking Software?

Reports good time tracking software provides should be enough to point you in the right direction. This is true because they point you to current problems your company is going through. They also provide a project health overview, since you can see whether you’re on track both time- and resource-wise.

As we have previously mentioned, the time a project takes isn’t the only factor isn’t the only indicator of productivity. The money you invest and the profit coming from the projects are equally important.

Sometimes, productivity will depend on your employees finding different methods of working or managing their time. This can be applied both to individuals and teamwork. On the other hand, sometimes you’ll need to make systematic changes to the way you structure business, add new team members or negotiate better contracts with your clients.

All these elements of productivity are covered in most time tracking software solutions that rely on timesheets. Additionally, the programs can show which employees are at the top of their game, and which ones need more guidance or simply don’t put in the effort they need to.

You can have conversations with individuals, teams, team leaders, and managers to level out the playing field. Find out more details about the reasons for underperforming, and remember that using timesheets as a way to punish underperformers only leads to fear and resentment. This, in turn, leads to inaccurate reports. Instead, try giving more opportunities and suggesting different productivity tools that can eliminate the problem.

Planning for the Future

However you decide to rectify the productivity problems in your company, you should consider the future. Your solutions need to be sustainable in the long run and help your long-term goals. That is why we insist on improving all the problematic elements of your business, and not only insisting that your employees work harder and be productive for 8 hours straight.

Planning weekly or monthly workloads for your employees according to their abilities is a good place to start. To do this successfully, you’ll need to understand how your teams work. This is where timesheets prove their usefulness. They are a great way to understand what makes your teams tick, and which members are more efficient with certain types of tasks.

This knowledge is truly valuable if you want to restructure the workload for maximum efficiency. Keep in mind, efficiency can mean different things in different positions – it can be measured by

  • Creativity
  • Speed
  • Customer satisfaction
  • Accuracy

and other factors. Hence, you’ll need to create a different approach depending on your industry and the dynamic of your teams.

How to Actually Increase Employee Productivity?

Many tips generalize and claim to be the only solution. Yet, as you know, all businesses are different. That is why our advice is not to listen to any advice that offers an instant solution. Research the ways companies similar to yours (whether by industry or work organization) improved their efficiency. Then think about the ways you can adjust their methods to your needs.

Some positive business practices show immediate results, while others will take some time. In other words, you should continue tracking time and review the reports regularly. This requires deep analysis. You will have to learn how the moving parts of your entire business affect one another. And, the best way to do that is through regular check-ins.

That is why we suggest a gradual implementation of different solutions. Be aware that your employees won’t be thrilled if you make several different changes at once. Hence, the gradual approach has better chances of working.


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