Measuring Employee Productivity

Are you measuring employee productivity in your business?  Productivity is a performance measurement calculation that tracks staff output and efficiency and measuring productivity is important in order to monitor your return on investment in staff and to identify opportunities to improve efficiency and profitability.  Measuring productivity involves quantitatively tracking staff output over time.  You can measure the productivity of your operation as a whole or track individual productivity, if you can easily isolate the output of each individual.  Performance measurement based on productivity can also provide objective data that supports your performance appraisal process.  This article examines how to set up effective systems to measure productivity.

Define Outputs for Each Role

To develop effective measures of individual employee productivity, you need to understand the job function and outputs of the position.  The starting point is to develop a job description for each role in the business, identifying the main areas of responsibility and the outputs the role is responsible for.

Develop Objective Measures

Develop quantitative measures for the key outputs of each role.  The measures should be clear, concise and relevant.  Some examples are:

1. Production output per worker in a manufacturing operation.
2. Number of customers served in a retail or fast food environment.
3. Billable hours for professional services employees or tradespeople.

Implement Reporting Processes

Track productivity over time and develop reporting processes that keep employees informed about the performance of the organisation and their individual performance.   You need to take account of extenuating circumstances which may affect individual results.  For example, employee involvement in a special project or systems or machinery failures outside of the employee's control.  Reporting can be totally transparent or you can keep individual results confidential, depending on what suits the culture of your organisation.  What is important is that employees are encouraged to pay attention to these numbers as a way to keep track of their own performance.

Staff Input

To maximise ideas for improving productivity, seek input from your staff in the design of productivity measurement systems.  Make sure that they understand how you're measuring their effectiveness and encourage them to provide feedback on any issues that are impacting their productivity and to make suggestions for improvements.

The Link to Performance Appraisal

If your staff buy in to your productivity reporting systems and monitor their own performance on an ongoing basis, your performance appraisal process should be more effective.  People are likely to take more ownership for delivering the results you're looking for and there will be fewer surprises in the appraisal process.  You need to bear in mind however, that productivity measurement does not provide a holistic assessment of an individual's work.  For example, an employee could achieve high billable hours, but not provide the level of customer service you expect.  For more information, see our article on Performance Appraisal.