Measure productivity by evaluating output over a specific time period, such as tasks completed or goals achieved. Use metrics like revenue per employee, units produced, or customer satisfaction scores. Tools like time tracking software and performance reviews can help assess individual and team efficiency.
It’s no secret that our society is obsessed with productivity. Employees want to find ways to do more in less time to accelerate their careers. Business leaders want to maximize their efficiency to increase their revenues. Government officials want to improve outputs to drive economic growth and prosperity.
The real challenge is figuring out how to measure productivity in a meaningful way. How do you measure something as intangible as productivity?
In this post, we’ll break down a few common techniques for measuring productivity in the workplace.
Related: Skills Gap Analysis
The Productivity Formula
One of the most basic ways of measuring productivity is by using the productivity formula. This formula calculates the quantity of output per unit of input over a specific period of time. Outputs include revenue or units of finished goods, while inputs include things such as raw materials, labor, or capital assets.
Output/Input = Workforce Productivity
As an example, let’s say your company generated $60,000 worth of goods in 1,400 hours. To calculate the labor productivity: $60,000/1,400 hours = $43 per hour of work.
You can use this formula to measure the productivity of a department or organization and get actual numbers. It works particularly well in organizations and departments where each unit produced is of equal value.
The 360 Degree Feedback Strategy
While hard numbers can be useful for measuring productivity, they rarely tell the entire story. Employers need human feedback from their employees to fill in the gaps, and that’s where the 360 Degree Feedback strategy can help.
With this strategy, employers ask their employees to provide confidential, anonymous feedback regarding the productivity of their fellow employees. This gives you a more complete picture of who is doing the work and meeting their goals.
The 360 Degree Feedback strategy is far from perfect. However, it is particularly ideal for a small organization or a close-knit team of employees. For it to be successful, every employee on the team must have a good understanding of various roles within the company.
Online Performance Tracking
You may already use digital tools and workforce development software to optimize productivity in the workplace. But do you use digital tools to measure productivity?
Online performance tracking software can take some of the headache out of measuring productivity by allowing employers to track relevant data automatically. For instance, many online performance tracking systems use electronic treats to track time spent on projects and specific tasks. This data can then be easily generated into performance reports.
While online performance tracking software can be incredibly useful for organizations, they don’t provide the complete picture of an employee’s productivity. Therefore, it’s important to use additional techniques to measure productivity.
Projects Completed
Another way to measure productivity is by tracking project completion and accomplishments rather than minutes and hours. In other words, is the work getting done?
This strategy is particularly common in the startup world, where founders and their employees often have important deadlines they need to meet. Employees are assigned a task or project and have their own key performance indicators (KPIs) to evaluate their success.
One downside to tracking projects completed is that it can potentially lead to employee burnout, which will ultimately hurt an organization’s productivity. When tracking this metric, it’s important for employers to emphasize flexibility and healthy work-life balance.
Profits Generated
Profit is essential to a company’s survival. And given that higher productivity is strongly associated with higher profits, it makes perfect sense for employers to use profit as a means of measuring productivity.
This method is generally preferred by smaller organizations because it’s simple and doable. Additionally, it helps ensure that employees aren’t unfairly punished for taking longer on a project in order to produce the best possible product for clients.
Daily Check-Ins
While some business owners rely on profits to measure productivity, others prefer to measure how well their employees stay on-task. Less focus is placed on output and profit. Instead, employers have daily check-ins with the team to ensure that everyone is reaching their targets.
There are several ways you can hold check-ins with your employees, the most common being conference calls and meetings. You can also hold check-ins by way of email, Google Hangouts, or a dedicated Slack channel.
Measuring Leads to Growth
To paraphrase Peter Drucker, you can’t manage what you don’t measure. By collecting valuable data through workforce development software and other digital tools, you can uncover actionable insights that spur economic growth and competitiveness. But more than that, they can help your employees reach their individual goals and feel more fulfilled at work.
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Popular FAQs
Below you can see common FAQs we get asked.
How can we calculate productivity for employees working in creative fields where output is not easily quantifiable?
To calculate productivity for creative workers, combine qualitative and quantitative measures. Use a productivity formula that includes factors like project completion rates, client satisfaction scores, and peer evaluations. Also, consider the impact of their work on company goals and revenue generation. This approach provides a more holistic view of employee productivity in creative industries.
What’s the best way to measure productivity in a company’s production process that involves both human labor and automation?
To measure productivity in a mixed human-automation environment, use a total factor productivity (TFP) approach. This productivity measure accounts for both labor productivity and capital productivity.
Calculate the ratio of total output (units produced or services provided) to the weighted sum of labor and capital inputs. This method gives a comprehensive view of how efficiently your company utilizes both human and automated resources in the production process.
What are some innovative ways to measure personal productivity for remote workers?
For remote workers, combine traditional productivity measures with digital engagement metrics. Track task completion rates, quality of work, and adherence to deadlines. Additionally, monitor digital collaboration tools usage, responsiveness to communications, and participation in virtual meetings.
This comprehensive approach helps assess both output and engagement, providing a fuller picture of personal productivity in remote settings.
How can we calculate capital productivity in service-based industries where physical capital may be less relevant?
To calculate capital productivity in service industries, focus on intangible assets and technology investments. Measure the ratio of services produced to capital invested in software, databases, and intellectual property. A lower capital productivity number might indicate inefficient use of these resources.
Consider factors like customer acquisition costs, return on technology investments, and efficiency gains from digital tools to get a more accurate picture of capital productivity in service sectors.
How can we measure productivity growth while accounting for factors that affect productivity beyond our control, such as economic fluctuations?
To measure true productivity growth, use a productivity formula that adjusts for external economic factors. Start with your basic productivity measure (output per input), then apply adjustments for industry-wide trends, market conditions, and macroeconomic indicators.
This approach helps isolate your company’s actual productivity improvements from broader economic shifts, giving you a clearer picture of internal efficiency gains over a specific period.
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Source: Rawpixel.com/Shutterstock
Source: G-Stock Studio/Shutterstock
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