Measuring productivity is one thing that is common among all successful business organizations that have set themselves apart from the rest. Measuring productivity is the best way to ensure a productive workforce.
Since employees are the building blocks of an organization, their productivity and performance directly impact the productivity and growth of the company. The importance of a productive workforce cannot be understated.
Do You Know How Productive Your Workforce Is?
We are not talking about what you think about the efficiency of your employees. This is because your thoughts might or might not be correct. Who knows if your workforce is more or less productive than you think?
According to research, an average office worker is productive 60% of the time or less daily. In fact, a study conducted by Voucher Cloud found that most workers are not even productive 60% of the time. They are only productive for 2 hours and 23 minutes in a day.
Are you feeling shocked?
That’s natural. But don’t conclude that this is true for your workforce too. Your employees might be more or less productive than that. To determine whether your workforce is as effective as you expect it to be, you should measure employee productivity in your company.
There is no need to rely on a generic study. There are multitudinous key performance indicators and metrics that can help you determine the exact efficiency of your workforce. Once you get the results, you can see whether you need to work on enhancing employee efficiency in your organization or not. Your workforce might already be the most productive it can be.
In this blog, we’ll discuss seven effective ways to determine the performance of your team. If you are ready for this enchanting journey, let’s proceed.
Seven Actionable Tactics to Measure Productivity
1. Direct Use of the Productivity Formula
Did you know that there exists a productivity formula that you can directly use to determine the efficacy of your workforce? It is a simple formula with no complexities. The productivity formula has been derived from the basic definition of productivity, which is nothing but output per unit input.
Productivity Formula = (Output/Input)
Here, the output is the value of goods and services produced by your workforce in a given time interval. The input is simply the amount of time required to produce the specific output. Seems confusing? Don’t worry; let’s consider an example to make things easier for you.
Example: How to use the productivity formula
Let us consider that your employees from a certain department or the entire organization produced goods or services worth $ 60,000 in 1200 hours. The output is worth $60,000, and the input is 1200 hours. Then, putting these values in the productivity formula, we get:
Productivity = (Output/Input) = ($60,000/1200 hours) = $50 per hour.
There is no exact standard to define whether the numerical value of productivity you derive is high or low. It depends on your industry type, the capabilities of your machine tools, and other factors. So, you are the best judge to determine whether the derived workforce productivity is satisfactory. If it is, that’s something to be glad about. Quite the contrary, if it isn’t, don’t be disheartened. You can implement productivity-enhancing strategies in your company.
2. Determination of the Overtime Percentage
You might wonder what overtime has to do with employee productivity. If we observe closely, there are only two primary reasons employees put in overtime. The first is a lack of productivity, and the second is work overload. Now that we have established a clear relationship between productivity and overtime, let’s discuss overtime percentage as a measure of workforce productivity.
As the name suggests, Overtime percentage indicates the percentage of extra hours your workers put into work aside from the regular hours. Now, you might wonder about the problem with your workers doing overtime. If they take more hours to complete their work than needed, what’s the issue? After all, work matters and they are doing their job. But it’s not that simple.
When your employees do overtime, your office appliances run more. Also, who knows, due to the stress generated by overtime, your employees compromise the quality of work? It is estimated that those who work overtime regularly are more prone to burnout because of a disturbed work-life balance. Overtime has massive negative consequences.
So, you must keep your workforce productive and prevent your employees from engaging in overtime frequently. Now, let’s discuss how to calculate the percentage of overtime.
The Formula for Percentage Overtime
(Overtime hours / Regular hours)* 100
Example: How to calculate percentage over time:
Let us say an employee worked ten extra hours, and the total number of regular working hours was 100. Then, the percentage of overtime using the above formula will be:
(10/100)*100 = 10%
3. Percentage of Goals Met
This is one of the best indicators of employee productivity. Your workforce’s productivity is directly related to the number of goals it accomplishes. By calculating the percentage of goals met, you can determine where your workforce stands in terms of efficiency. But, to determine this percentage, you need to set a quantifiable goal for your workforce or a particular department of your workforce. Now, let’s proceed toward the formula to measure the percentage of goals met.
Percentage of goals met = (Actual/Goal)*100
Here ‘actual’ stands for the actual output. ‘Goal’ stands for the targeted output.
To help you understand the usage of this formula in a better manner, let’s consider an example.
Example: How to use the formula for percentage goals met:
Let us suppose that you gave your content writing team the goal of submitting 30 blogs of 1000 words each within a week. If your team submitted 45 blogs, then the percentage goals met will be:
(Actual/Goals)*100 = (45/30)*100 = 150%
This implies that your content writing team met 150% of the goal. So, you can consider your content writing team to be productive. If the quality gets compromised, it’s something to be addressed.
4. Revenue Per Employee
Did you know that your revenue can also indicate the productivity of your workforce? Although it is not a direct measure of employee productivity, it can indirectly determine it. Revenue per employee measures the monetary benefits you avail per employee—the higher your revenue per employee, the higher your organization’s productivity.
The Formula for Calculating Revenue Per Employee
(Revenue generated in a particular interval of time / the total number of employees or the number of employees in the department whose productivity you aspire to calculate)
Example: How to calculate the revenue per employee:
Let us consider that you have 20 employees in your organization, and your annual revenue is $ 100,000. Then, the revenue per employee will be
$100,000/20 = $5000 per employee
5. Employee Absenteeism Rate
The employee absenteeism rate is also an excellent indicator of employee productivity. Whenever your workers are absent, their productivity is 0. If they aren’t working, obviously their productivity is 0. This implies that their absence impacts the productivity of your company. If you aspire to enhance the productivity of your workforce, you must reduce the absenteeism rate in your company. But, before that, you should be aware of the exciting employee absenteeism rate in your company. Don’t worry; there is no complexity involved in it. There is a simple formula that you have to use. Let’s explore the formula now.
The Formula for Calculating Employee Absenteeism Rate
(Total workdays lost to absenteeism / Total workdays in a given interval of time)*100
Further, let us understand the usage of this formula with an example.
Example: How to determine employee absenteeism rate:
If an employee took 10 days off out of 60 working days, then, using the above formula, the employee absenteeism rate will be:
(Total work days lost to absenteeism / Total workdays in a given interval of time)*100
Usually, an absenteeism rate of 1.5% is considered good, but this is not a standard value. It depends on your organization’s policies on how much absenteeism is normal for you.
6. Learning Ability
Good learning ability is a trait of highly productive employees. After all, a productive person is effective at everything. Given that, your employees’ learning ability can also indicate their productivity. But, to use learning ability to measure employee productivity, it is crucial for you to offer training and development opportunities to your workforce. As employees prefer companies that offer excellent development programs, the chances are that you already provide training programs to your workforce. If the answer is yes, let’s discuss how to use learning ability as a key performance indicator of employee efficiency.
There is no direct formula to measure the productivity of your workforce based on learning capabilities, but there are indirect ways to use this tactic. They have been discussed below:
- Conduct quizzes and tests to know how much your employees have progressed:
Once a training program is completed, you should conduct quizzes, tests, and other activities to know how much your employees have progressed. Their scores will help you examine whether they have learned something or not. Even minor expansions in their skills will boost their productivity in the long term.
- Determine the extent of improvement in their functional performance:
Let us consider that you offered an advanced design training program to your graphic designing team to understand this point. After completing the training program, if you witness improvement in the functional performance of your team, either in terms of quality or speed, your workforce is performing well.
7. Percentage Error Rate
Quality matters as much as speed when it comes to productivity. In fact, in some cases, quality matters even more. For instance, if a content writer spends two hours writing a blog that is poor in quality and you can’t publish it, will you call him productive? Certainly not. After all, the useful output remains 0.
Quite the contrary, if there is another content writer who takes four hours to write a blog on the same topic but with good quality content, won’t you consider him to be more productive despite taking more time? You’ll. This implies that the quality of work is also indicative of productivity. Hence, we can also use the percentage error rate to determine employee productivity.
The Formula for Percentage Error Rate
(Number of defective results / Total number of results)*100
Here the term results stand for the output, which might be the number of products, services, or something else depending upon your industry.
Example: How to calculate percentage error rate:
Let us suppose your manufacturing team produced 100 pieces, and 10 out of them were defective; then, using the above formula,
Percentage error rate = (10/100)*100 = 10%
There is no standard error percentage rate. Hence, depending upon the capabilities of the machines deployed, the level of training you offer to your workforce, and other factors, it is up to you to infer whether the determined percentage error rate is permissible.
Measuring employee productivity is crucial. When you know the existing productivity of your workforce, you can determine the extent of efforts you need to make to boost the productivity of your workforce. So, you should use different metrics to track employee productivity. Those mentioned above are some simple yet effective productivity metrics that you can utilize in your company. I wish you All the best.
How Do You Measure Productivity?
If you have ideas about how to measure productivity that might be helpful to readers, share them in the comments section below. Thanks!
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