“Employee productivity is defined as an assessment of value generated by an individual employee within a specific time period.â€
Table of Contents
- What Is Employee Productivity?
- Employee Productivity Calculation and Benchmarks
- 4 Best Practices for Improving Employee Productivity in 2020
- How Does a Performance Appraisal Impact Employee Productivity?
What Is Employee Productivity?
Employee productivity is defined as an assessment of value generated by an individual employee within a specific time period.
Productivity has a direct correlation with business outcomes (both near-term and long-term) and return on investment (ROI). Without this correlation, an activity cannot be viewed as productive.
High or low productivity depends on a company’s internal average and where the employee, team, and department stands as per this predefined baseline.
The overall success of an organization has everything to do with the efficient and effective productivity of the workforce.
Regardless of business opportunities, investments, or the strategic direction you take, on-ground execution and innovation come down to your employees. That’s why companies are so eager to improve employee productivity and help them perform better in the workplace.
But before we dive into how you can improve productivity/performance, let’s take a closer look at the concept of employee productivity and what it entails.
To accurately understand what the concept of employee productivity means for your company, you must first identify the intended value-add from employee efforts. Let’s consider three examples – a school, a contact center, and a software development company.
Employees at a school (teachers, administrators, non-teaching personnel, etc.) will work towards meaningful education defined by student performance on exams and the extra curriculum development of its students. Employees will also try to maximize the investments/revenues earned to keep the school running at a sustainable pace. There will also be marketing efforts to attract new students and grow the institution.
As per this example, any activity that helps to achieve one of these goals can be seen as productive. Further, the more productive activities an employee undertakes, the more valuable they become to the school.
Turning to a contact center, the concept of employee productivity will be different. The basic value delivery expected from a typical contact center employee is a high number of customer queries processed effectively with expected satisfaction levels. Employees who tackle voluminous customer interactions with ease and effectiveness would be deemed as most productive.
Finally, productivity for a software development company implies hands-on coding/development, product design, marketing and sales, strategic decision-making, customer service, and a lot of other ancillary job roles. Each role will have a unique way to deliver value and ROI.
As is clear from these examples, the concept of employee productivity can be highly nuanced, depending on the nature of your business as well as the organizational structure. Let’s see how to calculate this metric accurately.
Learn More: Top 10 Employee Productivity Tracking Software in 2020Opens a new window
Employee Productivity Calculation and Benchmarks
Here is the formula for employee productivity calculation for easy reference:
Employee targets can be anything from hours worked to projects completed, depending on the nature of work and the parameter that best describes productivity for the organization.
The accurate calculation of employee productivity depends on setting the right benchmark at the very outset. In our contact center example, we took the number of customer calls as the productivity indicator – but volume isn’t the only element to consider.
Here are five benchmarks you should remember while planning and calculating employee productivity:
1. Customer impact
How are customers impacted by the output and outcome generated by employees?
This is among the most important parameters that you should factor in when measuring productivity. Metrics like customer satisfaction scores (CSAT) and net promoter scores (NPS)Opens a new window capture the customer impact quantitatively. Let’s say the average NPS across the organization is 8 out of 10. If an employee achieves a 7.5 rating from their customers, it suggests an impressive productivity level of 93.75%.
2. Quality of work
It is vital to consider the quality of a person’s work when calculating their productivity. Sometimes, this will be reflected by CSAT or NPS, but mostly this is an internally calculated metric. For example, a manufacturer might use defects per unit (DPU) as a signal of good quality, suggesting that an employee with low DPU is highly productive.
In many cases, an employee’s immediate manager has a better understanding of their qualitative productivity. Let’s say a software development company employs a coder whose total work hours are below expectation – while from an HR process standpoint it may be a hurdle and may seem to affect productivity, only the manager can confirm where there is an actual impact on productivity metrics (typically coding deadline and quality of code) which are often not tied to actual work hours.
It is advisable to identify quality benchmarks specific to your domain (manufacturing, education, technology, public sector, etc.) as well the employee’s vertical of operations (marketing, HR, ops, admin, design, etc.).
3. Mental health and well-being
The sustainability of productivity levels is essential to accurate calculation. An unhappy, stressed-out employee will not be able to keep performing at an optimum in the long term.
In fact, the World Economic Forum reportsOpens a new window that happy employees are more productive – a survey of 1,800 contact center employees at British Telecom found that positive employee health and happiness led to 13% higher sales. We recommend that you conduct regular checks to maintain visibility on the mental wellbeing of employees.
4. Time optimization
High productivity must go hand in hand with intelligent use of time and a key focus on work-life balance. Employees shouldn’t opt for regular overtime efforts in order to exceed productivity expectations. On the other hand, they shouldn’t spend large portions of the day on non-productive activities.
A survey of 1,989 office workers in the U.K.Opens a new window found that employees spend just 2 hours 23 minutes being productive every day. By benchmarking productivity against the hours put in, you can avoid this pitfall.
Learn More: Manager Performance Review: 5-Step Guide with ExamplesOpens a new window
4 Best Practices for Improving Employee Productivity in 2020
While productivity is linked to an employee’s personality and skill set, there are several ways in which companies can help to maximize their potential. Here are four best practices for employee productivity improvement.
1. Equip your workspace with the latest productivity tools
Employees need sufficient technology to enable them to achieve their targets in a reasonable time frame. While following basic industry standards, the depth of automation/ tech-enablement depends on the amount of work needed to be done to achieve the set organizational goals.
For example, a collaboration app like Slack or Microsoft Teams will ensure easy access to and for all members of the organization and reduces the time spent on creating new emails/making internal phone calls.
Zensar’s Living Digital Survey Opens a new window of 1,000+ U.S. employees found out that 76% of them are more productive when they have access to the necessary digital tools. You can conduct surveys asking employees which activities they find most time-consuming, and check if any of these activities can be automated/tech-empowered.
2. Make the work environment productivity-conducive
Companies are investing heavily in office perks and wellness programs in a bid to increase productivity. But research suggests that a few simple measures can make officers more conducive to productivity.
A survey of 1,601 North American workersOpens a new window revealed that air quality and comfortable lighting were the two biggest factors that make employees satisfied with their work environments. And those that are satisfied are 16% more productive (not to mention 18% more retention-friendly).
Going forward, companies should take a closer look at how to treat employees with respect to increase productivity and acknowledge the voice of the employee. Intelligent office layouts, the use of fabric to enhance office acoustics, clean water, and clean air can go a long way in improving productivity – particularly in offices with a large number of employees, where these frequently become critical issues.
3. Offer in-the-moment learning opportunities
Learning and developmentOpens a new window is probably the most effective way to increase long-term productivity. You can train employees to use productivity tools, you can hone soft skills that let them collaborate better, and you can increase their familiarity with the domain of operations, speeding up the work process.
But it is often difficult to take out time from a busy workday for training. This is why in-the-moment learning is an important best practice for 2020. It’s a process where companies deploy workplace learning for maximum productivity by embedding the learning modules into workflows. It also makes use of mobile learning so that employees can consume bite-sized content in their free time.
4. Enable ready access to time tracking tools
This is a frequently overlooked productivity driver: employees cannot improve their performance if they do not have visibility into their efficiency levels. A time-tracking tool solves this by monitoring the time invested in each activity, the value it generates, and the gaps in productivity, if any.
And time trackingOpens a new window doesn’t have to be company mandated – it can be recommended as an employee-owned tool, where your workforce uses a dashboard to self-monitor and improve the utilization of time.
You can invest in end-to-end project management platforms like Trello, which also comes with powerful time tracking capabilities. Or, there are several free tools out there, such as Homebase, Toggl, and Google Calendar that can also serve your purpose. The idea is to link an employee’s time with their productivity, and finetune the correlation for maximum work-life balance.
How Does a Performance Appraisal Impact Employee Productivity?
Appraisals are commonly used as a forum for discussing an employee’s productivity and how to improve it. Business leaders often focus on the impacts of performance appraisal on employees’ productivity in an organization – but this has to be part of a larger conversation.
Here’s how performance appraisal could play a role in transforming employee productivity in your organization:
- First, you use the benchmarks and the formula we discussed to measure productivity all year long.
- Next, you establish concrete steps to improve productivity, following the four best practices we mentioned.
- Third, you observe the effect of these measures on productivity levels and perform a longitudinal study – capturing how productivity for a specific employee has changed over time.
- At this last step, you leverage a performance appraisal to influence employee productivity in your organization. Share the findings on the longitudinal study, highlight the most effective productivity drivers, and guide employees in the right direction.
Learn More: How to Phase Out the Annual Performance Review (And What to Do Instead)Opens a new window
There you have it! While the concept of employee productivity may seem complex at first, understanding and improving it can be surprisingly simple.
Companies can leverage the latest technologies, strategies, and best practices to build a productivity-friendly workplace. People analyticsOpens a new window can also help you measure productivity at regular intervals, processing data from a variety of sources. Ultimately, it comes down to the company’s culture and a keen eye on employee centricity.
This will help to constantly drive up employee health and productivity and engagementOpens a new window , even as you scale new heights of business success and enterprise growth.
What steps have you taken to improve employee productivity in 2020? Tell us on FacebookOpens a new window , LinkedInOpens a new window , or TwitterOpens a new window . We are eager to share your insights with the world!