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Productivity Measurement at Your Company: The Complete Guide

Learn how focusing on inputs as well as outputs leads to more effective ways to measure and improve workforce productivity.

Measuring and analyzing team productivity is an important part of running an efficient and effective organization. This helps organizations see what’s going well and what can be fixed to increase total outputs such as sales, leads, units of production and more.

However, to accurately measure productivity, organizations need to have a clear understanding of the factors that go into it. We often see organizations focus on outputs because they struggle to identify and quantify inputs — leading to inaccurate productivity measures.

In this guide, we’ll discuss what organizations should know to accurately measure productivity. Choose where to start:

  • What is productivity?
  • Why is productivity measurement important?
  • Productivity measurement challenges
  • How to measure productivity accurately
  • Additional tips to measure productivity

What is productivity?

Productivity is a measure of inputs to outputs expressed as a numerical ratio. It reflects the quantity, not quality, of work done based on resources such as people, processes and technology.

Organizations track employee productivity to analyze performance, identify potential improvements and forecast future capabilities. In order to measure productivity, you need to clearly understand inputs and outputs, which vary based on industry and organization.

  • Inputs: These are intangible aspects including behaviors and processes that directly affect outputs. For example, an unfocused or misaligned sales team’s strategy (input) may result in lower sales (output). Unlike outputs, inputs are fairly consistent across all service industries and businesses. The three key inputs at the core of every organization are people, processes and technology.
  • Outputs: Tangible productivity metrics are unique to each organization. They’re generally defined as either the product or service that is provided to the market or the team’s function to the larger organization. Outputs can be anything from the total number of articles published this month to how many sales leads were made to how many new products were put on the market.

Why is productivity measurement important?

Measuring productivity helps organizations see what’s working well and what can be better so they can make changes to increase their ratio of inputs to outputs.

Historically speaking, the U.S. Bureau of Labor Statistics found that increases in productivity have allowed the U.S. business sector to produce nine times more goods and services with only a few more hours worked.

 

 

Following the COVID-19 pandemic, we saw another radical shift as organizations were forced to change the way they did business, and many found ways to improve productivity. In our 2022 State of the Workplace Report, we found that while employees spent similar hours in front of their screens in 2020 and 2021, employee productive hours increased by 40% in 2021 from 4:37 to 6:28. The monumental leap can be attributed to organizational changes such as better processes and improved technology to accommodate the work from home trend.

Between the 70 years of historical data and recent post-pandemic insights about productivity changes, there’s plenty of evidence that improvements in people’s situations, processes and technology can help increase productivity and overall output.

But improving productivity requires consistent measurement to see the impacts of changes. Organizations need to see if decisions lead to increases or decreases in productivity, as the results will indicate if the change should be permanently or universally implemented.


Productivity measurement challenges

Measuring productivity is easier said than done, and there are a few challenges we see organizations struggle with often.

1. Excluding or minimizing inputs

Unlike outputs that are tangible and objectively measurable, inputs are intangible and subjective. As a result, some organizations measure productivity based heavily or only on outputs because they’re easier to see.

But dismissing the role of inputs in measuring productivity can skew the results.

For example, consider a sales manager who notices a decrease in total leads over the past month. If she only focuses on the decreased leads (outputs), she might think that her team is just not working as hard (decreased productivity). But if she considers inputs, she may find issues that actually lead to the decrease, like an employee is out for an extended period, inefficient processes or inhibiting technology.

2. Relying on ineffective measures

In the past, organizations relied on productivity and engagement measures like self-reporting, surveys or deadline completion to measure productivity. But these are a poor match for the needs of the modern enterprise because of two key issues: accuracy and access.

  • Accuracy issues: These measures depend on a lot of subjective factors. 45% of HR professionals don’t think performance reviews and self-reporting are accurate representations of an individual employee’s work, and they have a good reason for thinking this.
    On an anonymous skills survey for a large vehicle manufacturer, 76% of the engineers rated themselves above average. Since only 50% of any group can be above average, the only thing the survey correctly measured was that 26% of employees thought their performance and productivity were out of alignment with their actual output.
    Additionally, surveys and one-on-one meetings between managers and employees don’t track productivity in real time. Productivity levels naturally ebb and flow, and by the time you sit down with an individual employee to discuss what blocks their ability to work, it might be too late to take action and foster growth.
  • Access issues: Even if these productivity measures provided an accurate picture of inputs, there would still be the issue of access. That’s because these old-school ways to measure productivity are hard to capture at scale and have too many variables to give clear and reliable insights.

How to measure productivity accurately

To adequately measure productivity, focus equally on inputs and outputs. Outputs are easy to measure, but inputs require critical thinking and contemplation. To define expectations for inputs so you can quantify them and measure productivity, start by asking crucial questions about each of the three core inputs:

  • People:
    • Is my workforce engaged?
    • Are we helping with strain and fatigue whenever possible?
    • Are my employees focused for an extended period of time?
    • Are my employees spending an adequate amount of time on the right activities?
    • Are my employees capable and trained?
  • Process:
    • Are my processes streamlined and efficient?
    • Is there space in the production process to innovate and improve upon certain workflows?
    • Where do process bottlenecks exist? What’s causing them?
  • Technology:
    • Does my technology help with collaboration while also supporting automation?
    • Are employees adopting technology across my enterprise? Are they adopting it mindfully?
    • Are my employees adequately trained on the enterprise’s technology? Do they have the right know-how?

Once you have answers to these questions, define expectations for inputs and begin measuring them through relevant metrics.

  • People: When it comes to your employees, measure focus, alignment, effort, capacity and collaboration. Specific productivity metrics to consider include focus scores, burnout risk and break frequency.
  • Process: For process, focus on automation, efficiency, innovation and execution. Key productivity metrics to track include bottleneck points, automation opportunities and specific completion times.
  • Technology: With technology, measure value, security, adoption, usage, licensing and training. Productivity metrics to focus on include tool usage, training-to-adoption ratio and use-case application.

The standard productivity formula is Total Output / Total Input = Productivity. Outputs are generally easy to fill in, but quantifying and summing total inputs will be unique for each organization. You may find that a simple equation doesn’t work at all. In this case, you may need a more comprehensive productivity management solution.


Additional tips to measure productivity

Adopting a new methodology can be challenging, so here are a few tips to get started:

  1. 1. Establish a productivity level baseline or set benchmarks. See where you are and find ways to get where you want to be with concrete goals in mind.
  2. 2. Measure inputs as well as outputs. Identify areas for improvement and accurately assess how your actions impact employee productivity.
  3. 3. Focus on data measured accurately and frequently instead of relying solely on self-reporting and manager feedback.

If all of this seems overwhelming and you aren’t sure where to start, look into our productivity management solution that promotes transparency and trust between employers and employees.

We believe employee productivity monitoring empowers employees and leaders with digital activity in context. This means everyone gets greater visibility to find out how work gets done, how teams interact, how employees can improve and how results can be optimized.

Stats callout - 92% of employees are open to employee productivity monitoring

According to an Accenture survey, 92% of employees are open to the idea of collecting data on their work activity as long as it’s used to boost their own well-being and performance. Our productivity monitoring solution does just that by providing managers with the tools and contextual data to help their employees make the most of their workday.

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