Business depends on employee productivity. For the longest time, employers thought productivity meant working fast for the least money. However, quality initiatives and customer satisfaction now rule. Still, all work processes are not measured the same way, so it may be time to review the best ways to measure productivity.
Productivity Formula
The Harvard Business Review advises, “The central mission of a productivity index is to illuminate how a business can get more units of output per hour, per machine, or per pound of materials than its competitors.”
It’s a deceptively simple formula in which productivity equals the number of outputs divided by the number of inputs. But, so much goes uncounted in this equation.
Multi-factor Efficiency
The core productivity formula ignores areas where inputs, such as overhead or materials can be leveraged. For example, no level of productivity will lower price when materials become scarce.
The Organization for Economic Co-operation and Development finds productivity measures in less obvious calculations. They support businesses that ”achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining economic stability.”
Similarly, studies find that engaged and satisfied employees produce quality work less subject to returns, repair, or rejection.
Labor Unit Cost
There is a measurable relationship between work and wage. Where that relationship correlates with or exceeds the labor market, individual work improves speed, quality, and efficiency. Performance is, of course, a function of time and attendance. And, where this was once measured by the time clock on the wall, virtual time clock now admit monitoring and verification at and from any location. The time and employee use of it takes on a new dimension.
Segmented Sales Analysis
Measuring ales productivity presents some unique challenges. Performance differs in inside and outside sales, outbound and inbound sales, retail and online sales, so measure have to align with those differences.
Sales leads, contacts, and closes have numbers and volume. There are individual measures and team measures, and others relate to specific campaigns or product lines. Inputs includes controllable costs like marketing expenses, travel and entertainment, technology employees, and more.
Subjective/Objective Measures
Individual employees often have the best perspective on their own performance and the work process they perform. Managers have a voice in identifying the unmeasurable, assessing individual employee engagement and special contributions to outcomes.
Employees and their managers may be the best source of data on team work and process. Hands-on as they are, they may have the best perspective on effectiveness and cost efficiency. Measuring productivity, then, becomes a collaborative effort in purpose and methodology.
Technological Measures
Any measure of productivity that does not improve productivity is worthless. Office and manufacturing technology has increased productivity, in part, by reducing labor inputs and increasing process options.
At the same time, technology provides chances to trace, follow, and measure usage and outcomes, from counting emails to cultivating customer retention software.
The Final Word
Healthcare may link its success to the number of patients seen during a specific timeframe. Its key players may measure the cost of the doctors’ visit and/or the tests and therapies involved. Perhaps, however, it would make more sense for the healthcare provides to measure patients cured and satisfied. So, nothing begins without a clear definition of productivity in your business and its economic sector.
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