Amid the data-centric 21st century and the fourth industrial revolution, productivity in the workplace is more important than ever. The big tech firms, like Facebook, Amazon and Google are leading the way with HR strategic planning focused on people management. These companies know that without their employees, they would not have the same competitive edge in today’s world.
It is not simply a case of measuring results, but rather, understanding which factors influence process efficiencies to arrive at these figures. In this respect, measuring employee productivity involves considering both quantitative and qualitative indicators, from employee absenteeism to worker satisfaction, from training to equal pay, among others.
The sum of these aspects will give companies a more accurate perspective on their employees’ productivity, at the same time as signalling how to establish or strengthen a connection in which both parties benefit.
Therefore, in this article we will analyse in detail what productivity is in the workplace, how to measure it and some practical tips we can implement to improve it.
What is productivity at work?
In this light, what are we referring to when we talk about workplace productivity? Basically, the relationship between obtaining a result or a certain product and the resources used by a worker to get there. The more efficient this process is, the more efficient an employee, team, or company in general will be.
Measuring this correctly will not only help improve production figures, but also optimise the resources invested in it, rectify flawed processes and trends and, overall, make the right strategic decisions for the company’s or business’s progression.
The importance of productivity in the workplace
Productivity at work is an essential metric for all companies, as it is related to financial growth and development. Better employee productivity means a better use of resources, tasks completed more efficiently and greater competitiveness, as well as an increase in strengths and a reduction in weaknesses.
So, the importance of productivity is not just financial. A company with high levels of workplace productivity will have motivated employees, capable of carrying out their duties as efficiently as possible. This will result in lower absenteeism and turnover rates, two essential indicators when it comes to understanding employee productivity.
Moreover, understood on these terms, it will be a guarantee of healthy, stable workers. Caring about productivity also means protecting the mental health of our employees and avoiding situations like professional burnout.
How do you measure employee productivity?
In the above context, there is no one single way to measure employee productivity in the workplace, but rather different approaches that can offer a more complete overview of the situation. Below, we will explain some ways you can find out a company’s productivity level:
1. Establish a default standard
Firstly, it is vital to establish a guide productivity level to indicate the expected output for each task. It is also possible to set a target for specific tasks.
Using metrics and targets is important because employees will know what is expected of them; productivity will have a point of reference. Of course, these expectations should focus on the role or position, which will be simpler for jobs with specific functions and more complicated in the case of more general roles.
2. Value quality, not just the quantity of work
It is not a case of how many invoices are sent or how many orders are dispatched. Aside from the numbers, the qualitative aspect is very useful when measuring productivity.
Completing tasks with high quality standards is a key indicator for employee performance. By controlling the quality of work, as well as the quantity, employers can rapidly address any training needs and fix anomalies.
3. Monitor absenteeism and the turnover rate
When we are measuring productivity in the workplace, tracking absenteeism is fundamental to evaluate employee output. If an employee achieves fantastic performance rates when they are at work but is frequently absent due to work stress or illness, the company’s general productivity will be affected.
In the same way, the turnover rate can give us a very good indication of our company’s productivity. When a person joins the team, they need some time to gain the required competencies to carry out their role. If this person leaves the organisation, we have to start from scratch (recruitment, induction, adapting to the role), which involves added costs, and by extension a reduction in productivity.
Both indicators can be measured manually, or we can use reporting and analytics software which does this calculation automatically and digitally. So, the margin for error is minimised and it will take into account individual performance as well as the workforce as a whole.
4. Customer surveys
Poor employee output ultimately has repercussions for customers. A customer survey can be a good way to obtain feedback and investigate personally if an order or specific service has not gone as expected. At the same time, you can identify and praise outstanding performance or productivity.
5. Automate performance reviews
It is also possible to measure productivity automatically using performance review software. In this way, you can improve your employees’ performance and guarantee them better professional growth opportunities.
Using a digital program will allow you to, among other things, identify who needs more support to achieve the company’s goals, personalise the criteria for competencies to be considered excellent, and create an evaluation system for potential promotions.
6. Use the productivity formula
The formula to calculate productivity is simple: you divide the products or services produced by the resources used, like this:
Job productivity = (Products or services produced) / (Resources used)
For example, a shoe factory produces 100 pairs of shoes daily which are priced at £30 each, with 12 workers on an 8-hour daily shift at £10 per hour. The materials to produce the shoes cost £1000 and the machinery and rent come to £150 per day. Using these figures, the productivity according to the above formula would be as follows:
Productivity = (100x30)/(12x8x10+1000+150) = 1.42
If we wanted to estimate the productivity of an employee who makes 10 pairs of shoes, we would do it like this:
Employee’s job productivity = (10x30)/(8x10) = 3.75
5 tips to improve productivity
Clearly it is not just a case of producing the largest quantity in the least time possible. The aim should be to do the work in a sustainable fashion, in a pleasant environment, that benefits employees. In this vein these are some recommendations to improve job productivity:
1. Promote a good work environment
It has been demonstrated that poor or toxic corporate environments reduce productivity, generate higher staff turnover rates and increase hiring and retention costs. A good work environment is essential to get the best out of each employee. At the end of the day, a motivated, confident worker will be more productive.
So, it is key to measure how well teams work together, employee satisfaction, their sense of belonging to the company and opportunities for promotion, among other things.
2. Listen to your employees
Following on from the previous section, knowing what our employees think is a valuable source of information for strategic decisions. A suitable tool for this is the staff satisfaction survey. As well as measuring the company culture and the Employee Net Promoter Score (eNPS), which indicates whether your employees would recommend your organisation as a good place to work, it is a vital listening tool.
When you carry out a survey, it is important to guarantee anonymity for respondents and establish a subsequent plan to work on the areas employees have pinpointed and believe should be improved.
3. Promote equal pay
The best internal salary policy is one that ensures equal remuneration: the same roles mean the same pay. However, salary revisions are not always logical and, when done on a case-by-case basis, can result in workers doing the same job for different salaries.
A situation like this disadvantages those who are paid less than their colleagues, which generates low output rates and low productivity as a consequence. Since 2017, all UK companies with 250 or more employees must comply with gender pay gap reporting requirements. As part of the Equality Act of 2010, this legislation aims to achieve remunerative gender equality and put an end to the pay gap, which according to data from the Office for National Statistics, was 15.5% among all employees in 2020, to the detriment of women.
However, even among smaller companies, it is prudent to aim for gender equal pay from day one, to avoid difficulties at later stages of the company’s growth, and to promote a fair and responsible employer brand. While this kind of reporting does imply some challenges for the HR department, fortunately there are now custom tools to ensure compliance with gender pay gap reporting that make the task much simpler.
4. Encourage training
Establishing a training plan tailored to the company strategy allows us to keep our employees motivated and improve their competencies to make them more productive. It is helpful to allocate an employee support budget for this, offering them courses and tools with which to complement and improve their aptitudes.
5. Identify strengths and weaknesses
Last but not least, it is key to identify each employee’s strengths and weaknesses, so we can find out what they need to improve and assign them tasks to make them more prepared. In this way, they will be more productive and at the same time, this information will help us understand our team members’ ways of working, so we can make better strategic decisions for the company’s future.