What is employee productivity?
Employee productivity is an assessment of how efficient an individual or a group of employees are. In other words, how much work someone can do based on the guidance they receive in a specific amount of time.
Productivity is the amount of output generated per unit of input, so the calculation is total output/total input. Investigating how long it took an employee to do a task, if they did it to the required standard, and how much external support they needed to complete it, all give an idea of their efficiency and subsequently their value as an employee.
This metric plays a crucial role in evaluating workforce performance, allowing businesses to make informed decisions to improve their bottom line. It can help identify patterns and trends which might indicate underlying health and well-being issues which have gone undetected.
Methods for calculating employee productivity
To calculate employee productivity, there are two main methods: partial-factor productivity and multifactor productivity.
While partial-factor productivity focuses on a single input/output ratio, such as the number of units produced per labor hour, multifactor productivity measures the total input to total output. The partial-factor method allows organizations to assess the efficiency of specific tasks or processes, the multifactor method considers a variety of inputs, providing a broader view of overall performance.
Partial-factor productivity
Under the partial-factor productivity method, the amount of business output is compared to a specific business input; examples include the output per hour worked, capital productivity, and the output per unit of materials consumed. The partial-factor productivity method is used when a more focused view is desired, analyzing specific aspects of productivity in turn to identify bottlenecks and inefficiencies in workflows, pinpointing areas for improvement. By identifying processes where inputs are not being met with sufficient outputs, companies can optimize their workflows and maximize their productivity.
Multifactor productivity
The multifactor productivity method looks at a bigger picture of workplace productivity by combining multiple inputs. It uses the employee productivity formula: Output / (Input1 + Input2 + InputN) to get a complete view of employee performance. Unlike the partial-factor method that identifies improvement areas, the multifactor approach tracks productivity trends over time.
Why calculate employee productivity?
There are three key reasons why productivity is measured by companies:
Find out if improvement is needed
In order to determine if your current productivity levels meet your needs and expectations, it is crucial to calculate productivity per employee or per input. By doing so, you can identify any areas where performance falls short, and improvement is necessary. Overall, this will not only increase organizational profitability but also helps your company track efficiency and performance over time. So, taking the time to find out if improvement is needed is a key step towards enhancing your productivity.
Track efficiency and performance over time
A key benefit of monitoring productivity levels is the ability to track progress over a period of time. Areas of improvement can be identified, and measures put in place to fix any issues. Similarly, the use of historical data can be used to optimize resource allocation; by tracking efficiency and performance over time, you can make informed decisions based on long-term data. This is known as longitudinal reporting, and it allows you to identify trends and make strategic decisions for your employees, such as promotions or bonuses.
Inform decision-making for leadership
The data-driven insights provided by the partial-factor productivity and multifactor productivity methods are crucial information for strategic decision-making. These figures allow business leaders to identify the areas of high and low productivity, make decisions about resource allocation, and drive the replication of successful practices throughout the organization. Intuition alone isn’t enough to ensure resources are allocated to the projects with the highest potential ROI, leaders need the data.
Tracking productivity: tools and software
In a business environment where tracking productivity has become essential to good outcomes, there are a host of software options that can automate this tracking and calculation process. In the remote working world, these are invaluable.
These software applications[1] provide real-time data on employee efficiency and the time taken to complete assigned tasks, with productivity calculators providing an idea of employee productivity. This gives managers an instant idea of how productive individuals are at work and can help identify trends around absenteeism and presenteeism which may be caused by underlying issues. Once these patterns have been identified, positive steps can be taken to provide support to the individual or team affected.
The data can also be useful to the employee to help them manage their workload for optimum results. These systems are proven to boost employee productivity which, when leveraged correctly, allows businesses to effectively measure labor productivity, the number of sales, and the quality of work.
How employee productivity helps your business
Calculating employee productivity is essential for any business hoping to maximize their outcomes, and by understanding different methods such as partial-factor productivity and multifactor productivity, you can accurately assess the efficiency and effectiveness of your workforce.
However, it is important that this tracking is balanced with a consideration that, if employees are performing below expected levels, that a lack of productivity could be due to any number of factors, such as a physical or mental health issue. While employee productivity is paramount to a successful business, balancing this concern with the well-being of your employees is essential to creating an efficient but enjoyable workplace – indeed, if employees are happy, this is key to boosting productivity.
