Measure Productivity of Staff and Business - Tips, Tools, Metrics
Regularly assessing employee productivity and monitoring their contribution to business performance is vital for any business. It helps identify which workers are excelling or failing to meet targets and expectations, and what is causing lost production.
It is not necessarily the workers themselves who are to blame. The feedback from the workers on their suggestions for how to increase productivity is also very important. They are often the experts about doing their jobs and there know better than management about how to improve outcomes and communication.
Employers can develop a set of performance measurements as early warning systems that highlight issues that are threatening business outcomes, targets and deliverables.
Use these metrics to assess the productivity of every employee and stage of the business, and to monitor and improve productivity throughout the business. Developing these metrics depends on fully understanding the job functions and the key outputs for each position.
The best metrics are produced by engaging workers in their development. This article discusses how to develop business systems to measure productivity, how to define output targets and schedules and how to develop monitoring programs.
How Can You Measure Staff and Business productivity?
In economics, productivity is a simple measure of output per unit of input. In very simple terms, you may expect each worker to contribute an equal share to the output so their expected contribution is the output divided by the number of employees. Of course it is much more complicated than that but this is the basic principle. Research has identified a set of key drivers for productivity:
Attributes of People Management the Promote Productivity
- Engaging employees in improving processes to improve efficiency and eliminate blockages and time-wasters
- Encouraging innovation
- High employee effectiveness
- High employee utilization
- Effective managers
- Performance-driven culture
Attributes of the Business Strategy and Operation that Drive Productivity
- Marketing and brand sophistication
- Effective distribution channels
- Operations sophistication
- Financial sophistication
- Technology sophistication
- Culture of innovation and responding to feedback
- Effective Change Management
Tips and Steps for Improving Productivity
Identify Work Outputs for Each Position by Reviewing Job Descriptions
The operational positions are easier to do because they have defined outputs and production goals. It is more define productivity metrics for administrative or service jobs but not if you have performance plans and goals established. You may need to use broader measures, such as number of customers served or tasks completed. In some departments, it may be easier to define group productivity goals and each individuals role in it.
Discuss with staff to get their ideas on how to improve productivity
Many studies prove that productivity improves when employees assist in developing performance metrics. In a car assembly plant the persons who knows most about fitting left hand front doors are the workers who this job. Asking them about time-wasters, delays and ways to do it faster and better will provide real benefits. Empowering them to actually make the changes and providing incentives to improve productivity has worked in many industries. Management should facilitate this process and step back from micro-managing every minor task and process.
Derive objective measurements (metrics) for the key functions and outputs for the job
These metrics may be simply the number of orders shipped, number of orders taken, number of phone enquiries dealt with. You may need to work out how the total output is shared among various employees. But it is important that what you use is measurable, understood and can be tracked as a real measure of productivity. Don't focus on measuring the time wasters and non-productive things - focus on the real outputs that matter. For these metrics to work you need to establish a baseline of current productivity as measured by the metrics.
Identify, productivity limiters, blocks and time-wasting activities
It is important to identify things that hamper a workers' ability to do their jobs efficiently. Often its not their fault, but sometimes they do spend too much times texting or on private phone calls. Sometimes its red tape and administration. Sometimes its poorly maintained or ancient equipment. This review is to identify how fundamental restructuring could improve productivity by eliminating bottle-necks and time-wasters and being innovative. You need options and financial data because many of the improvements may be too expensive and the productivity gain insufficient to justify the extra cost.
Track the Metrics Using a Spreadsheet or Chart
Some people us a 'shame and blame' approach with public displays of team members performance. However, while this may be going overboard it is still a good idea to have a 'scare-graph' that track the metrics against the starting baseline and the target set. Both the individuals themselves and their managers need to be able to keep track of their progress. This highlights under performance that needs to be investigated. Ideally the chart should show the expected trajectory so that interim progress can be assessed.
Review and Revise the Productivity Measurement
Every 3-6 months, revise progress and make adjustments to the metrics, the targets and the expected trajectory. You need to ensure it is accurately based on the current operating conditions and any changes that have occurred.
Develop an Up to Date List of Impediments, Blockages and Circumstances Affecting Productivity and Performance
Keep a list of the various circumstances causing delays and reducing performance as you track employee productivity and discuss the issues with them. Cross them off as they are attended to and provide action summaries about when they will be fixed, or why they can't be addressed.
Develop a Plan and Strategy to Improve Productivity
Once you have identified the impediments to productivity and have begun to track progress towards performance goals it is time for action to make your plan work. This should be on-going with real actions being taken to make sure the planned improvements in productivity are achieved. Someone in the business should be in charge of implementing this strategy.
© 2012 Dr. John Anderson
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