The Ultimate Guide to Measuring Employee Productivity

Being present at work isn’t always the same as being productive. Anyone can get distracted on the job and a pattern of distraction can impede employee productivity and ultimately damage the effectiveness and profitability of your company.

In this article, we’ll explore the ultimate guide to measuring employee productivity. From defining productivity to implementing measurable metrics, this article will help you identify the ways in which employee productivity standards vary by industry and employee type. 

What Is Employee Productivity? 

Productivity is a measure of how effectively an employee uses their time and resources to accomplish tasks and achieve goals. Employee productivity can be measured in terms of output, such as the number of tasks completed or products manufactured, or in terms of efficiency, such as the time taken to complete a task or the number of resources required.

Productive employees are those who are able to complete tasks efficiently and effectively, often exceeding the expectations of their employers. They are able to manage their time effectively, prioritize tasks, and work collaboratively with others to achieve common goals. High levels of employee productivity are typically associated with increased profits, improved customer satisfaction, and a more positive work environment.

How Is Employee Productivity Measured? 

Have you ever seen that episode of workplace comedy Superstore where Mateo just doesn’t engage with his work? While dealing with another workplace crisis, Mateo’s co-workers happen to notice him chilling out in the break room. Knowing that he’s still clocked in for his shift, one character remarks, “Didn’t your break end, like, an hour ago?” Without looking up from his phone, Mateo responds, “Yeah, I’m just not feeling it today.” 

That scene might make us laugh when we’re enjoying an episode of Superstore, but managers know all too well that this scene isn’t really satirical. Mateo might be physically present at work but he isn’t being productive. In fact, by clocking in while he isn’t actually working, he’s effectively stealing from the company and being dishonest about his hours. 

Sadly, this scene is relatable because it’s true in daily life. Many employees reenact this scene on a regular basis; they might be at work but they’re not generating any productive output. That’s exactly why it’s important to establish accurate and effective metrics for measuring employee productivity. 

Some common metrics for measuring employee productivity include:  

• Output-Based Metrics: Output-based standards of productivity measure the quantity of work completed by an employee in a given time frame, such as the number of units produced, the number of sales made, or the number of customer service calls handled.

• Quality-Based Metrics: Where an output-based metric concentrates on the total quantity of work produced, quality-based metrics measure how well an employee does their job. The specifics may vary according to your specific business or industry, but quality-based metrics typically evaluate factors like the number of errors made, the number of customer complaints received, or the level of customer satisfaction achieved.

• Time-Based Metrics: This method measures the amount of time an employee spends on a specific task, such as the amount of time it takes to complete a project or the number of hours worked in a day.

• Input-Based Metrics: What resources do your employees need to complete a task? Where output-based metrics measure results produced, this method measures the resources used by an employee to complete a task, such as the amount of money spent on a project or the number of team members involved.

• Behavioral Metrics: This method measures the behavior and attitudes of an employee, such as their attendance, punctuality, and willingness to learn and take on new tasks.

Employers often use a combination of these methods to assess employee productivity, as each approach offers a unique perspective on an employee’s contributions to the organization. It’s important to keep in mind that productivity measurement is not an exact science, and various factors can influence an employee’s productivity levels, such as work environment, motivation, and skills.

What’s the Difference Between Project-Level and Employee-Level Productivity?

Project-level productivity measures the efficiency and effectiveness of a specific project, while employee-level productivity measures the output and performance of an individual employee.

Project-level productivity is typically measured by evaluating the overall success of a project in meeting its objectives, such as delivering the project on time, within budget, and to the expected quality standards. Project-level productivity metrics may include the number of tasks completed, the amount of work completed in a specific timeframe, the number of defects or errors found, and the satisfaction level of project stakeholders.

By contrast, employee-level productivity metrics may include the number of units produced or sold by a specific employee, the amount of revenue generated, the number of customer service calls handled, or the number of hours worked.

Transform your field crew into a productivity powerhouse

Find Out How

How Might Productivity Be Measured Differently for Salary v Hourly Workers?

Now that we’ve explored some of the various methods for measuring employee productivity, it’s time to take a more microscopic approach and consider how productivity measurement can vary at different levels. So, how is productivity measured differently for salaried employees versus hourly workers? Why does that difference matter? 

Productivity can be measured differently for salary and hourly workers based on the type of work they perform and the method used to calculate their compensation. Here are some key differences:

• Output-Based Metrics: Hourly workers may be more likely to have their productivity measured based on the amount of output they produce in a specific timeframe, such as the number of units produced or the number of customer service calls handled. In contrast, salary workers may have their productivity measured based on their overall contribution to a project, such as the completion of specific milestones or the overall success of the project.

• Time-Based Metrics: Hourly workers are often paid based on the number of hours they work, so their productivity may be measured based on the number of hours worked versus the amount of output produced. In contrast, salaried workers may have more flexibility in their work hours and may be expected to work until specific tasks or projects are completed.

• Overtime: Hourly workers may receive overtime pay for hours worked beyond their regular schedule, so their productivity may be measured based on their ability to complete work within their scheduled hours. In contrast, salaried workers may not receive overtime pay, so their productivity may be measured based on their ability to manage their workload efficiently and meet project deadlines.

Measuring Employee Productivity by Type

You can also measure employee productivity through three different types of labor: partial labor, multi-factor labor, and total output. These metrics involve a few mathematical formulas, so be warned: if math is not your strong suit, this may not be your favorite section. (It can still be very helpful for measuring employee productivity though!)

Partial Labor 

Partial labor productivity measures the output produced per unit of a specific input, typically labor. Here are the steps to calculate partial labor productivity:

• Determine the output. Identify the specific output being produced, such as the number of units produced or the amount of revenue generated.

• Identify the input. Identify the specific input being used to produce the output, typically labor. This can include the number of workers, the number of hours worked, or the amount of wages paid.

• Calculate the partial labor productivity.

• Divide the output by the input to calculate the partial labor productivity. For example, if 10 workers produced 100 units in a week, and the total wages paid to the workers was $10,000, the partial labor productivity would be calculated as:

• Partial labor productivity = Output / Input
• Partial labor productivity = 100 units / $10,000
• Partial labor productivity = 0.01 units per dollar of labor input

This means that for every dollar paid in wages, the organization produced 0.01 units of output.

Partial labor productivity can be used to identify areas where productivity improvements can be made. For example, if partial labor productivity is low, it may indicate that the organization is not using its labor inputs efficiently or that there are bottlenecks in the production process. By identifying these areas, organizations can make targeted improvements to increase productivity and reduce costs.

Multi-Factor Labor Productivity 

Multi-factor labor productivity measures the output produced per unit of multiple inputs, typically labor, capital, and materials. Here are the steps to calculate multi-factor labor productivity:

• Determine the output. Identify the specific output being produced, such as the number of units produced or the amount of revenue generated.

• Identify the inputs. Identify the specific inputs being used to produce the output, typically labor, capital, and materials. This can include the number of workers, the amount of capital investment, and the number of raw materials used.

• Weigh the inputs. Assign weights to each input based on their relative importance in producing the output. For example, if labor is more important than capital and materials, it may be assigned a higher weight.

• Calculate the multi-factor productivity index. Divide the output by the weighted sum of the inputs to calculate the multi-factor productivity index. For example, if 10 workers produced 100 units in a week, the total investment in capital was $50,000, the total cost of materials was $20,000, and the weights assigned to labor, capital, and materials were 0.6, 0.3, and 0.1, respectively, the multi-factor productivity index would be calculated as follows:

• Multi-factor productivity index = Output / (0.6Labor + 0.3Capital + 0.1Materials)
• Multi-factor productivity index = 100 units / (0.610 workers + 0.3*$50,000 + 0.1*$20,000)
• Multi-factor productivity index = 0.0055 units per dollar of inputs

This means that for every dollar invested in labor, capital, and materials, the organization produced 0.0055 units of output.

Total Labor Productivity 

Total labor productivity measures the output produced per unit of labor input. Here are the steps to calculate total labor productivity:

• Determine the output. Identify the specific output being produced, such as the number of units produced or the amount of revenue generated.

• Identify the labor input. Identify the specific labor input being used to produce the output. This can include the number of workers, the number of hours worked, or the number of wages paid.

• Calculate the labor productivity. Divide the output by the labor input to calculate the labor productivity. For example, if 10 workers produced 100 units in a week and worked a total of 400 hours, the total labor input would be:

• Total labor input = Number of workers x Total hours worked
• Total labor input = 10 workers x 400 hours
• Total labor input = 4,000 labor hours

The total labor productivity would then be calculated as follows:

• Total labor productivity = Output / Labor input
• Total labor productivity = 100 units / 4,000 labor hours
• Total labor productivity = 0.025 units per labor hour

This means that for every hour of labor input, the organization produced 0.025 units of output.

Total labor productivity can be used to measure the overall efficiency of labor utilization within an organization. By comparing total labor productivity over time or across different organizations, managers can identify areas where productivity improvements can be made and make informed decisions about resource allocation, training, and process improvements.

Advantages of Measuring Employee Productivity 

• Improved resource allocation: Measuring employee productivity can help organizations identify areas where resources are being underutilized or where there may be bottlenecks in the production process. This information can be used to make better decisions about resource allocation and optimize operations.

• Informed decision-making: By measuring employee productivity, managers can make more informed decisions about hiring, training, and performance management. They can identify high-performing employees and reward them appropriately, as well as identify areas where additional training or coaching may be needed.

• Increased efficiency: Measuring employee productivity can help organizations identify inefficiencies in their processes and operations. This information can be used to make improvements that increase efficiency and reduce costs.

• Better performance management: By measuring employee productivity, managers can set performance goals and track progress towards those goals. This helps employees understand what is expected of them and provides a clear path for career advancement.

• Enhanced accountability: Measuring employee productivity can help hold employees accountable for their performance. This can help motivate employees to work harder and can discourage poor performance.

Disadvantages of Measuring Employee Productivity 

While measuring employee productivity has many benefits, there are also some potential disadvantages to consider:

• Overemphasis on quantity over quality: Focusing too heavily on productivity can lead to an overemphasis on quantity over quality. This can result in employees rushing through tasks or sacrificing quality in order to meet productivity targets.

• Disengagement and burnout: Constantly measuring employee productivity can lead to feelings of pressure, stress, and burnout among employees. This can negatively impact morale and engagement.

• Narrow focus: Measuring productivity can lead to a narrow focus on certain tasks or goals, which may not align with broader organizational objectives.

Maximizing Employee Productivity with the Right Tools

Effectively measuring and enhancing employee productivity requires not just the right approach, but also the right tools. As an employer, you can benefit greatly from implementing systems and software that streamline your business operations, optimize workforce efficiency, and drive better results. Here’s how:

1. Selecting the Best Employee Time Tracking App
   One of the easiest ways to keep tabs on employee productivity is through an employee time-tracking app. It helps record work hours accurately, enabling you to assess how employees are utilizing their time and making payroll more efficient.
2. Managing Remote Teams Effectively
   Tracking productivity in remote teams can be challenging. Consider utilizing an employee time-tracking app for remote teams to maintain accountability and ensure that all team members are meeting their work expectations, even from a distance.
3. Improving Job Cost Accuracy with Time Tracking and QuickBooks Integration
   For businesses already using QuickBooks, integrating with a time-tracking tool can significantly improve the accuracy of job costs and streamline payroll. Check out how you can improve job costing in QuickBooks Online to save time and money.
4. Avoiding Common Time Tracking Mistakes
   Incorrect time tracking can lead to inefficiencies and errors in measuring productivity. Familiarize yourself with common time-tracking errors to avoid pitfalls that could skew your productivity assessments.
5. Adopting Automated Payroll Processes
   Manual payroll processing can eat up time and introduce inaccuracies. An automated payroll system can improve accuracy, reduce processing time, and ensure that your employees are paid on time, contributing to better morale and productivity.
6. Utilizing Comprehensive Team Task Management Tools
   Managing your team’s tasks effectively is critical for improving productivity. Implement team task management software to streamline task assignments, monitor progress, and ensure timely completion of projects, leading to better resource allocation and task prioritization.
7. Enhancing Field Employee Productivity with Efficient Scheduling
   For field employees, balancing time spent on the road and on-site is crucial for productivity. Using an app that tracks drive time versus wrench time can help you optimize your workforce schedules and ensure that more time is being spent productively on the job.

These strategies and tools can significantly improve employee productivity by simplifying administrative processes, improving accountability, and providing actionable insights that help in better workforce management.

How Measuring Employee Productivity Can Benefit Your Employees 

We’ve explored some of the ways measuring employee productivity can benefit your business, but this practice can also help your employees learn, grow, and achieve excellence. Here’s how:

• Identify areas for improvement. Measuring employee productivity can help employees identify their strengths and weaknesses. Encouraging employees to evaluate and reflect on their own performance can help them grow personally and professionally. 

• Encourage accountability. Accountability is crucial in every area of life. Everyone can benefit from an improved sense of integrity and personal responsibility. Measuring employee productivity encourages employees to take ownership of their performance, be accountable for their mistakes, and strive for honesty in life and in the workplace. 

• Enhance employee engagement. Measuring productivity can help employees understand the importance of their work and how it contributes to organizational success. This can increase their sense of engagement and motivation.

Why Measuring Employee Productivity Is Beneficial for Your Business 

In addition to streamlining your business’ efficiency, improving your results, and encouraging your employees to grow, efficiency and growth, measuring employee productivity can also help you tackle three underrepresented issues that are key to a company’s success. Here’s how: 

• Benchmarking: Measuring employee productivity is an important aspect of benchmarking because it provides a baseline for comparison with other organizations in the same industry or sector. By measuring productivity levels, your company can compare its performance to that of its competitors and identify areas where it may need to improve in order to remain competitive.

• Labor optimization: Everybody wants to work smarter, not harder. And that’s exactly what labor optimization empowers you to do. Employee productivity tracking can help your business achieve labor optimization by identifying underutilized or overutilized labor, streamlining workforce planning, and encouraging innovation. 

• Analysis and reporting: Employee productivity tracking can assist your company in analysis and reporting by distilling employee output into measurable data for analysis. This, in turn, can support data-driven decision-making, enable performance comparisons, and support accountability. 

How Workyard Can Help 

Every business and industry will have different individual needs when it comes to measuring employee productivity. That’s why you need to know which productivity app is best equipped to help you. Workyard aims to support all businesses with their productivity tracking needs, so let’s take a look at how Workyard can help. 

When it comes to field-based productivity tracking, you really can’t do better than Workyard. If your employees work in construction or out in the field, you need to know when they’re on-site and what they’re working on. Workyard’s superior GPS tracking app can help you confirm that employees have arrived on-site and are staying on track. 

Furthermore, when it comes to measuring productivity, you can leverage cost codes to better understand where time is being spent and optimize your workforce accordingly. You can even compare drive time to wrench time to improve project bids and overall efficiency. Workyard’s user-friendly app even allows you to update schedules and tasks on the go, reducing the number of hours spent in the office each week.

Lastly, Workyard’s intuitive layout empowers field employees to quickly learn and use the software to track their working hours, ensuring payroll accuracy and compliance with labor laws. So, what are you waiting for? Sign up for a free trial of Workyard today!