What is a productivity metric?
As a leader of a company or an ordinary employee, you want to be as productive as possible. You understand that this can be achieved by hard work, skill development, and maintaining contact with your colleagues. While stress, lack of sleep, eating habits, and motivation loss may lead to poor performance.
To start improving your productivity, let’s answer the following questions: what is it exactly, what are productivity metrics, and why is productivity at work so important?
Simply put, productivity is the indicator of effectiveness. In economics, this concept is used to describe and measure output per unit of input and is often calculated as a ratio of GDP (gross domestic product) to labor hours. Being an essential indicator of the development of every economic object, whether it is a common family, a corner store, or the whole country, measuring and controlling labor productivity are the two primary goals of job management.
Belonging to a business team, you’re encouraged to keep improving your personal productivity, being rewarded by a higher salary, additional benefits, or even a promotion. That’s why keeping your performance high is so motivating.
Another essential concept connected with productivity growth is metrics. They represent methods of measuring, in our case - measurements of productivity. Metrics show how efficiently your team deals with routine tasks and which outcome this brings to the entire company. They can yield many benefits to customer service, management, and human resources departments, including:
- Overall productivity growth
- Providing objective feedback
- Indicating areas of improvement
- Showing employees their strengths and weaknesses
- Effective remote collaboration
- Comprehensive future planning
- Economic growth
- Increased profits
However, the metric definition goes far beyond its implementation in the business sphere, representing a useful tool for other spheres of life, from education to medicine.
Total Factor productivity vs. Multifactor productivity
Other things you need to consider before diving into the best practices for a productivity boost are total factor productivity (TFP) and multifactor productivity (MFP). What is the major difference between these two economic concepts or is there any?
Actually, you can use them interchangeably. TFP (or MFP), typically, consists of an input and output. The input usually includes all the factors connected with labor (for example, labor hours, labor force, labor productivity), energy, purchased services, materials, and capital, while the output represents all the changes that the inputs have led to.
Simply put, TFP refers to the overall productivity of all inputs taken together.
How to calculate labor productivity?
Alright, we’ve figured out what the productivity metrics are. But how do we use them to measure the level of productivity?
The whole process can be divided into two parts. First, you should pick the appropriate performance metrics that correspond to your company’s goals. After that, you should calculate those metrics and analyze the results.
Choosing metrics to measure productivity
You will hardly find a person who works every second during working hours. So you should consider this fact when picking a metric for estimating productivity growth.
All tasks a team performs daily can be divided into measurable and unmeasurable. For example, you can’t measure learning new skills because this process is complicated and more connected with personal achievements than with business matters. Alternatively, you can measure how successfully a worker applies these skills while dealing with clients.
Let’s examine the following situation:
You want to find out how productive your customer service department is when contacting unsatisfied clients. After obtaining the results, you want to decide if there’s a need for a new hire or if the current number of specialists is enough for providing quality service. For doing this, try gathering the information about:
- An average number of customers an agent serves per day.
- A number of un/successfully solved issues per day/week.
- How many complicated cases did an agent solve last week?
- Should the company hire more support agents?
When each person answers these questions, you’ll acquire more information about the quality of the services produced. Moreover, the team will share their need for additional help provided by a new employee.
After that, you can proceed with the second stage.
Calculating the metrics
You can measure anything concerning your business using performance metrics: from employees' work satisfaction to the Chinese partners' readiness for cooperation.
Before starting the calculation, it’s essential to determine:
- The desired result
- Activities that help to reach it
- Ways to measure the outcome results
After deciding on these factors, precede with the following:
- Choose a specific period of time for analysis: it may be limited to an hour, day, week, month, quarter, or year.
- Determine the task: whether it is a phone call or developing an app, make every employee concentrate on it.
- Monitor the implementation: see how effectively employees carry out their duties.
- Gather data: collect all the information about the performed task for a set amount of time.
- Calculate the results: after collecting all the data, you can obtain the information of how productive your team is while working on a certain task.
This process may vary depending on the set goals and assigned tasks. It may include additional preparation, information gathering, and more detailed analysis, even with the involvement of experienced specialists.
After we’ve found out what labor productivity and its metrics are, how they help to estimate a team’s performance, let’s examine several examples of useful productivity measures that help enhance all business processes in a company.
Performance metrics for employees
Employees are the driving power of any organization. Their skills, experience, and abilities are what make businesses develop. Therefore, knowing how to measure the productivity of employees is vital for any company. Let’s examine several examples of the metrics that help analyze how effective the workforce is.
This metric concerns all the company’s staff and their performance, including working hours, amount of workers, shift efficiency, and other indicators. Such information is highly valuable for human resources departments, allowing them to analyze the information about the staff, answer complicated questions, compose statistics, and predict further development of a company.
The most straightforward way to calculate this metric is to divide the total sales by the number of workers. Although to get more detailed results, there should be other indicators involved, such as:
- The number of delivered goods and services
- Quality control
- Customer service performance
- The amount of the output
- Turnover rate
This list can include many elements, depending on the size, type, and location of a company.
The major benefit of using this metric is the possibility to assess the workforce and understand in which areas the company achieved significant success.
Sales and economic growth
This measurement is popular in sales and marketing departments, allowing them to control the sales growth/decline and the personal productivity of managers, according to their targets and locations.
Basically, it’s composed for a specific period of time (year or quarter) and compared to a similar period in the past.
Composing a graphic with the sales rates can bring many benefits:
- Show what works for your business
- Demonstrate how tendencies change over time
- Illustrate differences in sales value for various periods
Top support agents
Instead of a “support agent” you may use other words:
- Product manager
- Front-end developer
- Cleaning specialist
- Any job name
This metric is quite useful for any team in your company. People like getting feedback from other employees, feeling a competitive spirit, and being rewarded for the best performance.
What concerns support agents, you can take the following indicators to determine the top worker of the month:
- Number of satisfied/unsatisfied customers
- Average calls per day
- First-call resolution
Your top workers deserve to be recognized. This, in turn, gives them more motivation to keep being on top.
Another practical metric to measure labor productivity is turnover rate tracking. It's often used by HR (human resources) departments to calculate employee retention. This metric measures the percentage of employees who leave a company in a given period. It's usually calculated by dividing the number of people who left by the total number of people at a certain time during that period.
The turnover rate is an essential indicator of the production process and productivity growth because it can show how effective your team is and how happy your workers are in their jobs. If your company has a high turnover rate then you may need to rethink your policies or consider hiring more qualified candidates for certain positions or at least ask your managers to identify areas that require special attention.
For composing a graphic with labor statistics, you can use the following scheme:
- Choose a period you want to track (month-to-month is more common).
- Decide on the factor you want to get more data about.
- Divide the number of workers who have left by the number of current employees during the chosen period.
Performance measures for administrative staff
When calculating a company’s productivity, you can’t skip the administrative staff because they take responsibility for the most important tasks, including:
- Working process organization
- Team management
- Future planning
- Hiring and firing
- Event management
- Labor statistics
They motivate, control, and inspire other employees to work harder to the benefit of the entire company.
Let’s discover some effective ways on how to measure their performance:
Personal motivation and drive
Although most administrative jobs include numerous standardized responsibilities, people always have their own goals, skills, and achievements. To measure their motivation as an employee, it can be useful to conduct a survey, including the following questions:
- Do they set future goals beyond the ordinary working duties?
- Are they creative enough to brainstorm new ideas and solve problems?
- Do they spend time learning new skills?
Office communication and collaboration
Another thing worth estimating is the ability of administrative personnel to maintain healthy relationships with employees, customers, and partners. Here are several ways to measure how communicative and open workers are:
- Do they welcome new ideas and collaboration with their colleagues?
- Are they willing to share personal knowledge to increase efficiency?
- Are they team players or prefer working alone?
Organization and coordination skills
The administrative staff is also capable of arranging and coordinating meetings, planning business trips, scheduling appointments, and carrying out other organizational tasks. That’s why it may be useful to focus on how smoothly they deal with routine tasks and what feedback they get from the executives.
If we consider a business trip, the following actions can be measured:
- Do they prepare a detailed itinerary with all trip details?
- Is everything good with the logistics?
- Do they formulate instructions and notes for certain situations that may happen during the trip?
What to do next?
Being aware of your company's overall performance and each worker's productivity is extremely essential to increase productivity. With a distinct understanding of productivity measures and the way to apply them, you can transform this task into an engaging process.
What are you waiting for? It’s time for measurements!
Create a productivity dashboard
First, decide which metrics you want to track, how often you want to do that - daily/weekly/yearly, and list the information you need for that. Creating a to-do list can also help.
Analyze the previous results of labor productivity
If you want to keep developing and planning future goals, you should be aware of your current achievements and failures. Feedback is another useful thing for analyzing your activity. Try to:
- Look through social media for reviews about your company
- Analyze comments on your business accounts
- Take a survey among your customers and employees
Not enough data or components? Make an action plan!
Maybe your team lacks a time tracker or more motivation, or maybe a selling strategy requires updates. Examine what you have and what you need, and create a plan with all the actions your team should take to start a productiveness assessment.
What is more, the market offers a highly convenient app that can speed up this process and provide you with all the necessary information. Its name is Whoosh and it’s an all-in-one virtual working place with AI features, including a smart assistant, productivity reports, online meetings, and business analytics.
If a productive and close-knit team is your primary goal, download Whoosh - an app that sees employee effectiveness as front and center of any company!