How to Measure (and Report on) Productivity

If you want to know how efficiently your business is operating, you need to periodically report on employee productivity. How much work are your employees doing and how valuable is that work?

Unfortunately, productivity can sometimes be difficult to calculate – so how do you objectively measure and report on this metric?

Why Productivity Reporting Is So Important

Productivity reporting is your opportunity to better understand the productiveness of your employees, the efficiency of your organization, and best practices for operating even more efficiently in the future. These are some of the most important benefits to recognize:

  •       Employee accountability. Tracking productivity gives you an objective way to hold employees accountable. If one of your employees isn’t contributing as much as they should, you can prove it in an objective way and encourage them to improve their performance. Also, the very fact that you measure and report on productivity encourages your employees to do their best, preventing most productivity issues from arising in the first place.
  •       Employee recognition. Conversely, reporting on productivity gives you an opportunity to recognize your most valuable employees. Which of your employees was most productive in the last month? A cash bonus or similarly attractive reward could incentivize this employee and others to continue improving and providing value to the organization.
  •       Managerial transparency. Managers make more effective decisions when they have ample information to justify those decisions. How do you decide which employees to promote, reward with raises, or discipline? Which strategies lead to better collaboration and teamwork? When you better understand the productivity dynamics of your team, you’ll be in a position to act intelligently.
  •       Profitability optimization. Productivity is the heart of an organization’s profitability, assuming there’s a viable business model in place. If all your employees are sufficiently productive, adding more value to the organization than they cost, you should have no trouble turning a significant profit. Highlighting productivity issues can help you practice profitability optimization, eliminating waste and increasing value.

Calculating Productivity

There are many different strategies for calculating productivity. Unfortunately, no single one of them is perfect.

  •       Absenteeism. You can start by tracking absenteeism. Employees are perfectly entitled to take days off for illnesses, mental health, vacations, and personal desires; however, when employees abuse this system or fail to meet even the lowest expectations for attendance, it can create massive productivity issues.
  •       Hours. There are some compelling arguments for why the hourly wage should be abolished; among the most powerful is the simple, irrefutable premise that an hour of time tells you very little about productivity. One person may be able to complete 100 tasks in an hour, while another completes only 20. Still, tracking hours spent can help you illustrate a full picture of productivity. For example, if you expect a project to take 10 hours, and an employee completes it in 11, you can assume this employee is reasonably productive; if another employee takes 25 hours, it’s important to analyze why and act on that information.
  •       Tasks. In some working environments, the best way to track productivity is by tracking individual tasks in a project management platform or similar apparatus. This is especially useful if each task in your tracking system is relatively equal in terms of the effort required to complete it. For example, you might track the number of bugs resolved by each of your developers.
  •       Goals/milestones. Similarly, you might measure productivity in terms of goals reached or milestones achieved. This is a vague description because it’s going to manifest differently for different types of businesses. For example, you might track the number of drafts produced by a designer or the number of sales landed by a salesperson.
  •       Value. Productivity is also about the value provided to your organization by each individual contributing to it. Accordingly, you can track productivity in terms of value added. How much revenue is being generated by each individual? How can you calculate the value provided by each individual’s labor?

Tips for Better Productivity Reporting

Follow these tips for even better productivity reporting:

  •       Use automatic software. The right software platform can make your life much easier, allowing you to automatically generate reports on a variety of different productivity metrics on a regular basis. Depending on the size of your team and the scope of your operations, set up weekly or monthly productivity reports.
  •       Report on multiple metrics simultaneously. As we’ve seen, there’s no single, objectively “best” way to track productivity. Instead, you’ll need to use a variety of metrics to fully understand the situation. Track and consider multiple productivity metrics simultaneously.
  •       Be consistent. If you want your productivity statistics to mean anything, you need to make sure you report on them consistently. Compare your employees apples to apples to ensure fair comparisons, and follow the same metrics across different measurement periods to effectively track progress or regression.
  •       Get feedback via surveys. Productivity has subjective elements. You can learn more about productivity in your workplace by gathering feedback from your employees via surveys.
  •       Act on your reports. Data is only valuable if it’s actionable. Don’t just focus on the numbers in the report; focus on what the numbers tell you, then use that information to plan further improvements.

Measuring and reporting on employee productivity aren’t straightforward activities. But if you can master them, you can put yourself in a much better position to optimize your business for profit.

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