5 Tips for Measuring and Improving Productivity
Although every operating budget is unique, it’s common for labor costs to make up a large portion of a company’s operating expenses, a key determinant of both operating and net income. To earn the greatest return on payroll expenses, a company must maximize real output relative to labor costs that arise from the manufacture or sale of a product, or the provision of a service. Consequently, it makes sense to set employee productivity baselines, identify redundant tasks, monitor actual employee performance, and make adjustments where necessary.
- Set a baseline for labor
Every manager must relate the contributions of each member of his labor force to the goods a company produces or the services it provides. A first step in the process is creating a baseline for a particular scope of work. Next, you measure the work of the employee who performs those tasks and compare that figure to the baseline to gauge the relative efficiency and productivity of that employee.
To set a baseline for a scope of work, you begin by setting a baseline for the total daily output of all employees who perform the same work. Then, you the divide that total by the number of employees who participate in the work process. For example, to evaluate the average daily productivity of each of the employees who man a help desk, you begin by summing the number of calls the help desk takes per day. Next, you divide that total by the number of employees who take those calls, and that’s your average. So if your help desk takes 210 calls a day, and the help desk staff consists of seven workers, each employee handles an average of 30 calls per day, so that number is your baseline.
- Identify redundant tasks
After setting your baseline for a work process, identify any elements of the activity that are redundant and that, if eliminated, will increase a worker’s output. Using the help desk example, employees will repeat common requests, such as password resets, the creation of new accounts, and provisioning new resources several times a day. So to improve each employee’s productivity, you’ll need to find efficient alternatives to the repetitive tasks. For instance, you might use scripts to automate the repetitive tasks and thereby improve task efficiency. Another alternative is to create “run books” that “walk” an employee through the steps required to respond to a common request, such as an employee’s inability to log on to a system.
By automating some tasks or creating documentation to make the performance of other tasks more straightforward, each employee may handle more calls. Consequently, each employee’s per-day productivity will increase, as will that of the help desk team.
The performance of your company is determined by many factors, including the efficiency and productivity of each individual employee. Whereas the efficiency of an employee’s work relates to his work quality, the employee’s productivity is a function of his output during a time period.
By logging the daily output of each employee, it will become clear who is a high achiever, an under-performer, or something is in between. For instance, assume that 60 percent of a company’s help desk staff become familiar with the appropriate use of “run books.” Consequently, each employee included in the 60 percent will require less time to handle a call and the number of callbacks related to problems he should have handled decreases. As a result, these employees can handle a larger number of calls per day.
- Provide individual feedback
Not all efforts to improve employee productivity succeed, and this fact can be frustrating to personnel who commit to the process. Leaders should treat all efforts as opportunities for learning and growth, while holding individuals accountable for their personal performance.
But rather than assign blame, a leader should emphasize the importance of individual effort; state clear expectations; motivate employees to do their best; monitor employee work; quickly recognize a job well done; and provide support, such as training, when needed.
- Continue to monitor employee productivity
An operating environment is in a constant state of flux, so looking for opportunities to improve employee efficiency and productivity must be an ongoing process. It’s a good idea to establish performance baselines twice a year, or following major changes to equipment, processes, or your staff.
Employee salaries can be a sizable dollar amount relative to other business expenses. This fact makes it important for each worker to perform assigned tasks in an efficient and productive manner. Measuring an employee’s productivity is a first step in improving his performance. But responding to those findings with technical solutions, new processes and procedures, or training is sometimes needed to improve the productivity of the individual and your company.