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Productivity is a hot topic no matter what industry you’re in. One question is sweeping through workplaces, from hospitals to agencies to construction sites: How can your team get more done and work more efficiently?
Calculating quantifiable productivity can help you find out.
Employee productivity measurement shows how efficient you and your employees are in completing a task or project. By calculating productivity and comparing over time, you can identify opportunities for improvement.
These productivity benchmarks can help you notice potential issues in your business operations. For example, you might see that shifts started late 50% of the time this past month, compared to your typical benchmark of 25%. This could inspire you to relook at scheduling or check for signs of burnout.
"Monitoring employee efficiency and work productivity is key to meeting customer demands of fast service delivery,” said Deepu Prakash, SVP, Process & Technology Innovation, at development firm, Fingent. “It was important for us to measure productivity as we had to transition to remote work culture during the COVID crisis."
No matter what drives you to research productivity metrics, there are a few things you should know so that you can measure productivity more accurately.
For an employee to be productive, they need to be focused and motivated. However, they also need the proper tools and workflows in place to do their job.
In other words: low productivity isn’t solely due to an employee’s work ethic.
Low employee productivity can be a sign of employee disengagement, collaboration issues, or inefficient workflow processes.
These are all things a manager or business owner can work to improve.
When teams are productive, projects get done on time, budgets stay on track, and collaboration is easier.
In this guide, we’ll show you how to calculate employee productivity while taking different approaches to productivity into consideration.
Are there time-consuming tasks or inefficient processes holding your team back? Let’s find out.
To be able to understand your employees better and find a way to improve their productivity, you need to find out more about how they work, as well as how they approach projects.
The four main types of productivity styles include:
The Planner
The Visualizer
The Arranger
The Prioritizer
The Planner is a highly organized, detailed-oriented individual. Planners are disciplined and usually structure their day around their to-do lists.
They anticipate problems, find flaws in project plans, and make the proper preparations for completing tasks.
The main issue with Planners is that they’re not very spontaneous and can’t work well if they don’t have a detailed plan of action in place.
Help Planners plan out their workflow by providing them with meeting agendas and detailed project plans.
Don’t waste their time with pleasantries, but rather get straight to the point and give them the information they need to move forward with a project.
Reply to their emails promptly and make sure you’re there on time for every meeting you make with them.
Visualizers are creative and tend to think in terms of the bigger picture. They have a broader approach to tackling projects and tasks.
A Visualizer is often disorganized but thrives under pressure. Visualizers get bored easily, so they prefer working on multiple projects at the same time.
Since they’re very spontaneous, they can sometimes derail projects.
Explain to them why they need to do things a certain way to prevent their spontaneity from derailing projects.
Give them the space to express themselves and their ideas, and ask them to help visualize projects for the team.
Pair them with a Planner who can help them get more organized if needed.
The Arranger is a great communicator and works well as a part of a team. Arrangers are very supportive, but also persuasive.
They ask a lot of questions and openly address their concerns. Not only are Arrangers happy to share their feelings, but they also enjoy listening to others and being emotionally supportive of their coworkers.
The main issue with Arrangers is that they don’t work as well on their own. Being part of a collaborative team will help them thrive.
Make sure to schedule some one-on-time with an Arranger to let them express their concerns, ask questions, and share their ideas.
Organize regular company retreats where Arrangers can connect with their coworkers on a deeper level.
Prioritizers are analytical and data-driven individuals. They’re very effective at managing their time and prioritizing high-value tasks.
Prioritizers are goal-oriented and have great problem-solving skills. They tend to keep to themselves and might not be great team players.
Minimize their exposure to Arrangers and Visualizers, who might stifle their productivity.
Since they're very efficient on their own, it’s best to leave Prioritizers to do their thing and manage their time themselves.
As you can see, all four productivity styles bring something unique to the table.
While none of these styles is better than the others, it’s important to fully understand them if you want to help your team members become more productive.
There are a number of different ways to measure and calculate productivity. The most commonly used formula is called labor productivity, and looks like this:
Employee Productivity = Total Output / Total Input
Output is usually measured in the amount of revenue generated, while input is measured in the number of hours worked.
For example, if an employee generated $100,000 for your business within a year (2,000 work hours), their productivity could be stated as generating $50 per hour:
This number then becomes your benchmark for future productivity. When you aim to improve it by evolving processes or adding more tools for automation, ideally, that number goes up.
Looking to simplify your calculations? Enter your information in the fields below and get a benchmark for productivity.
Start with monthly amounts to make it easy. You can examine this at the level of individual employees or add up your team members to get a company-wide view.
Hours worked:
Number of team members:
Costs of goods sold ($):
While the labor productivity calculation is the most common, there are other employee-level measurements you can use depending on your team’s goals.
If you’re running a software company and looking to judge the productivity of one of your support team members, you might look at tickets resolved or the number of customers contacted in a day.
If a member of your team was able to fully resolve seven issues out of a total of twelve conversations that were started that shift, you would say their productivity level was 58%.
There are other inputs you might want to consider depending on your business.
One company modified the marketing metric PPC (pay-per-click) to track pay-per-seat as a way to motivate their sales team.
"We work out how much a salesperson costs us in total for the year by adding up their salary, bonuses, vacation, office energy, office drinks, uniforms, staff socials, and more. This total is then divided by the working days in the year, giving us a daily gross amount."
The objective is to at least hit that target, which puts a real-life comparison for reaching sales goals.
Another popular metric for service-based work is utilization rate.
Utilization rate compares billable vs. non-billable time during a workday or workweek. You can use utilization rates as a benchmark in many different settings, from healthcare to software development.
"The service-business industry is people-focused, so utilization and budget performance are the two most important productivity measurements we use"
An agency might use utilization to determine how much time their employees spend on client work compared to internal projects.
Health clinics might calculate utilization rates based on time spent with patients vs. time spent charting or doing admin work.
Once you have a working formula and are measuring your company’s productivity regularly, you’ll also want to create a productivity index so that you can see if your employees are becoming more or less productive.
Which leads us to the next question: What’s a good productivity rate?
The productivity percentage you should be aiming for will depend on your specific business and the job of each person.
Team members with longer project lifecycles will have fewer outputs to measure, while those with quick turnaround tasks will have a higher volume.
That’s why it’s important to think about productivity percentages as benchmarks.
Let’s take utilization rates, for example. Here’s how one company looks at them:
"Once the utilization rate hits 75%, that is a signal that we need another member of staff to cope with the workload"
"75% is the cut-off because there needs to be a buffer for personal projects, coffee breaks, and unexpected work."
Here’s a sample chart that Downes uses for his team’s utilization.
For this reason, using your own data will lead to better metrics and more accurate goal-setting.
That said, referencing an outside perspective can be helpful.
"According to a recent study, the average employee is productive for 2 hours and 53 minutes during a standard 8-hour workday."
If you’re using software to track and measure your employees’ productivity, keep in mind that different solutions use different formulas, so your results might vary from one tool to the next.
Hubstaff’s productivity measurements are called activity rates, and they’re based on mouse and keyboard usage. Every ten minutes of work provides a percentage that is then added up and averaged for the day and week.
Every person who tracks work time with Hubstaff has access to their own data, so they’ll see everything that their manager does, including activity rates.
When customers ask us what a good activity rate is, we advise them to analyze rates as trends. There is no perfect rate that applies to everyone, as it all depends on the work you’re doing.
Someone on phone calls or reading as part of their job may have lower rates than those who are constantly typing or designing. For some, an 85% activity rate is expected, while others might aim for 30%.
Instead of focusing on one individual number, we recommend noticing if things are trending upward or downward, as this can tell you if it’s time to check in with an employee.
They may have hit a roadblock or discovered a better process that you’ll want to share with the team.
Now that you know how to calculate employee productivity, let’s look at how to calculate productivity at the level of your entire company.
There are two main ways to calculate how productive your company is as a whole: partial factor productivity and multifactor productivity.
Partial factor productivity calculates the ratio of total output to a single input.
To do this calculation, you’ll need:
The total value of goods sold
The total costs to produce those goods (labor, materials, and any other resources that cost you money)
It’s best to look at this in a month or week view, so you have enough data you can examine.
For example, if your company produced $100,000 worth of goods in a given month, with the value of resources spent being $80,000, you would calculate your productivity like this:
You can use this ratio to determine if you need to balance costs and revenue better. Use it as a benchmark and keep calculating partial factor productivity as you make changes to operations.
Multifactor productivity (also known as total-factor productivity) is based on the ratio of total outputs to a particular subset of inputs.
It provides a better insight into a company’s productivity compared to partial factor productivity, but is also harder to calculate.
Let’s take a landscaping business, for example.
Maybe you generated $30,000 that month in revenue, while your materials cost $3,000 and labor cost was $8,000.
Do you have an office or a work vehicle? Add in any other overhead for that month to your labor and materials costs, and you have your input amount. For the sake of this example, let’s say overhead is another $2,000.
Employee productivity is a measure of how efficient employees are in completing tasks and projects.
Since the productivity of your employees can have a significant impact on your business and growth goals, it’s crucial that you measure productivity and work on improving it.
You’ll first want to learn more about the different productivity styles of your team, including Planners, Visualizers, Arrangers, and Prioritizers.
Then, you’ll need to calculate employee productivity manually (using the output/input formula or our calculator) or automatically using a solution like Hubstaff.
Hubstaff gives you an easy way to calculate your team’s productivity. It tracks work activity and provides you with detailed reports on how team members spend their work hours. It can also help you get a benchmark for activity rates, which you can use to identify changes or obstacles for your team.
As mentioned above, it’s all displayed on your dashboard, so it’s easy to check-in without having to interrupt your team and see how things are going.
To celebrate hard work, Hubstaff sends achievement badges based on activity rates and hours worked. This is entirely customizable, so you can always turn this feature off if you don’t want to use it.
Hubstaff can also be integrated with Hubstaff Tasks to provide you with even more detailed performance reporting.
When you’re ready, start a free trial and experience the productivity features for yourself.
If you’re looking to calculate productivity at the company level, you have two different options at your disposal: partial factor productivity and multifactor productivity.
Make sure to measure the productivity of your employees regularly and look for patterns or trends that could help you uncover what might be affecting productivity either positively or negatively at any given time.
Track time, measure your team's productivity, and discover ways to help team members become more productive.