The importance of knowing how to calculate the productivity of an employee correctly

Good human resource management in a company is essential to staying competitive in a world where competition is increasingly fierce.

And to be able to evaluate the results of each employee, it is paramount to define strategies and changes to achieve improvements in your business.

But, do you even know how to calculate the productivity of an employee?

What is productivity?

Before figuring out how to calculate the productivity of an employee, you need to better understand the definition of productivity.

The concept basically refers to the relationship between what was produced and the resources used to make it.

So, from this idea, you will be able to establish how productive your company is being.

Many believe that this concept is only associated with quantities, but they forget to consider another important factor: quality.

Therefore, before stating that a company is being productive, it is also necessary to define the quality the company wishes to offer its customers.

Similarly, employee productivity can also be related to this. So, consider factors such as the amount of hours spent to perform a function as well as its production value.

After all, a collaborator who delivers tasks very quickly, but with several errors, can not be considered a model of productivity.

And another that can deliver with quality, but with extreme delays or high costs, also presents a productivity problem.

How do you define this calculation, then?

How to calculate the productivity of an employee

When considering the business environment , productivity can (and should!) stop being just a concept to be defined based only on cold statistics.

You can use a general formula:

• PRODUCTIVITY = value of useful outputs ÷ by the total costs to obtain outputs

There is a variation, in a more financial sense:

• PRODUCTIVITY = total revenue ÷ total cost

Starting from these two principles, you can still adapt the formula to several fields in your company.

That is, it will be possible to measure the efficiency of a machine and also to calculate the productivity of an employee, for example.

When evaluating your team, you can further customize the above formula according to the activities performed and the specific functions of each employee within the company.

It is also possible to combine more than one index – all resulting from this calculation – for further analysis.

For example, do you want to evaluate the productivity of a customer service officer?

Two factors could be defined.

An index that considers the number of calls made per hour. In this case, John and Peter were analyzed:

• John attended to 12 people in 8 hours of work during one day. His productivity, therefore, in this case, is 1.5 people / hour.
• Peter was able to assist 16 clients in 8 hours of work in the same period. That is, his productivity was 2 people / hour.

Apparently Peter is more productive than John, however, in another stipulated productivity index, which is a little more refined, that considers the consultations performed with satisfactory quality assessment by the client:

• John attended to 8 people satisfactorily in 8 hours of work. His productivity is 1 satisfactory customer service / hour.
• Peter served 6 clients satisfactorily in the same period. That is, his productivity was 0.75 quality customer services / hour.

Therefore, the situation reverses, and John can be considered more productive than Peter in the period in the analyzed case, if quality is used as an important performance indicator in his company.

Still in this example, you could combine the results obtained with another index: the amount of complaints about the service.

You just need to divide the number recorded by the hours worked in the same period. That way, you would be able to assess which employee is generating greater customer satisfaction.

Therefore, it is very important to define what is important to the company’s strategic objectives before defining employee productivity ratios.

Step by Step Employee Productivity Formula

Before you leave by putting into practice the methodology learned above, it is important to follow some steps for how to measure the productivity of employee’s objectively and assertively:

1. Understand your business, employees, functions and activities within the company;
2. Determine what should be valued in the work of your employees, that is, what will be the focus of your evaluation;
3. Choose a time limit to measure such factors (One hour? One Day? A month? 6 months?);
4. Define the two quantities and analyze them (customer service / hours, sales / employee, etc.) to see if they portray something relevant to the business.

Some things to be careful of when measuring employee productivity

Before performing your calculations and analyzes, it is very important to be careful about some aspects:

1- Not all the important factors to determine whether an employee is productive or not are measurable

For example, issues such as the level of employee psychological satisfaction, accident risk, team relationship quality, and brand identification all have an impact on the productivity of a company’s employees.

However, these are factors that can not be quantified in numbers, but nonetheless, they are still relevant.

Therefore, do not disregard these aspects when measuring employee productivity.

2- Perform frequent follow-ups

You have to keep up with the data on a regular basis, after all, the information that will determine how to calculate an employee’s productivity needs to be collected in  a truthful and up-to-date way.

3- Use technology in your favor

Getting the necessary data, as well as constantly monitoring this information, requires a lot of attention, time and work.

Therefore, look for options (such as data logging software, spreadsheets, applications, etc.) that can aid the reliability of recorded data and optimize time spent on these tasks.

The method of how to calculate the productivity of an employee in a company is important

As seen, human resources in a company are central to ensuring that businesses achieve the expected results.

For this, it is essential to maintain a team of engaged, motivated and productive professionals.

Therefore, knowing how to evaluate the productivity of an employee, based on proven data and evading “gimmicks” or personal preferences, can give managers more accurate decisions about who to maintain and replace in the team.

In addition, by knowing how to calculate the productivity of an employee correctly, you can detect potential efficiency problems and adopt strategies to decrease them.

Still, it is worth mentioning that the productivity of an employee is related to how much they feel valued in work. Just measuring productivity and not praising those who are most effective can affect all the company’s efforts to achieve better results.

Siteware works with STRATWs One, a robust and intuitive Corporate Performance Management Software, which aligns employees with the operation and strategy, and in turn increases productivity in companies.

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