How To Measure Productivity At Your Company?
Wondering how to measure productivity?
Everyone wants to be more productive.
You can get more done and waste less time and energy.
But how do you measure how productive you and your team are?
Should you measure the number of tasks completed, hours worked, or lattes sipped? 🍵
This article will cover the different productivity metrics most businesses use and how they can help you.
- What Is Productivity?
- How To Measure Productivity
- Other Factors That Can Affect Productivity Metrics
- How To Improve Productivity: Use ClickUp Goals
Let’s get kickin’!
What Is Productivity?
Before measuring productivity, let’s first get on the same page over what it is.
Productivity means different things in different contexts.
Productivity helps you measure how efficiently you can produce outputs (like a product or a service) from many inputs (like capital, raw materials, time, or labor).
For example, if you finish assembling a piece of furniture (labor productivity) after three cups of coffee, but your team member needs four cups to do it, you’re more productive.
You both also need a caffeine detox, but that’s another story.
As a society, we’re obsessed with productivity improvement and are always on the lookout for that fantastic sales hack, tip, or tool to do more office or remote work in less time.
In a recent survey by ClickUp, we found that more than half of employed Americans (51%) say they lose at least one hour per day being inefficient at work. That’s why streamlining workflows, identifying any inefficiency, and helping you stay on top of your tasks is our top priority!
How To Measure Productivity
Want some good news?
You don’t need to conduct a complex labor productivity analysis to measure productivity.
When it comes to measuring productivity, all you need are a few basic metrics and fundamentals.
This section will show how you can measure productivity for:
It’ll help you understand if you’re just spinning your wheels or adding something valuable.
And most importantly, it’ll help you answer a very intriguing question at work:
What about those mythical salespeople spending all their time at the golf course… are they “productive?”
How To Calculate Productivity For Businesses
Before establishing key productivity measurement metrics, you need to know what you’re aiming for and get a feel for the state of your business or department.
One primary way to determine your productivity index is by looking at the cold, hard facts, aka the productivity data.
Let’s say you’re focusing on revenue to determine productivity.
Productivity in terms of revenue generated per employee can be calculated by dividing the total output (revenue) by the total input (number of employees).
Productivity = Total Output / Total Input
So if your company makes $100,000, and you have 20 employees, then your productivity formula in terms of financial output would look like this:
Productivity = $100,000/20 = $5000 per employee
However, remember that this is just a raw number.
It doesn’t consider expenses of any kind.
It also doesn’t consider the value, expertise, or position of any worker or team member.
There’s value in understanding this efficiency ratio, but it would be wise to combine it with a different productivity measurement.
What you need to adopt is a multifactor productivity measurement approach.
You can do that by adding a period of time to this measure of productivity to capture the average, such as per month or week, for work.
Then, you would have a benchmark or baseline that you could improve upon.
So if $100,000 was your revenue for one week, your average employee productivity would be generating $5000 every week.
You can then use this information to implement policies that help you achieve more than $5000/employee per week.
Note: You don’t have to limit yourself to just revenue per employee when calculating productivity, here are 35+ other KPI examples you can use.
In fact, let’s carefully go over another KPI that’s especially helpful in determining productivity at work:
Another Organizational Productivity Metric: Team Effectiveness Ratio
Think about your total gross profit (revenue minus all your expenses) in comparison to the total expenditure on your whole workforce.
Then, divide it by the number of employees if you want.
This productivity measure doesn’t consider the amount of time spent and only considers the overall productivity of your employees in their work.
It emphasizes team performance over time and honors the contribution of each individual employee.
There’s one significant limitation when calculating the organizational productivity metric:
Some employees may be doing the heavy lifting, and the average doesn’t do them justice.
It’s like Robin taking all the credit when Batman does most of the work!
How To Calculate Productivity For Individuals
Each employee or worker has a different role on your team and will impact workplace productivity differently.
For example, let’s say you’re running a small business offering a software solution.
In that case, individual remote employees or remote workers will be tasked with revenue-generating activities, while others will be involved in maintenance, knowledge work, or management of one, or even multiple, virtual software solutions.
That’s why the method for measuring employee productivity must be different for different departments or businesses.
When it comes to individuals, you can measure an employee’s productivity in terms of:
- Sales Productivity
- Customer Service Productivity
- Software Development Productivity
- Marketing Productivity
A. Sales Productivity
Some worker productivity metrics to measure here include:
- New accounts opened per month
- New contacts made per month
- Number of sales closed per month
- Amount of sales activity per day (number of emails sent or calls made)
- Total sales closed
- Number of hours spent on the golf course with leads 🏌
B. Customer Service Productivity
Some metrics to use here are:
- Number of customer replies
- Percentage of the replies
- Quality of customer feedback
- Level of customer satisfaction
- Number of amazing reviews received 😉
C. Software Development Productivity
These are some metrics to consider:
- Time spent on a task
- Time spent on a sprint
- Number of hotfixes completed
- Number of keyboards NOT broken!
D. Marketing Productivity
Some metrics to take into account here are:
- Number of marketing-qualified leads acquired
- Website or social media traffic
- Number of inbound requests for more information
- Number of viral trends started (we wonder what happened to Dalgona coffee 🤔)
E. Productivity Metrics For Other Industries
We could go on forever here, but we’re just limiting it to three industries for now:
Manufacturing Productivity takes into account:
- Employees’ schedules
- Number of people on each shift
- Quantity and quality of the production process
Food Service Productivity considers:
- Cost of food
- Cost of labor input
- Cost of any additional supplies
- Waste of resources
A Law Firm or Creative Agency Productivity often considers the billable number of hours worked as a metric for calculating their performance index. It’s based on the understanding that each individual employee must bill a certain amount of time at the firm or agency.
Tip: If you’re curious about what other metrics you can use, check out our ultimate guide to business metrics.
Other Factors That Can Affect Productivity Metrics
When measuring productivity, it’s a great idea to consider these aspects:
If you want to be more productive tomorrow than you are today, you first need to know what you did today.
And that means measuring. Otherwise, the data won’t be valuable.
Yup, it’s all relative.
Thank you, Einstein!
Remember to track your department’s productivity over a set amount of time.
Your whole organization may have critical metrics for this (such as revenue, labor input costs, etc.), but it may help your budgeting process to drill down on these numbers to understand your department’s work.
Identify your most important factors or metrics that contribute to the team’s productivity, and start tracking them to compare your productivity gains later on. This helps you understand how much you’ve improved your productivity since the last time you measured it.
2. Value Creation
The number one objective for just about any company is creating a product or service that has intrinsically more value to the buyer than it costs to produce. This is important because, without profit or productivity growth, a company can’t sustain itself.
To figure out value, subtract the total production costs, marketing, administration, and other overhead costs from the total sales revenue.
If the result is a positive number, you may not care about your team’s productivity as much (though you should!).
It also helps you to clarify and refine those areas that require productivity improvement.
How To Improve Productivity: Use ClickUp Goals
There are a few organizations where goals are created and then tossed aside in short order.
Not because they were necessarily bad goals, but because they had no reason to keep them around, as they couldn’t tell how they directly related to their work or total productivity.
With ClickUp Goals, you won’t have that problem!
Goals are embedded into the platform, making it simple to attach tasks and specific measurable actions to your objectives, targets, and critical results.
Here’s how ClickUp goals are awesome:
1. Goals Are Front and Center
Goals are in your navigation bar, right where you start tasks and access different views.
Just look for the trophy icon!
2. Goals Have Targets
You can also attach specific Targets or tasks to each high-level goal setting to ensure there’s a path to reach it. As you complete each Target, you move closer to achieving your Goal.
This ensures that your short and long-term goals are attainable and not just pipe dreams!
3. Goals Are Measurable
Use numbers, completed tasks, currency, or a simple true/false binary to help your team establish their Goals.
You can also set due dates for goals to keep track of your progress.
Measuring organizational productivity and individual productivity is crucial.
However, when considering a productivity measurement system for your team, don’t ignore the human element.
People aren’t just metrics!
Work collaboratively with your team to establish a productivity metric that works for you.
This increases employee engagement and makes them more invested in achieving better team productivity!
So why not get ClickUp for free today to take your team’s productivity level to the next level!