HR MANAGEMENT - Measurements of Employee Productivity

Measurements of Employee Productivity

by Jason Gillikin, Demand Media

Employee productivity can be measured in several ways, depending on industry.

As more businesses try to achieve greater efficiencies with fewer employees, productivity measurement is becoming a staple labor metric for many organizations. Measurement systems lack uniformity because employees perform a variety of tasks--some routine, some complex and some that defy easy assessment. Nevertheless, employers use several approaches to measuring employee productivity.

Core Measures

Budget-conscious employers track several core measures related to employee performance. Employee productivity--or the relative efficiency of how employees produce goods or provide services--is a part of a larger package of measures, including overtime rates, annual employee turnover and staff satisfaction. All these measures taken together give executives insight on how to achieve superior performance from their workforce.

Unit of Service Analysis

Companies in the service industry may use a "unit of service" as the basis for measuring labor productivity. These companies identify the basic unit of output and an use this value to calculate efficiency scores. For example, in health care, an inpatient nursing unit at a hospital might use a single patient as one unit of service, so a nurse who cares for four patients in the first half of her shift and five patients in the second half has an average hourly unit-of-service score of 4.5 for that shift.

Hours Per Product

Manufacturers of complex products use a variant of a basic "hours per product" measurement. For example, an aircraft company might determine that it takes 5,000 labor hours to assemble an airframe, so productivity is assessed on how many actual hours accrue to each assembled airframe. This method is useful for larger projects where each employee's individual contribution is less relevant than the outcome of the project as a whole.

Ratio of Productive Hours

Employees in call centers or other jobs where productivity is a function of time spent available to customers, might be measured based on how many working hours are actually spent in frontline service. For example, a collection agency could measure how long each employee is logged into the phone system as a percentage of total time on the clock. Meetings, training, lunches and other time away from the customers is considered non-productive.

Products Per Hour

Many small businesses, especially those involved in product assembly or manufacture, measure productivity by counting how many items each employee completes per hour--or day, or week. A fish processing plant, for example, might calculate how many pounds of fish each employee cleans and fillets in a shift.

Methodology

Productivity measurements are most useful when they relate to a target. Managers define targets by looking at industry best practices, or by performing a time study to determine the optimum amount of time needed to complete a specific task. Productivity scores unrelated to a target or average performance provide little information to help the manager or the employee to improve their scores.