HR MANAGEMENT - How do I Measure Employee Productivity Performance?

How do I Measure Employee Productivity Performance?

by Owen E. Richason IV, Demand Media

Employee productivity can be measured with simple calculations.

Measuring employee productivity is a difficult task for small businesses. Journalist Saheli S.R. Datta points out in CNN Money, "The standard economic measure of productivity--dividing company revenue by number of employees--won't help you make operational improvements. Nor can you simply count the widgets they ship per week, as factory managers do." But methods do exist for measuring your small business's employee productivity. With a little creativity and number crunching, you will be able to put numbers to everyday operation.

Step 1

Establish a baseline. You need a starting place to measure employee productivity at large. Using your small business's normal or day-to-day business operation output, set an average for the total amount and then divide it by the number of employees. If your small business is watch and jewelry repair, take the average number of repair services performed in the course of a normal business day and divide it by the number of employees to yield a baseline.

Step 2

Identify and subtract productivity limiters--things that hamper employees' ability to execute their jobs. If your small business provides residential lawn maintenance and pest care services, having employees fill out customer invoices by hand and writing work orders by hand take more time than supplying preprinted, completed documents. Look for redundancies also and eliminate them. David Sward at Intel describes it this way, "Don’t forget to take into account any fundamental restructuring that eliminates all or a portion of activities; these are often innovative changes."

Step 3

Create a spreadsheet. Having eliminated redundancies and time-wasting activities, coupled with establishing a baseline, you now have the ability to measure employee productivity performance. Start a new spreadsheet and place each employee's name on it along with columns that track individual performance relative to your baseline. If your small business writes software and your baseline is "X" units written per day written, divide the total number of units by the number of employees and then compare that to each individual's output. This identifies which employees are meeting, exceeding or failing to meet the daily average.

Step 4

Re-evaluate your productivity measurement. Every quarter to six months, establish a new baseline to ensure it is accurately reflecting current operating conditions and re-evaluate each employee based on the new standards.