Productivity metrics and how to review them

17 of October, 2022

Two of the terms that an employer must never lose sight of are efficiency and quality to ensure that the company’s activity is productive and that it can achieve its short- and long-term goals. In this sense, productivity metrics like key performance indicators (also known as KPIs)  are used.

Here is a complete guide to analyze productivity metrics, keeping track of your employees’ task management. Keep reading!

Why is it important to measure productivity KPIs?

Productivity metrics or Key Performance Indicators synthesize information to determine the most productive actions of your workforce. In addition to knowing the best tools to increase your staff’s productivity, discover why it is interesting for your company to use KPIs and all that their analysis entails:

• Providing useful information for the company.
• Measurement of certain variables and results.
• Comparing information against competition and industry data.
• Analyzing information and drawing strategies based on it.
• Decision making based on the information gathered.

Productivity metrics you can’t miss

The process of identifying productivity metrics in a company requires both time and effort, but once they are established, they are a very valuable asset for business management. The type of metrics relevant to measuring productivity depends directly on the needs and goals set out in a business strategy.

• Quantity: if the interest of your KPI analysis lies in knowing data associated with quantity you can focus on: the number of projects delivered or products produced, number of invoices issued.
• Quality: in this case, the most interesting data are: mistakes, reviews, defective products, complaints or comments.
• Speed: when we talk about speed KPIs we mean delivery times, estimated time comparison, units produced per day, etc.
• Cost: in this case, we are talking about the relationship between employee cost versus the final expenditure of a project.

Regardless of whether they are KPIs that refer to quality, quantity or speed, there are some key data to determine the productivity of an employee. Write down the following metrics to know the true effectiveness of a project:

• Average time per task: this metric is essential to know the differences between work areas, analyze those that are not as profitable or effective and suggest improvements. Average time per task = total time of a task / number of times performed.
• Work rate per employee: when calculating this indicator, it clearly differentiates billable hours from non-billable hours. Work rate (%) = (total monthly billable hours/total hours logged) x 100.
• Profit per employee: if you want to find out what is the real profit generated by an employee, you can calculate it by applying the following formula: Profit per employee = total profit / number of employees.

Key strategies and techniques for measuring productivity

Measuring productivity is the starting point for understanding your team’s performance as well as project profitability.

There are two simple ways to do this: for example, you can calculate the productivity of a sales department by dividing total revenue by salespeople. Or you can find out the productivity rate based on industry standards.

Below, we have compiled the basic concepts and techniques for optimizing productivity metrics. We will explain what they are, why they are necessary and how you can implement them to boost your business.

Productivity tracking software

Analyzing productivity metrics without using a productivity tracking software can be a complicated task. These types of tools generate reports based on the most relevant KPIs by applying a productivity formula and using data like the time employees spend on tasks. 

By using several tools to improve employee productivity you can obtain information in just one click. Like in the case of The Pomodoro Time Tracker, a tool to manage and administer time efficiently that structures work in phases of 25 minutes with 5 minute breaks.

In the specific case of Sesame HR a time tracking software with extended features you can find a task manager and a project manager where workers add the tasks and projects they are working on and track the time spent on them. A task manager like Sesame HR allows you yo see how much time has been spent on effective or productive work and how much time has been spent on interruptions or less productive tasks.

Do you want to improve your employees’ productivity? Know real-time metrics such as activity rate using a software. This means better management and helping workers to progress in their work tasks. Analyze each project and team member. With the use of a task manager and agile project management tool you can get productivity reports to make smart decisions.

Employee productivity formula

If you want to find out the relationship between the time an employee has spent at work and the units produced in that time, you need to use the productivity formula.

Productivity = Production / resources used 

When applying the formula you could measure, for example, the number of tasks completed among the projects delivered. However, it is important to keep in mind that not all tasks require the same time or effort. 

Revenue per employee productivity metric

The ratio of revenue per employee can be useful in analyzing productivity metrics for certain teams or departments such as sales or marketing, as well as in other areas of production where the work is much more measurable.

Productivity = Revenue / Total number of employees in the department

Sometimes not only productivity indicators must be taken into account, but also production quality, because generally when applying the productivity formula, equations are used in which only the delivery of the product and the hours invested by the team are counted.

Measure productivity and draw conclusions

Once you have identified the most relevant metrics to measure employee productivity, you will know how employees perform their jobs, what their strengths and weaknesses are, the issues to improve and how to reorganize workloads to get the most out of each team member. 

Finally, don’t forget that productivity metrics are essential for each employee to review their efficiency with these data, compare themselves with other team members, feel motivated, engaged and aspire to grow in their work environment. Therefore, the concept of productivity is not only associated with efficiency, but also with the psychological need of each team member to know how to improve professionally and to know where they stand in terms of their department or team.