Your organization has many layers. This makes it challenging to measure your staff's productivity. No metric, like billable hours or return on investment (ROI), covers the entire scope. Productivity reviews should measure all of the variables within your company. Some include revenue, attrition, and customer satisfaction.
Learn the most critical employee productivity metrics before beginning your review.
Why Should You Measure Employee Productivity?
An employee productivity analysis estimates your team's engagement, strengths, and productivity standards. These valuable insights can help you strategize better business goals and approaches for individual employees. You may even identify employees who are under or over-utilized. As a result, you can optimize the time employees spend working. You can also keep your company culture healthy and worthwhile.
11 Employee Productivity Metrics You Should Track
Employees' workloads comprise various key performance indicators (KPIs). Looking at one KPI isn't enough to gauge an employee's overall performance. Doing so might overlook separate strengths, weaknesses, and accomplishments. Instead, you should measure productivity and performance using several factors.
Tracking the following workplace metrics will help you analyze employees' productivity and improve performance accordingly.
1. Revenue per Employee
Your organization's "revenue per employee" describes the average earnings generated by each staff member. To determine this key metric, divide your organization's total revenue by the number of employees. Knowing this number can help you in many ways, from reviewing employees to identifying growth opportunities.
You may notice differences in individual employees' productivity and revenue at a base level. For example, if ten salespeople make up your organization, each employee should contribute about 10% of the total income. A salesperson accounting for only 5% of that revenue may be less productive than the others. An employee with 15% may need a raise.
That said, the above example is quite over-simplified. Many departments, such as accounting, human resources, and reception, don't directly bring in revenue. So, you won't always be able to use revenue per employee when reviewing their performance. However, tracking this productivity metric long-term can still help you identify changes in income and engagement. This is especially true when comparing it to other factors.
2. Employee Attrition Rate
Employers often measure attrition rates to gauge employee turnover and retention over a period of time. To determine this metric, divide the number of employees who have left your organization by your total number of employees during that time.
The employee attrition rate is a useful employee productivity metric. It lets you easily gauge your turnover frequency across different timespans. For instance, you can calculate your attrition rate yearly to see if your employee turnover and culture have improved long term. For best results, consider separating these metrics by the reasons employees left. This includes voluntary attrition and termination.
3. Absenteeism Rate
Your team's absence rate describes the number of days that your employees miss. Like attrition rates, you can measure your absenteeism over different periods of time. For example, by month and year.
To determine your absence rate, first find the total number of working days in your timeframe. To do this, multiply your number of employees by the number of workdays. So, if you have 10 employees working 60 days per quarter, your organization has 600 quarterly working days.
However, if your employees have different full-time and part-time schedules, you may need to combine each person's working days individually.
Once you've finished that calculation, divide the number of employees' absences by the total number of working days. This percentage will reveal the frequency of absences over a particular period of time. You can compare how your absent rate has changed over time. This can help you gauge which employees may be abusing the system.
4. Employee Utilization
Depending on their role, many employees' work alternates between billable and non-billable hours. For example, a therapist bills clients for appointments but does not bill for care planning and scheduling. Most billable positions require a fair balance between these two types of work. This balance guarantees they can give clients and customers the best attention possible.
Your employee utilization measures your organization's billable and non-billable hours. Measuring the average time utilized across your team can help you maintain balance and find growth opportunities. It is usually depicted as a ratio or percentage.
5. Focus Hours per Day
Ongoing studies show that humans can only maintain their maximum focus for four to five hours per day before burning out. These limitations are critical to consider in the workplace. This is especially true when optimizing your company culture and labor productivity.
This employee productivity metric is harder to measure since every person's work process varies. Instead, consider your team's maximum daily focus hours when creating schedules and workflow.
Avoid giving employees more than four hours' worth of daily high-focus work. This includes tasks like detail-oriented paperwork and one-on-one client interactions. Instead, mix lighter administrative tasks into daily workflows. Spread out heavier projects across the week. In doing so, you can limit mistakes and avoid employees returning to work exhausted.
6. Total Cost of Workforce
Your organization's workforce costs comprise all of the money spent on staffing. Measuring this metric alongside your revenue per employee lets you compare your spending to your resulting income.
The total cost of your workforce includes more than what's on employees' paychecks. Combine the following factors to determine your overall labor costs:
- Salary, wage, and commission
- Overtime and premium pay
- Bonus pay
- Paid time off (PTO)
- Insurance benefits
- Retirement benefits
- Human resources
- Onboarding costs
- Training costs
7. Overtime Hours
Most businesses offer overtime pay at least 50% higher than standard wages. Though overtime can improve your employee productivity rate, the extra work performed isn't always worth it.
You should keep track of the number of overtime hours worked every week or month. Then, compare this metric to your total workforce costs, revenue per employee, and employee utilization. In doing so, you can determine if overtime is beneficial. Or you may discover underutilized work hours that employees should use instead.
8. Customer Satisfaction for Client-Facing Employees
Your organization's customer satisfaction score is one of the most reliable metrics for gauging your brand and image. It's also critical for evaluating employee performance, depending on each staff member's role.
If your organization doesn't have one already, introduce an easy platform for clients and customers to give feedback. Most businesses feature short surveys on their websites, incentivizing employees to market them. In doing so, they maximize the amount of available feedback for more accurate and detailed results.
9. Planned-to-Done Ratio
Planned-to-done metrics evaluate employee productivity based on individual performances. This ratio compares the number of tasks an employee completes to the total number of assigned tasks.
The planned-to-done ratio lets you compare overall employee output. You'll likely need to calculate your team's performance for the best results. For example, if your entire staff has significantly more planned tasks than completed tasks, you may need to revise how you delegate work.
Since most roles' tasks differ, you should still take each metric case by case. An employee may be behind on tasks because they're genuinely unmotivated. Or they could be distracted by their environment, have too much work, or not understand their full expectations. It's often better to talk to staff about their employee experiences rather than take planned-to-done ratios at face value.
10. Human Capital ROI
Your human capital return on investment (HCROI) combines your organization's revenue per employee and total workforce cost. This metric is ideal for measuring output on a monetary scale. This way, you can appreciate what each employee brings to your company and determine if there's room to hire new staff.
To calculate HCROI, first, subtract your operating and workforce costs from your gross revenue over a select period of time. Then, divide this gross revenue by your workforce costs to learn your ROI percentage.
11. Employee Satisfaction
Knowing your employee satisfaction is essential for your team's productivity and retention. Simply put, employees unsatisfied with their jobs will often find a new position elsewhere, especially in today's hiring market.
Unfortunately, employee satisfaction is one of the most challenging key metrics to determine. Many employers use frequent surveys and one-on-one meetings to gauge their teams' thoughts. Still, some employees may hesitate to share criticism or express dissatisfaction because they fear retaliation.
Instead, getting involved with your company culture is the best way to measure your employee satisfaction. Learn more about your teammates.
Start Tracking Productivity To Improve Performance
Tracking productivity is often more challenging in hybrid and remote workplaces, but it doesn't have to be. With modern technology, a proactive approach, and a positive culture, you can gain more insights and data as your team grows. This will make it easier to maximize your hybrid hours and learn from your employee productivity metrics.
