Everyone has heard the term productivity and people talk about how productive it is and how it can be improved. However, few people know how to measure productivity, and they know exactly what it means when they use the term “productivity”.
In its simplest form, the productivity formula is: Output ÷ Input = Productivity.
For example, two salespeople each call a customer 10 times each week. The first sells an average of 2 times per week, and the second averages 3 sales per week. By concatenating the numbers, you get the following level of productivity for each salesperson:
For salesperson 1, the output is Sales 2 and the input is Sales 10. 2 ÷ 10 = .2 or 20% productivity. For salesperson 2, the output is sales 3 and the input is sales 10. 3 ÷ 10 = .3 or 30% productivity.
Knowing how to measure and interpret productivity is a valuable asset for any manager or business owner today. For example, in the above scenario, salesperson #1 is not doing as well as salesperson #2.
Knowing this information, you can now better decide what to do with salesperson number 1.
Some possible outcomes may be that you need more in-house training for that salesperson, or have you accompany a more productive salesperson to learn better skills. Salesperson number 1 is not suitable for sales and may do a better job in another location.
How to measure productivity with management techniques
Knowing how to measure productivity can help you fine-tune your business by minimizing costs and maximizing profits.
1. Identify long-term and short-term goals
A good understanding of what your (or your company’s) goals are is key to measuring productivity.
For example, if your company’s goal is to maximize market share, you can measure the productivity of your team by their ability to acquire new customers, not by actual sales.
2. Break down your goals into smaller weekly goals
The long-term goal is to get 1,000 new customers a year. There will be 20 new customers every week. If you have 5 members on your team, you need to attract 4 new customers each week, one by one.
Now that you have broken down, you can track each individual’s productivity every week by simply linking the numbers.
Productivity = number of new customers ÷ number of sales requests
3. System creation
Did you know that the French fries machine is always on the left whenever you enter McDonalds?
Because McDonald’s created the system. They decided that the most efficient way to set up a kitchen is to always have a French fry machine on the left side when entering.
You can do the same thing and you can adapt to your business.
Let’s say you know that the most productive salespeople are making the most sales between 3pm and 7pm. If other salespeople work from 9am to 4pm, a simple task like adjusting the working day could potentially increase productivity.
Knowing how to measure productivity allows you to set up, monitor, and fine-tune your system to maximize output.
4. Evaluate, evaluate, evaluate!
We’ve already used these productivity metrics to evaluate and monitor our employees, but don’t forget to rate yourself using the same metrics.
If you’ve set up a system to track and measure employee performance, but are still not meeting your goals, it may be time to look at your management style. Anyway, Your management It is a large part of the input side of the equation.
Are you the manager of the carrot or stick type? It can be of the opposite type to see if productivity changes. Are you managing your employees in groups? Perhaps taking a one-on-one approach is a better way to capitalize on each individual’s strengths and weaknesses.
Remember that you and your management style directly contribute to employee productivity.
5. Using a rating scale
Having clear and concise goals for individual employees is an important part of any attempt to increase workplace productivity. After setting goals or objectives, it’s important to get regular feedback from your employees about their progress.
Using a rating scale is a great way to provide a standardized visual representation of your progress. Using a scale of 1-5 or 1-10 is a great way to provide clear and concise feedback individually.
It’s also a great way to track long-term progress and growth in areas that need improvement.
6. Hiring “Mystery Shoppers”
This is especially useful for retail operations where customer service is important. Mystery shoppers can provide feedback based on what the average customer is likely to experience.
You have a company that either hires your own buyers or offers them for you. Whichever route you choose, it’s important for mystery shoppers to have a standardized checklist for evaluation.
You can ask for an assessment of employee friendliness, the time it took to welcome shoppers, the employee’s knowledge of your product or service, and anything else that is important to your retail operations.
7. Proposal Feedback Form
Using the feedback form is a great way to get feedback directly from your existing customers. There are a few things to keep in mind when using the feedback form.
Please fill out the form shortly first and leave room for additional comments, asking up to two or three questions. Asking people to fill out a long form with a lot of questions significantly reduces the amount of information you receive.
Second, keep in mind that customers are much more likely to submit a feedback form when they are dissatisfied or dissatisfied than when they are satisfied.
You can offset this trend by asking everyone to take part in a survey at the end of their interaction. This improves compliance and provides a broader customer experience to help you learn how to measure productivity.
8. Cost Effectiveness Tracking
This is especially useful if the employee has some discretion over the budget. You can track how much each individual spends and how they spend versus productivity.
Again, this is easy to connect to the equation. Productivity = amount fetched ÷ amount spent.
Having this information is very useful for estimating costs and estimating your budget.
9. Self-Assessment Use
Asking an employee to self-assess can be a win-win for everyone. Research has shown that morale improves when employees feel they are engaged and their opinions are taken seriously. As we all know, high employee morale leads to high productivity.
Using self-assessment is also a great way to ensure that your employees’ and employer’s goals are aligned.
10. Time management monitoring
This is the number one cause of productivity at work. Time spent browsing the Internet, playing games, checking emails, and making personal calls all contribute to productivity loss.
The trick is to limit these activities without being overbearing and without affecting your morale. Research shows that most people are fair and follow rules that apply equally to everyone.
Ideally, you might think that none of these activities should be done during company time, but your employees will have very different opinions. From a productivity standpoint, it’s best to have policies and rules that are fair for both while learning how to measure productivity.
11. New customer acquisition analysis
We’ve been told that “acquiring new customers is more expensive than retaining existing ones.” This is very true, but for your business to continue to grow, you need to constantly add new customers.
Knowing how to measure productivity by acquiring new customers can help you spend your marketing expenses in the most efficient way possible. Here’s another metric you can easily link to your formula. Productivity = number of new customers ÷ amount spent on acquiring those customers.
For example, if you run some kind of advertising campaign, you can compare the results and base your future spend accordingly.
Let’s say your total advertising budget is $3,000. I put $2,000 in television commercials, $700 in radio commercials, and $300 in print ads. Tracking the results reveals that TV commercials generated 50 new customers, radio advertisements generated 15 new customers, and print advertisements generated 9 new customers.
Let’s connect that number to the equation. The television produced 50 new customers at a cost of $2,000 (50 ÷ 2000 = .025 or a 2.5% productivity rate). The radio ad generated 15 new customers and cost $700 (15 ÷ 700 = .022 or 2.2% productivity). Print ads have 9 new customers and cost $300 (9 ÷ 300 = .03 or 3% productivity profit).
It is clear from this analysis that print advertising can be used to maximize advertising costs.
12. Using peer feedback
This is especially useful for people working as a team or group. Self-assessment can be very useful, but the average person is notorious for assessing one’s abilities.
Ask how many people think they’re above average drivers in a room full of people and you’ll see 70% hands raised! Now we really know clearly that about 25% of drivers are below average, 25% above average, and 50% average.
Are all these people lying? No, they don’t have an accurate assessment of their abilities.
The same is true at work. Peer feedback can often help you more accurately assess a person’s abilities than self-evaluation.
13. Encourage innovation and don’t penalize failure
Encouragement of employee input and adoption of ideas when it comes to productivity can be a great way to increase productivity. Let the changes you adopt lead to productivity gains.
Let’s say someone asks you for an entertainment budget so potential customers can play golf or have dinner. You can easily create a cost-benefit analysis using simple productivity metrics and extend the program to the rest of the sales team or close it entirely.
Either way, we’ve included employees in the decision-making process to gain valuable knowledge and increase morale.
14. Use of external evaluators
Using external evaluators is the pinnacle of objective evaluation. Companies that provide professional assessments use highly trained personnel specializing in specific industries.
They will design a complete analysis of your business productivity level. The final report provides suggestions and recommendations on how to improve your productivity.
The benefits of a professional evaluation are many, but the cost makes them expensive for most businesses.
These are just a few things you can do when learning how to measure productivity. Some may work in certain situations and some may not.
The most important thing to remember when deciding how to track your productivity is choosing a method that matches your goals. Once you make a decision, you are constantly monitoring your progress, making minor adjustments, and analyzing the results of your adjustments.
The business world is changing fast, and having the right tools to track and monitor productivity can give you a competitive edge.
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Featured photo credits: William Iven via unsplash.com