Ever wondered why some businesses are more productive and successful than others? Productivity is a priority for every company, but only some know how to succeed. The trick here is measuring productivity metrics to determine whether your productivity strategies are working.
Productivity metrics are Key Performance Metrics to measure the effectiveness of an individual, team, or organization. A business can boost productivity by tracking employee productivity metrics and optimizing workflow by identifying areas for improvement. These metrics showcase the:
There is only one way to measure productivity: By using accurate data. You may have CCTV cameras in every corner of your office to monitor whether your employees are working. You may also conclude that your employees are productive when you see them at their desks. However, such assumptions will not give you a clear picture of workplace productivity.
Your productivity metrics should include:
1. Specific information
The most critical productivity data comes from gathering information about:
This data gives you all the essential information you need to calculate productivity. You can add productivity calculations to your raw data to better understand your entire team's performance.
2. The sales growth
How productive is your sales team? An increase in sales is measured by sales growth from one period to the next. In addition to benchmarking their progress, this metric can help businesses set realistic goals. If costs are rising faster than revenue, then there is a problem.
3. Employee productivity formula
Does your company make the revenue it should, even if your employees work for 8 or 9 hours? Evaluating labor productivity is a critical indicator that is made possible by using the ‘employee productivity formula.
Employee productivity = Total revenue (for a specific time period)
__________________________________________________________________
The total number of hours worked for the time frame.
4. Cost-benefit ratio
When you take up a project or a big task for clients, the first question is, “How will this project/task benefit my company?” The cost-benefit ratio is a valuable metric to ascertain if a project is worth its money and time spent.
5. Revenue/employee
As the name implies, this metric evaluates the revenue generated by each employee over a specific period or for a particular project.
6. Team effectiveness ratio
The team effectiveness ratio compares your company's profits and the salary costs of your employees. Here’s a simple formula to find it:
Gross profit
______________________ =Team Effectiveness
Employee payroll costs
Using this productivity metric, you can identify whether or not you're investing in your employees effectively.
Also Read: Track Your Time, Track Your Progress: The Importance of Time Tracking
Whether you call it measuring, calibrating, or assessing, benchmarking simply means calculating and comparing the productivity of different teams in your organization.
It is important to measure numbers according to the functions of the teams responsible for the multiple operations in your business. Based on the resulting numbers, you can assess each team's productivity and whether it aligns with your business objectives. There are four ways to benchmark your team’s productivity metrics:
1. Tracking e-commerce productivity
Online store owners often focus on tracking and optimizing marketing campaigns but must pay more attention to the various back-office positions that make their store tick. To keep your site running smoothly, you should:
In e-commerce, service is a major expense, so merchants should pay close attention to metrics related to their service.
Tracking sales team productivity
Benchmarking your sales team’s productivity is one of the easiest things to do. Instead of getting lost in numbers, you can use this simple formula:
Aggregate Sales Productivity = Total sales for the year.
_________________________
Total number of sales personnel
2. Tracking agile metrics
Agile teams operate in a structured yet flexible environment where their projects and tasks are cut out for them. This structured approach allows you to track escaped defects, cycle time, and planned-to-completion ratios.
3. Tracking Customer Service
Customer retention and acquisition are among the most critical parameters of a successful business. To achieve this, it is critical to provide exceptional customer service that fulfills their demands. Your customer service can be productive only if your team is quick and efficient in responding to and solving customers’ problems. They should also have the marketing ability to encourage customers to buy more.
Wrapping Up
Measuring productivity is crucial because it allows you to identify areas for improvement. With these tips, you can benchmark your productivity metrics and ensure you meet your goals.
In the current digital age, employee productivity monitoring will also help you measure employee time spent on various tasks and time spent completing each task. Advanced time-tracking software like More/Hour gives you accurate analytical data for calculating your team’s productivity. Call our team to get a 7-Day free trial.
