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G2 Leader Fall 2024Productivity is a hot topic no matter what industry you’re in. One question is sweeping through workplaces, from hospitals to agencies to construction sites: How can your team get more done and work more efficiently?
Calculating quantifiable productivity can help you find out.
Employee productivity measurement shows how efficiently you and your employees complete a task or project. By calculating productivity and comparing it over time, you can identify opportunities for improvement.
These productivity benchmarks can help you notice potential issues in your business operations. For example, shifts started late 50% of the time this past month after a new policy started, compared to your typical benchmark of 25%. That realization could inspire you to stagger shift starting times, add more people to a shift, or give teams time to gather before they begin the day.
No matter what drives you to research productivity metrics, you should know a few things to measure productivity more accurately.
For an employee to be productive, they need to be focused and motivated. However, they also need the proper tools and workflows to do their job.
In other words, low productivity isn’t solely due to an employee’s work ethic.
Low team member productivity can indicate employee disengagement, collaboration issues, or inefficient workflow processes. It may also point to new changes causing disruptions or old tools failing to adapt to modern needs.
These are all things a manager or business owner can work to improve.
When teams are productive, projects get done on time, budgets stay on track, and collaboration is easier. In this guide, we’ll show you how to calculate productivity while considering different approaches to productivity.
Your goal is to learn how to measure employee productivity while also creating a positive work environment.
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To understand your employees better and find a way to improve their productivity, you need to learn more about how they work and how they approach projects.
There are four standard versions of these productivity styles:
The Planner
The Visualizer
The Arranger
The Prioritizer
The Planner is a highly organized, detail-oriented individual. Planners are disciplined and usually structure their day around their to-do lists.
They anticipate problems, find flaws in project plans, and make the proper preparations for completing tasks.
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The main issue with Planners is that they’re not very spontaneous and can’t work well if they don’t have a detailed action plan.
Tips for helping a Planner improve productivity:
Help Planners plan their workflow by providing meeting agendas and detailed project plans.
Don’t waste their time with pleasantries. Get straight to the point and give them the information they need to proceed with a project.
Reply to their emails or Slack messages promptly. Ensure you’re on time for every meeting with them because they often view this as a sign of respect and focus.
Visualizers are creative and tend to think in terms of the bigger picture. They have a broader approach to tackling projects and tasks.
A Visualizer is often disorganized but thrives under pressure. Visualizers get bored quickly, so they prefer working on multiple projects simultaneously.
Since they’re very spontaneous, they can sometimes derail projects.
Tips for helping a Visualizer improve productivity:
Explain why they must do things in a specific way to prevent their spontaneity from derailing projects.
Give them the space to express themselves and their ideas, and ask them to help visualize projects for the team.
Pair them with a Planner who can help them get more organized if needed.
The Arranger is a great communicator and works well as a part of a team. Arrangers are very supportive but also persuasive.
They ask a lot of questions and openly address their concerns. Not only are Arrangers happy to share their feelings, but they also enjoy listening to others and being emotionally supportive of their co-workers.
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The main issue with Arrangers is that they don’t work as well on their own. Being part of a collaborative team will help them thrive and keep them from feeling lonely.
Tips for helping an Arranger improve productivity:
Schedule one-on-one meetings with Arrangers to let them express their concerns, ask questions, and share their ideas.
Organize regular company retreats where Arrangers can connect with their co-workers on a deeper level.
Avoid projects that have long periods of quiet between check-ins and meetings.
Prioritizers are analytical and data-driven individuals. They’re very effective at managing their time and prioritizing high-value tasks.
Prioritizers are goal-oriented and have excellent problem-solving skills. They tend to keep to themselves and aren’t always effective team players.
Tips for helping a Prioritizer improve productivity:
Minimize their exposure to Arrangers and Visualizers, who might stifle their productivity.
Since they're very efficient on their own, it’s best to leave Prioritizers to do their thing and manage their time themselves.
Offer independent ways to confirm task completion, but add a mix of meetings for more significant status updates.
As you can see, all four productivity styles bring something unique to the table.
While none of these styles is better than the others, it’s crucial to fully understand them to help your team members become more productive.
There are several different ways to measure and calculate productivity. The most commonly used formula is called labor productivity, and it looks like this:
Employee Productivity = Total Output / Total Input
Output is usually measured in the amount of revenue generated, while input is measured in the number of hours worked. This is great when you have actual output numbers and basic benchmarks established.
For example, if an employee generated $100,000 for your business within a year (2,000 work hours), their productivity could be stated as generating $50 per hour:
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This number then becomes your benchmark for future productivity. When you aim to improve it by evolving processes or adding more tools for automation, ideally, that number goes up.
Revenue per employee can be a useful metric for a successful business to know, but it’s important to consider both individual and workforce productivity.
Are you looking to simplify your calculations?
Enter your information in the fields below and get a benchmark for productivity.
Start with monthly amounts to make it easy with a standard base period. You can examine this at the level of individual employees or add up your team members to get a company-wide view. It uses a straightforward productivity formula to get you thinking about these measures.
Hours worked:
Number of team members:
Costs of goods sold ($):
While the labor productivity calculation is the most common, other employee-level measurements can be used depending on your team’s goals.
If you’re running a software company and looking to judge the productivity of one of your support team members, you might look at tickets resolved or the number of customers contacted in a day.
Here’s a look at this productivity formula for customer service representatives:
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If a team member could fully resolve seven issues out of twelve conversations that started during their shift, their productivity level was 58%. That average may indicate you need to boost productivity among customer service jobs for a better overall company performance.
There are other inputs you should consider depending on your business.
One company modified the marketing metric PPC (pay-per-click) to track pay-per-seat to motivate their sales team.
"We work out how much a salesperson costs us in total for the year by adding up their salary, bonuses, vacation, office energy, office drinks, uniforms, staff socials, and more. This total is then divided by the working days in the year, giving us a daily gross amount."
The objective is to at least hit that target, which puts a real-life comparison for reaching sales goals.
Another popular metric for service-based work is utilization rate.
Utilization rate compares billable vs. non-billable time during a workday or workweek. You can use utilization rates as a benchmark in many different settings, from health care to software development. Productivity measured here is more flexible but still has an optimal efficiency ratio.
"The service-business industry is people-focused, so utilization and budget performance are the two most important productivity measurements we use"
An agency might use utilization to determine how much time their employees spend on client work compared to internal projects. Health clinics might calculate utilization rates based on time spent with patients vs. time spent charting or doing admin work.
Once you have a working formula and are measuring your company’s productivity regularly, you’ll also want to create a productivity index to see if your employees are becoming more or less productive.
Which leads us to the next question: What’s a reasonable productivity rate?
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The productivity percentage you should aim for will depend on your specific business and each person's job.
Team members with longer project lifecycles will have fewer outputs to measure, while those with quick turnaround tasks will have a higher volume. That’s why it’s crucial to think about productivity percentages as benchmarks.
Let’s take utilization rates, for example. Here’s how one company looks at them:
"Once the utilization rate hits 75%, that is a signal that we need another member of staff to cope with the workload"
"75% is the cut-off because there needs to be a buffer for personal projects, coffee breaks, and unexpected work."
Here’s a sample chart and productivity formula that Downes uses for his team’s utilization.
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For this reason, using your own data will lead to better metrics and more accurate goal-setting. That said, referencing an outside perspective can be helpful.
"According to a recent study, the average employee is productive for 2 hours and 53 minutes during a standard 8-hour workday."
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If you’re using software to track and measure your employees’ productivity, remember that each solution will use a different productivity formula, so your results might vary from one tool to the next.
One of Hubstaff’s introductory productivity measurements is called activity rates, which rely on mouse and keyboard usage. Every ten minutes of work provides a percentage that is added and averaged for the day and week.
Every person who tracks work time with Hubstaff has access to their own data, so they’ll see everything their manager does, including activity rates.
When customers ask about a reasonable activity rate, we advise them to analyze rates as trends. There is no perfect rate that applies to everyone, as it all depends on the work you’re doing.
Someone who makes phone calls or reads as part of their job may have lower rates than those constantly typing or designing. A 75% activity rate is standard for some, while others might aim for 30%.
Generally speaking, activity rates above 80% are difficult to sustain and may point to someone who is overwhelmed and at serious risk of burnout.
Instead of focusing on one individual number, we recommend noticing if things are trending upward or downward, as this can tell you if it’s time to check in with an employee. They may have hit a roadblock or discovered a better process you’ll want to share with the team.
Now that you know how to calculate productivity, let’s look at how to calculate productivity at the level of your entire company.
There are two main ways to calculate how productive your company is as a whole: partial factor productivity and multifactor productivity.
Partial factor productivity calculates the ratio of total output to a single input.
To do this calculation, you’ll need:
The total value of goods sold
The total costs to produce those goods (labor, materials, and any other resources that cost you money)
It’s best to look at this in a month or week view to have enough data to examine.
For example, if your company produced $100,000 worth of goods in a given month, with the value of resources spent being $80,000, you would calculate it with a productivity formula like this:
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You can use this ratio to determine if you need to balance costs and revenue better. Use it as a benchmark and regularly calculate partial factor productivity as you change operations.
Another benefit of the above formula is you can check and see if you’re paying enough per employee or per hour to get the kind of work you need or hit an optimal number of units produced. Thinking of annual revenue with this formula can help companies put productivity changes into perspective.
Multifactor productivity (also known as total-factor productivity) uses the ratio of total outputs to a particular subset of inputs. It provides a better insight into a company’s productivity than partial factor productivity but is also harder to calculate.
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Let’s take a landscaping business, for example.
Say you generated $30,000 in revenue one month, while your materials cost $3,000 and labor cost was $8,000.
Do you have an office or a work vehicle? Add any other overhead for that month to your labor and materials costs, and you have your input amount. For this example, let’s say overhead is another $2,000. That brings your total set of expenses to $13,000. Here’s what our final productivity formula looks like:
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Productivity and efficiency can go hand-in-hand, so some productivity measures look similar to employee efficiency metrics. Here are three to consider.
The standard labor model productivity formula is one way you can review productivity for a project, not just an individual. You’ll use benchmark data to determine the expected amount of time it takes to complete a project. This is the total labor hours it takes, not calendar time.
So, let’s say you have a project for two people, and it is supposed to take them 20 hours each to complete their work. That would total 40 hours because it’s 20 hours x 2 people.
However, this project took each person 22 hours to complete, or 44 hours total.
For our standard labor model, we’ll divide the labor hours projected by the total time worked. That’ll give you something with a decimal, so we multiply it by 100 to get a percentage for our efficiency score. That gives us the full productivity formula.
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Not every employee’s work is tied directly to a monetary output. That means a lot of the measures discussed above are hard to quantify.
However, these roles can still be vital to the health of your organization.
So, how do you know if they’re being productive? Or, how can you tell if they might need a hand in accomplishing their goals?
One of the best ways is to directly compare that team member’s output against their goals for a long time.
This can be a very straightforward effort. Your social media manager must post thrice a week for the first quarter. That’s a total of 39 posts. Their efficiency is just how many posts they made — let’s say they did 38 — divided by the required number of 39.
That 38/39 gives us an efficiency of 97%.
Repeat that for someone’s different tasks on a monthly or quarterly basis and take the average of the percentages. That’ll give you a ballpark figure to use. If you want to get complex, you can weight more important tasks higher so that their overall score is better if they hit 100% on what leadership says is essential.
When someone’s role is managing team members, productivity can feel a little more elusive. These leaders need to own productivity for their teams and typically are measured at revenue per employee they lead. But what about their productivity?
How do you know if a team lead is productive and necessary if they aren’t required to contribute directly to a project or process outcome?
You can turn to employee feedback in surveys or rating tools in these cases. This process isn’t as rigid as the others, but it can give you an idea of productivity relative to team health.
Think of how you would evaluate that manager or team lead. Turn each of those KPIs into a question that someone can rate from 1 to 5. Average the scores from all the people under that manager and above them. You’ll get a score that you can then divide by the total number of possible points to get a feedback-based productivity estimate.
Possible questions you can include here are:
How productive is your manager?
How good is your manager at resolving team conflict?
How proactive is your manager at removing project roadblocks?
How well does your manager help you meet goals?
How willing is your manager to step in and provide direct support when a problem arises?
How much confidence do you have in your manager’s ability to help you complete work on time?
Employee performance measures how efficient employees are in completing tasks and projects.
Since your employees' productivity can significantly impact your business and growth goals, it’s crucial that you measure productivity and work on improving it.
You’ll first want to learn more about your team’s different productivity styles, including identifying who are Planners, Visualizers, Arrangers, and Prioritizers.
Then, you’ll need to track employee productivity manually (using the output/input formula or our calculator) or automatically using a solution like Hubstaff.
Hubstaff gives you an easy way to calculate your team’s productivity. It tracks work activity and provides you with detailed reports on how team members spend their work hours. It can also help you get a benchmark for activity rates, which you can use to identify changes or obstacles for your team.
Our Insights platform takes this a step further to provide more data, actionable insights, and performance verification in an intelligent dashboard. With Insights, you’ll get a real-time look into employee and team health, with options to compare current work against industry or company benchmarks.
You can quickly see if someone is experiencing a productivity dip, needs help, or is having a great week and needs a shoutout. We also make it easy to see when employees are working longer hours or outside of regular hours, which may be a sign of stress and increased burnout risk.
Productivity data becomes a way for you to improve your bottom line, how well your teams do, and how much they enjoy coming to work each day.
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As mentioned above, it’s all displayed on your dashboard, so it’s easy to check in without interrupting your team and seeing how things are going. Calculating productivity should be quick and avoid disrupting team members.
To celebrate hard work, Hubstaff sends achievement badges based on activity rates and hours worked to celebrate hard work. This is entirely customizable, so you can always turn this feature off if you don’t want to use it.
Hubstaff can also be integrated with Insights to provide you with more detailed performance reporting. When you’re ready, start a free trial and experience the productivity features for yourself.
If you’re looking to determine employee productivity at the company level, we recommend a mix of online time tracking and project management software to target productivity levels relevant for your industry. Reviewing this data with a tool like Hubstaff can help you look at a productivity increase as part of larger company goals.
Engaged employees make it easier to target enhanced productivity benchmarks, and we’ve got your insights into actual hours, productivity numbers, and different metrics you can use.
Make sure to measure productivity of your employees regularly and look for patterns or trends that could help you uncover what might be affecting productivity either positively or negatively at any given time.
Track time, measure your team's productivity, and discover ways to help team members become more productive.