According to a survey by VoucherCloud, “an employee’s productivity is only 2 hours and 53 minutes on average per day.”
This eye-opening statistic reveals a major workplace issue: strikingly low employee productivity. Several factors can contribute to this issue, including lack of motivation, inefficient workflows, excessive meetings, and excessive administrative workload. As a result, companies may experience subpar work quality, frequent project delays, and reduced profit margins.
To circumvent these outcomes, firms must take necessary steps to understand the underlying causes for lower employee productivity and address them with effective strategies.
This blog explores the different facets of employee productivity and provides best practices that firms can adopt to improve workforce efficiency.
What is Employee Productivity?
Employee productivity refers to the work or output an employee produces within a specific period. It is often measured by comparing the output to the required time, resources, or effort.
Let us understand this with a scenario:
In a packaging company, Sam works on the assembly line along with 19 other employees. The goal for this unit is to produce 200 carton boxes daily within an 8-hour shift. Initially, Sam, who was thoroughly trained and followed a streamlined process, packed ten carton boxes daily. However, after an injury, his productivity dropped to 5 boxes per day. This decrease led to a drop in the total number of carton boxes produced daily from 200 to 195.
Due to Sam’s inability to meet daily targets, other employees had to work overtime to fill the deficit of 5 carton boxes. This led to resource overutilization, and eventually, it impacted the overall productivity and engagement of the other team members. Unfortunately, the company saw a decline in performance and struggled to meet its production targets efficiently.
This example clearly illustrates how the productivity of an individual employee directly impacts team dynamics and organizational output.
Having understood employee productivity, let us dive deep into the factors influencing it.
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Factors Affecting Employee Productivity
Whether at the personal or organizational level, several factors affect employee productivity on a daily basis. Below are a few common ones:
Workload Distribution
One common factor that affects employee productivity is workload distribution. When employees are overloaded with work, it can lead to stress and burnout. On the other hand, underutilization can result in disengagement and low employee morale. Both instances can negatively hamper productivity and even lead to unplanned attrition. Therefore, an organization must ensure employees have a balanced workload to improve their productivity and overall performance.
Compensation Structure
Compensation is the remuneration an employee receives for their performance in the organization. When employees are not offered competitive salaries and benefits, such as bonuses, paid time off, ESOPs, etc., it reduces their motivation and job satisfaction. Ultimately, it affects their willingness to work hard and be productive. Conversely, when employees feel fairly compensated for their work, they are more likely to be engaged, committed, and perform to the best of their abilities.
Training & Development
Employee productivity is significantly influenced by the training and development opportunities provided by the organization. When employees are equipped with new skills and technologies, they can work more efficiently and grow professionally. Conversely, a lack of training can result in higher error rates, more rework, and slower work processes. Thus, the absence of learning and development opportunities can stagnate career growth, disengage employees, and reduce their productivity.
Read More: Top 10 Business Benefits of Training Scheduling Software
Technology & Tools
Access to the right technology and tools is essential for optimizing employee productivity. Modern solutions can streamline workflows, reduce manual labor, and enhance collaboration. This allows employees to focus on more revenue-generating and strategic activities, improving their productivity. Conversely, outdated technology can cause silos, delays, and errors, resulting in frustrated workers and lower productivity.
Leadership & Workplace Culture
Leadership and workplace culture have a profound impact on employee productivity. Influential leaders inspire their teams, foster a positive work environment, and ensure employees feel valued. Such guidance and support motivate employees to work hard and deliver better results. Conversely, poor leadership and a toxic work culture can lead to disengagement, high turnover, and subpar performance.
Read More: How Can Your Work Culture Improve the Employee Experience?
Now that we understand the factors, let us go through the benefits of improving employee productivity.
Benefits of Improving Employee Productivity
When organizations harness the workforce’s full potential, it leads to many positive business outcomes.
Here are a few advantages of boosting employee productivity:
Improves Employee Engagement Levels
It is no secret that employee productivity directly correlates to engagement levels. When employees are productive, they feel more accomplished and satisfied with their work. Thus, engaged employees are more likely to be proactive in their workplace, contribute innovative ideas, and collaborate effectively with their team members, leading to better business outcomes.
Boosts Accountability & Responsibility
Higher employee productivity naturally enhances accountability and responsibility. Productive employees take greater ownership of their tasks and are more mindful of their impact on overall business goals. This sense of responsibility encourages them to work efficiently, meet deadlines, and maintain high-quality standards. As a result, they contribute more effectively to the team and drive organizational success.
Reduces Operational Costs
By improving workforce productivity, firms can reduce wastage and minimize operational costs. When employees are highly productive, they can complete tasks faster and with greater accuracy. As a result, organizations can accomplish more work with fewer resources. This reduces labor costs and additional overheads. Further, a productive workforce is more likely to use advanced technologies and tools to manage their workload and streamline workflows, subsequently reducing operational expenses.
Read More: How to Improve Operational Efficiency in Your Firm?
Improves Project Outcomes
The productivity of the workforce, both individually and collectively, determines the project outcomes. Highly productive resources are more likely to collaborate effectively, meet deadlines, and uphold quality standards, which leads to successful project delivery and boosts customer satisfaction. This improved performance can lead to repeat business and long-term client relationships, ultimately driving profitability and a higher ROI.
Now, let us explore steps to gauge employee productivity in an organization.
How to Measure Employee Productivity?
Measuring employee productivity is crucial for understanding how efficiently your team works and identifying improvement areas. The basic formula for calculating productivity is:
Employee Productivity = Total Output (Work Completed)/Total Input (Hours Worked)
But how do we get there? So, here are a few steps to follow:
Establish a Baseline
The first step in measuring employee productivity is to set productivity benchmarks for every employee, whether permanent, contingent, part-time, or full-time. These benchmarks should include realistic targets that employees are expected to achieve within a specified timeframe.
For example, consider a startup company that is expanding its team by hiring new product managers. The HR department is responsible for identifying potential hires through phone interviews. To set a productivity baseline, the company decides that an HR employee should make 45 calls per day, with each call lasting no more than 30 minutes. This benchmark provides a clear target for what is expected from the HR team.
Define Measurable Metrics
The next step is identifying specific and quantifiable metrics that accurately reflect each employee’s performance. These could include the number of tasks completed, quality of work, sales figures, or customer satisfaction ratings.
Considering our example, For the HR role, the measurable metrics are:
- Number of interviews conducted
- Time spent per interview
- Interview-to-hire ratio
Let’s consider two HR employees, Tony and Peter. Their performance will be assessed based on these metrics, allowing for a clear comparison of their productivity.
Monitor & Collect Data
Once KPIs are identified, the next step is to monitor them periodically. Companies can opt for regular performance evaluations like one-to-one meetings, surveys, feedback sessions, etc., or use time-tracking software to collect the necessary data.
In our example, Tony’s and Peter’s managers can monitor their performance by tracking the number of calls made per day, the time spent on each call, and the number of candidates who progress to the next interview stage. An automated log system could be particularly useful for collecting this data efficiently.
Analyze & Evaluate Performance
As the final step, analyze the data collected to measure the quality and quantity of the output produced within a set timeframe. This data can be used to identify employee performance patterns, areas of weaknesses, and opportunities for improvement.
Continuing our example, the managers evaluate the data for Tony and Peter. The analysis reveals that Peter makes fewer calls than expected and spends 10 minutes more per call than the baseline. This indicates productivity inefficiency that requires immediate attention, and managers must implement corrective actions to rectify it.
Let us now move on to understanding employee productivity best practices.
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10 Best Practices to Improve Employee Productivity in Organizations
Organizations must adopt the right practices to improve workforce productivity and drive efficiency for better results.
Enlisted below are a few best practices to achieve the same:
Clearly Define Employees’ Roles and Responsibilities
A research by Effectory reveals that “nearly 50% of employees across various industries lack clarity about their roles in an organization. “
It is essential for firms to clearly establish the roles and responsibilities of their employees. This eliminates ambiguity and uncertainty among team members by offering them a clear understanding of what is expected of them to meet the organizational goal. This clarity prevents confusion and helps employees focus on tasks, enhancing their productivity and overall work quality.
Consider Employee Skills and Interest for Allocation
As per a report by Nailted, “only 47.7% of employees feel that their assigned tasks match their skills, interests, and responsibilities.”
Resource allocation based on skills and interests is one of the best ways to increase team productivity. When managers assign projects by considering employees’ skills, competencies, and interests, employees can work efficiently, leading to higher job satisfaction. As a result, employees are more motivated and productive, contributing positively to overall project outcomes and organizational success.
Read More: Resource Allocation: A Guide on How to Apply it to Project Management
Offer Attractive Compensation Packages
A report by BambooHR asserts that “73% of employees are ready to leave their current jobs for higher salaries.”
Firms can offer enticing compensation packages to employees to boost their productivity levels. This can include competitive salaries, performance bonuses, comprehensive health benefits, and retirement plans. Further, firms can provide other perks, such as retreats/vacations, PTOs, stocks, etc. This will motivate employees, reduce turnover, and foster a loyal, productive workforce that contributes positively to company goals.
Automate Repetitive & Mundane Tasks
When employees are involved in time-consuming and monotonous tasks, they are at higher risk of burnout and disengagement, which can lower productivity. Thus, adopting the right tools and technologies that allow companies to automate these repetitive tasks efficiently is crucial. This shift reduces the time spent on mundane work and enables employees to concentrate on more meaningful and impactful tasks. As a result, productivity levels rise, and job satisfaction improves.
Monitor and Optimize Workforce Utilization
Maintaining a balanced workload among resources is crucial for optimal productivity. For this, managers should continuously monitor and track resource utilization levels. If employees are overutilized, they can implement techniques such as resource smoothing or leveling and distribute the workload more evenly. Conversely, for those who are underutilized, managers can allocate additional tasks to keep them engaged. This balance maintains productivity and improves the organization’s resource health index, fostering a more efficient and healthy work environment.
Read More: How can you Implement Workforce Optimization to Improve Productivity?
Provide Opportunities for Career Advancement
A Gartner survey states that “only 46% of employees are satisfied with their career development.”
Offering the right career advancement opportunities is crucial for cultivating a satisfied workforce. Organizations can achieve this by implementing training and development programs and facilitating peer-to-peer coaching and mentoring options. These initiatives support skill development and professional growth, enhancing productivity and reducing turnover rates.
Promote Work-Life Balance & Flexibility
According to a survey by Flexjobs, “96% of respondents felt more productive in a flexible work option because it offered fewer interruptions and less commute stress.”
As stated in the statistics, offering flexible work arrangements rather than sticking to the usual 9-to-5 schedule improves productivity levels drastically. Companies must encourage agile working where they allow employees to select the work environment and time that suits them best. This increases the work-life balance and employee’s well-being as they are given the autonomy to manage time and work.
Implement Effective Bench Management
Effective bench management is a critical way to improve employee productivity in companies. It involves managing employees who are “on the bench,” i.e., those not currently allocated to any active projects. To do that, managers can either look for pipeline projects that could use their skills or put them into internal projects, training programs, etc. This approach not only boosts employee’s productivity and engagement but also reduces downtime and ensures that employees remain active and valuable to the organization.
Foster an Open-Door Communication Policy
It is important for organizations to practice an open-door communication policy as it allows employees to feel valued and heard. Through a transparent communication channel, employees can share their ideas, concerns, and suggestions without fear. As a result, it leads to better problem-solving and a more collaborative work environment. This instills confidence, trust, and collaboration among the employees, resulting in a more engaged and productive workforce.
Develop Employee Recognition Program
As per a study by Nectar, “77.9% of employees feel that if they were constantly recognized, it would improve their productivity levels in the workplace.”
The final motivator for improving employee productivity is rewards and recognition programs. When companies acknowledge, appreciate, and celebrate good performance, it invokes an impression of accomplishment that will make employees feel valued for their effort. These recognitions can include incentives like gift cards, appreciation emails, verbal praises, social media shoutouts, etc. This not only prompts employees to walk that extra mile but also helps firms to attract and retain top talents efficiently.
Read More: Employee Recognition Programs: Types, Benefits and Best Practices
Conclusion
In today’s competitive business landscape, maintaining optimal productivity is essential for sustainable growth. However, companies often encounter productivity declines due to various personal and professional factors. By implementing the above-mentioned best practices, organizations can foster a positive work culture that meets diverse needs and preferences. This approach also helps build an engaged and motivated workforce that supports long-term business success.
The Glossary
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The SAVIOM Solution
SAVIOM is undoubtedly the market leader in offering the most powerful and configurable Enterprise Resource Management Solution. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helps them to achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software, which can be easily customized per business requirements.
