What is employee productivity?

Employee productivity refers to how efficiently and effectively team members perform their tasks and contribute to the overall goals of an organization. 

In the modern workplace, employee productivity isn’t just about output. It takes into account the quality, innovation, and impact of the work. 

Why is employee productivity important?

A productive workforce is able to provide more goods and services, making a direct impact on an organization’s bottom line. 

Productive people also drive innovation, promote organizational goals, and enhance customer satisfaction—making productivity an integral part of an organization’s success. 

How can you measure employee productivity?

Given the link between employee productivity and business outcomes, it’s useful to know about employee productivity measurement. It can give you key insights into how to increase employee productivity within your organization.

While quantitative output is essential to measuring employee productivity, it’s not enough to give you the full picture.

For accurate employee productivity monitoring, it’s important to take qualitative indicators into account too, such as quality of work, innovation, efficiency, and impact on customers and colleagues. 

Employee productivity formula

To measure employee productivity, use the following basic formula. It will give you the level of employee productivity as a percentage:

Employee productivity = (Output/Input) x 100

As you can see, how you measure productivity depends on how you define output and input. Output can include how many units team members produce, how many tasks they complete, or how much revenue a team generates.

Input tends to include resources a team uses to complete their work, such as labor hours, number of individuals, or costs. 

Which factors affect employee productivity?

A variety of factors can influence employee productivity and it’s important to consider how these different factors interconnect. Below are some examples:

  • Work environment. Physical surroundings, office layout, noise levels, lighting, and cleanliness can affect the comfort and concentration of your people. 
  • Company culture. Organizational culture influences the work environment. A positive or toxic culture can help or hinder your people from performing at their best. 
  • Leadership and management. Effective leadership and management create positive relationships between managers and team members. The best leaders motivate their people and provide the necessary support for their team to reach their full productive potential.
  • Communication. Clear and open communication prevents misunderstanding and ensures people can carry out their work effectively. 
  • Workload. Providing challenging yet achievable tasks and a balanced workload ensures sustained productivity.
  • Technology and tools. Giving your people access to efficient and up-to-date tools and technology enables them to carry out their work properly.
  • Job satisfaction. People’s satisfaction with their roles, responsibilities, and the overall workplace contributes to a positive and productive work environment.
  • Health and wellbeing. The physical and mental health of your people play a significant role in your organization’s success. A healthy workforce is generally more productive and engaged.

How can you improve employee productivity?

Implementing the initiatives below into your people management strategy can help you improve employee productivity within your organization:

  • Work-life balance. A healthy work-life balance is crucial for preventing burnout and maintaining productivity levels among your people. Offering flexible work arrangements and schedules can promote this balance.
  • Wellbeing programs. Yoga, meditation, and exercise classes, walking meetings, and provisions of healthy food can all be ways to support your people’s wellbeing, improving employee productivity as a result. 
  • Continuous feedback and performance reviews. Continuous feedback and performance reviews help individuals perceive their progress and areas for improvement—and keep them on track. 
  • Recognition and rewards. To boost employee productivity, it’s important to improve morale and motivation by recognizing and rewarding their achievements.
  • Training and development. Training and development initiatives help your people become more capable and confident in their roles. Provide them with opportunities for growth and progression to further motivate them in their work. 
  • Team collaboration. Advocating for a collaborative and supportive team environment encourages knowledge-sharing and problem-solving, contributing to overall productivity.
  • Time-tracking tools. Giving your people the ability to monitor their time on tasks with time-tracking software promotes accountability and a sense of autonomy. 
  • Autonomy. Trusting team members to carry out their responsibilities encourages a proactive and independent mindset. People will take pride in the outcome of their work, promoting overall productivity. 

Is employee productivity a KPI?

Employee productivity is a KPI that reflects the efficiency and effectiveness of your organization’s workforce. 

Adding employee productivity to the HR metrics you monitor enables you to track progress, set benchmarks, and align strategies to achieve overarching business objectives.

Tracking employee productivity with HR tech

HR tech empowers organizations to analyze and track employee productivity. An HR system provides in-depth data that organizations can use to enhance workforce productivity, improving business outcomes. 

Some examples of HR tech that can help track and increase employee productivity include:

  • Performance management systems. Set clear goals, track individual progress, and provide regular feedback. 
  • Time-tracking tools. Give your people greater autonomy and gather precise insights into how teams allocate their time, helping you manage projects effectively.
  • Employee engagement platforms. Use surveys and feedback mechanisms to gauge satisfaction levels, allowing you to address concerns and enhance overall productivity.