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Everything You Need To Know About Employee Productivity

Boosting employee productivity means creating the right environment for employees to thrive. Learn how to make employees more productive here.

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Woman at a desk and laptop juggling multiple tasks, showing employee productivity

Your employees are one of the most important assets your company has. The better they work, the more your organization can grow, and the more profit you can make. Employee productivity, effectiveness, and efficiency drive a company’s success. 

Boosting employee productivity may not always be a straightforward process. There are various factors you need to consider. What are your goals? What resources are you working with? 

Here’s everything you need to know about employee productivity—what it is, and how to increase it.

What is employee productivity?

Employee productivity, also referred to as workforce productivity, is a measure of how much work employees do over a certain period of time.

Productivity isn’t only a measure of the quantity of work, though. Quality is just as important. A productive employee:

  • Prioritizes tasks correctly, finishing the most important ones first, without wasting time on non-essential tasks

  • Delivers their work on time

  • Meets or exceeds expectations

Employee productivity is a measurement that can be used to track the impact of individuals, teams, or entire departments over time.

How is employee productivity measured?

The process for measuring employee productivity varies slightly depending on the industry, the size of the company, and what type of products you’re creating. But there are a few metrics to look at that should work for most organizations.

  • The number of tasks performed over a certain period. This metric is very common when measuring productivity. It does have one major downside—it looks only at the quantity, and not the quality. Is an employee that finishes 100 products in a week really productive if 70 of them are defective? Usually not, so always look at the wider context.

  • Percentage of goals met. Setting goals helps teams have a more strategic work plan and it may improve effectiveness. Goals can also help measure success and productivity. Completion of those goals can be a clearer indicator of productivity than the number of tasks employees finished because, more often than not, goals take quality into consideration as well.

  • Revenue per employee. This may not work for all sectors or all teams, but it can be a useful indicator of productivity in the right circumstances. For instance, it may be hard to determine productivity based on generated revenue for an HR employee. But that could be easier to do for someone in the sales department or even for a factory worker.

  • Time spent on a project. How quickly your employees can finish a task is often a measure of productivity. Like the number of tasks, this metric has its blind spots if you don’t look at quality as well.

  • Work quality. This time, you’re not looking at the number of tasks completed, but at how well they were completed. You can use it in conjunction with a quantitative metric for a more complete overview if you’d like. 

Download this free guide to learn the eight productivity metrics you're not tracking

Employee productivity vs. employee efficiency vs. employee effectiveness

Discussions about employee productivity almost always include efficiency and effectiveness. Many even use the terms interchangeably, but they’re far from the same thing.

We already know what employee productivity is, so let’s look at the other two terms.

Employee efficiency prioritizes maximizing the output while minimizing the costs 

For example, you have a software developer who completes one module of an app within one week. You need to cut costs and reduce the headcount budget, so you lay some people from that department off. 

The software developer will now need to finish the same module within three days to maintain the same production rhythm. If the developer can work at the new pace, your efficiency goals are reached.

Another example would be outsourcing customer support to an external call center. This could come at a reduced cost, but it might also have a negative impact on support if the call center employees aren’t well-trained for your customer’s specific needs. The change will be efficient, saving you cost, but it won’t necessarily be effective or improve quality.

Employee effectiveness values the end result and its benefits

Employee effectiveness, on the other hand, puts an emphasis on how well things are done, not how fast or cheap they are. In the long run, prioritizing effectiveness can help you reach business goals.

Efficiency is often short-sighted, not seeing long-term goals and omitting the issues that prioritizing volume or costs could have on things like quality and customer satisfaction.

Effectiveness, on the other hand, drives performance, improves satisfaction, and helps your business grow.

Download this guide to learn the 10 people metrics that have a big financial impact, and get a free checklist.

6 steps to increasing employee productivity

Increasing your employee’s productivity may seem complicated, but it doesn’t have to be. Here are a few easy steps to help you get started.

1. Set clear goals and expectations

When people know what they’re working towards, they’ll be more efficient and effective. Imagine all the time people would waste if they constantly had to second guess what’s expected of them. 

Having clear goals makes it easier for people to focus on the tasks at hand. It also helps them know when they meet those expectations and when they should work a little harder. 

2. Stop micromanaging

Many feel micromanaging is the safest route to employee performance and productivity. You’re following their every step, making sure they do exactly what you want, how you want it, and when you want it. What you’re really achieving is ruining your relationship with your employees, decreasing satisfaction, engagement, and even harming productivity. 

What to do instead? Go back to step one. Set goals, make your expectations clear, set a deadline, and trust your employees.

3. Improve communication within the company

Create an environment where people feel safe speaking their minds. Allow them to share what they think of certain projects, the workflow, and more. A study by McKinsey showed that good communication can boost productivity by as much as 25%.

Communication doesn’t need to always be face-to-face. Make sure employees can reach you with ease every time they have questions or issues to report. Meet their questions positively, helping them to the best of your abilities. Be a good listener and hear them when they have concerns or ideas. 

4. Give constructive feedback

Whether or not you perform periodical evaluations, you will sometimes need to give feedback to your employees. Turn this into a learning opportunity for everyone.

Negative feedback that only points out what they did wrong will help no one. Constructive feedback that focuses first on the employees’ strengths and then offers solutions for improvement can boost performance and productivity long term.

The reverse is also true. From time to time, ask for your employees’ feedback. It could be during the annual evaluation or you could do it at random moments, through surveys.

5. Create a flexible schedule

A fixed work schedule is not for everyone. Sure, some thrive in the predictability and routine of a classic 9-5. And some industries need a fixed schedule. But many don’t. 

So, whenever possible, let your employees have a flexible schedule. If you’re worried it will create chaos, you can set a few easy guidelines. 

For instance, make it clear how employees should communicate their schedule so that everyone knows when someone will be available. If two or more people need to be at work at the same time, assist them in finding the best schedule for all of them.

6. Prioritize your employee’s well-being

Focusing on productivity and effectiveness, you might forget your employees are only human. They need to balance their work with their private life and they need to take care of their health, both physical and mental.

Start by assessing your employees. Do they seem tired or stressed? Talk to them. What would help them relax and feel better, and be more energized? It could be a wellness program, a subscription to the gym, leisure activities after lunch, and much more.

The bottom line

Employee productivity and effectiveness can make or break a company’s success. When your employees perform at their best, everyone has something to gain. While some productivity factors may be out of your hands, most of them aren’t.

An inclusive workplace that prioritizes good communication and transparency can go a long way. Trusting your employees and avoiding micromanaging them will also increase employee satisfaction, employee engagement, and effectiveness.

When measuring productivity, don’t forget to look at both quantitative and especially qualitative metrics. People analytics is a good place to start to understand what drives and motives your workforce and how you can help them improve. Strive for quality, for effectiveness more than quantity and you’ll be well on your way to success.

Read more about employee productivity and HR metrics:

On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices how to create a strategic compensation strategymetrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.

See why Visier is the #1 People Analytics solution on the market. Take a tour.

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