When you’re working with hourly staff, measuring employee productivity can often feel more like guesswork than science. It’s not like an office setting, where project milestones reign supreme, and all that matters is that the work’s getting done on time.
When your workers are hourly, time — specifically, the time they spend working — is money. Unless you run a manufacturing facility, you can’t just measure the number of “things” an employee makes or sells over a period of time and use that as an accurate reflection of each person’s productivity.
How can you weigh the value of your employees’ time and effort in a way that maximizes the profitability of your business?
Defining Productivity Management and Measurement
Historically, productivity management is the application of a single formula: units of output divided by units of input. The goal is to get less for more, putting you ahead of your competition.
“Output” is usually defined by the amount or value of goods or services a business produces. “Input” can be the cost of labor, capital, overhead, or materials.
When addressing the productivity levels of your hourly employees, one way to measure employee productivity is to find an average amount of sales per employee, per day, and compare each employee’s sales to that average to see if they fall above or below it.
But humans aren’t machines, so these types of numbers tell only part of the story. For example, if you’re a restaurant operator, you may have a handful of servers who regularly bring in higher sales than others. Does that mean these employees are your most productive ones? Possibly. But productivity in a team setting is symbiotic, meaning your “low performing” servers may actually have lower sales because they spend more time helping team members.
Looking at the numbers is a good place to start, but it’s not the only thing to consider.
Looking at the Big Picture
According to a Harvard Business Review article by W. Bruce Chew, the problem with measuring productivity by one factor alone (like labor) is that “it is easy to increase the productivity of one factor by replacing it with another. Labor, capital, and materials are all potential substitutes for each other.”
The solution, then, is to develop an index “that identifies the contribution of each factor of production and then tracks and combines them.”
It sounds complicated, but it doesn’t have to be.
Developing a Productivity Management Plan
Here are main steps to developing a productivity measurement plan, and how to put it into practice.
#1: Identify what you want. Identify what you’re hoping to improve through measuring your employees’ productivity. It could be increased sales, better scheduling of employees, or more new customers. Beginning with the end goal in mind will help you choose the right metric for measuring employee productivity, and will help you actually improve productivity when the time comes.
#2: Choose your input and output. A metric for input is easy when you’re talking about human labor — it’s either the time an employee puts in, or the direct labor cost associated with their employment.
The output is the tricky part. You could measure output in terms of sales, sales of a particular product or service, or number of positive reviews on customer surveys. In a gym, it could be the number of new memberships signed per employee, per day. In a retail environment, maybe it’s store credit cards sold. In the back of the house in a restaurant, it may be average ticket times per employee.
#3: Find the average and compare each employee to it. Finding an average will give you a baseline measurement to compare employee productivity across the board. First, choose a time period you want to measure — this will depend on your industry. For example, if you run a bar, you should probably measure weekday afternoon staff separately from your weekend closers because their numbers will be drastically different.
Here’s how to find the average: Add up your total input and divide by number of employees in that group. Add up your total output and divide by number of employees in that group. This will give you a standard against which you can compare individual employees.
#4: Experiment. Switch up the way you measure output against input, or employees against one another. Compare employees who work the same shift on different days. Compare seasoned employees with newbies. Change your metrics, and take note of what changes in the data — and what stays consistent.
#5: Discover what gets in the way of employee productivity. Though much less scientific than the steps above, this is one of the most important considerations in understanding your employees’ productivity. There may be a good reason your Tuesday staffers are doing significantly fewer sales than your Wednesday ones — and it may have nothing to do with their skill level or motivation.
According to the Todoist Blog, the number one productivity killer is when employees are tasked with busywork that falls outside of their skills and knowledge. If your best credit card salesperson at your clothing store is spending hours vacuuming floors and dusting, how many credit card sales might you be losing? Ask your employees, what’s one thing you have to do during your workday that hurts your productivity?
#6: Keep an eye on productivity. According to this Quickbooks article, it’s folly to assume that productivity measurement is a one-time thing. Keep an eye on your numbers over time, especially as you implement a training program and make other changes to improve productivity.
Creating and Implementing a Training Program
One of the key ways to enhance employee productivity across the board is to execute training — both for new employees, and ongoing advancement for existing ones. Not only does training grow your employees’ skillset, but it improves company culture by helping hourly workers feel more engaged in the business. Here are a few best practices for creating and implementing a training program.
Identify potential trainers. Your productivity data should reveal who your top performers are in different categories. If you don’t already have designated trainers, approach these star employees to gauge their interest, and offer them a higher training wage for training shifts.
Read it, speak it, do it. The more channels you use for training, the more the information will sink in. Develop an employee handbook to help solidify the cornerstones of your company, and to serve as a quick reference for employees. Provide a combination of literature, hands-on training, and peer or mentor training to reach all kinds of learners in your organization.
Schedule smartly. Integrate training shifts for new employees at the best time of day, and schedule ongoing training — whether in the form of team meetings or individual sessions — at their appropriate times, too. Use an app for scheduling employees to allow trainers to swap shifts seamlessly if needed.