How to Measure Employee Productivity the Right Way

Tracking employee productivity doesn’t have to feel like micromanagement. Here’s how to do it right.

Written by Dean Mathews
Published on Aug. 22, 2023
How to Measure Employee Productivity the Right Way
Image: Shutterstock / Built In
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Employees are the lifeblood of every successful business, and it’s the manager’s responsibility  to ensure that each employee is engaged and pulling their weight towards meeting organizational goals. On a successful team, each employee is expected to be productive,  but in reality, that’s not always the case

6 Tips to Effectively Measure Employee Productivity

  1. Track tasks instead of time.
  2. Ensure productivity tracking doesn’t directly impact employee productivity.
  3. Measure productivity against specific, intentional goals.
  4. Engage employees without micromanaging them.
  5. Regularly evaluate employee productivity data.
  6. Encourage open communication to prevent presenteeism.

There can be many reasons why employees fall short of their targets, such as feelings of disengagement or fatigue. Yet leaders are often unaware of how they can track the contributions of their employees or how they can use that data to improve their performance


Why Businesses Should Measure Employee Productivity

Before you can begin to track and measure employee productivity, you must understand why doing so is important. 


1. It Provides Accurate Feedback for Consistent Employee Growth

The workforce has evolved significantly in recent years. Employees place greater emphasis on how their employer can help them grow and develop over the course of their employment. This increased focus on learning and development also encourages employees to work harder. Almost three quarters of American employees said that an increased investment in learning and development would make them more productive, according to a Salesforce report. Tracking employee productivity can help managers direct this growth more effectively.


2. It Helps to Recognize and Reward Outstanding Employee Achievements

One of the biggest mistakes managers make when tracking performance is only using the results to punish employees. Managers can’t expect employees to maintain high levels of productivity if their efforts aren’t recognized and celebrated. Recognizing and actively rewarding employees who perform at a consistently high level can encourage other employees to improve their efforts as well. Employees are much more likely to remain productive if they are aware that their work is being tracked and that they are likely to be rewarded for being reliable and productive. 


3. You Can Better Understand and Predict Company Performance

Employee productivity and company performance are directly related. If employees remain productive, the organization is more likely to post better performances. This means that if a business can measure and monitor employee performance, it can use that data to predict short-term company performance. Employee performance data can also help managers predict if their team will achieve their goals and objectives for a given period.

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How to Measure Employee Productivity

Success depends on what data is collected and the means by which it is done. Identifying what insights you want to gain from your tracking is critical to deciding what aspects of an employee’s workday should be tracked. There are also a few regulations and best practices that are important to know.


1. Track Tasks Instead of Time

A common pitfall that leaders should avoid is tracking time at work instead of tasks completed. The number of hours an employee spends at work is usually dictated to them and is not an indicator of efficiency, output, or productivity. It’s more important for businesses to know what an employee does with the hours they spend at work. This could mean tracking time only as it relates to a specific task to assess efficiency and monitoring task completion rates to measure productivity. These metrics provide a holistic overview of an employee’s performance levels.


2. Ensure That Productivity Tracking Does Not Directly Impact Employee Productivity

When tracking employee productivity, any processes designed to measure tasks or time should not negatively impact productivity. For instance, a recent study from Workfellow found that the average office worker spends 10 percent of their time manually entering data. Businesses that demand that employees manually input tasks or track time can ironically cause employees to be less productive. Automated tracking through specialized software can make this process a lot less disruptive to an employee’s daily workflow and can help managers get a more accurate view of productivity levels for their team. 


3. Measure Productivity Against Specific, Intentional Goals

It’s not enough to simply check if an employee is completing a certain number of tasks or if they’re putting enough hours in at work. Every team should have a clearly defined set of goals and objectives to achieve in a given time period. The tasks that are tracked should then correspond to these goals and objectives. For example, if a sales team wishes to hit a certain sales goal, managers could measure how much time is put into customer outreach and track if that translates into higher sales numbers. It is also important to remember that business targets are often fluid. Managers must reassess the tasks they are tracking and adjust them instead of simply demanding more from their team.

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4. Engage Employees Without Micromanaging Them

Micromanagement is unfortunately a common misstep for managers. A study from Fingerprint For Success revealed that 79 percent of workers have experienced some form of micromanagement and 69 percent have considered leaving their role as a result. Employee tracking that’s perceived to be highly intrusive or disruptive can lead to employees feeling mistrusted as well as reduce motivation and productivity levels. 

Managers must clarify why employees are being tracked and explain the specific parts of their daily workflow that are being monitored. Indiscriminate task tracking can lead employees to feel like they are being micromanaged. It is therefore prudent to only track the most important tasks. There is also an increasing focus on privacy and data protection amongst regulators and employers have to be careful to remain compliant with the rapidly changing laws and regulations. 


5. Regularly Evaluate Employee Productivity Data

Once employee tracking systems are in place, it can be easy to ignore the data until it becomes clear that a team is not meeting their goals. However, modern employee management systems allow managers to receive employee productivity data in real time. A daily review can provide managers with crucial information about an employee’s performance. This allows them to intervene and communicate with the team member before reduced productivity levels have a negative impact on their team’s output.


6. Encourage Open Communication to Prevent Presenteeism

Some employers may have concerns about employees gaming the system, especially when a team works remotely. Open internal communication can help to prevent this form of presenteeism. Employees should be given the opportunity to share their concerns about how their employer collects data and how that data is being used. Managers should also regularly communicate the benefits of the organization’s time tracking policies. It is important for managers to maintain open communication lines at all times to accommodate employees who might not be comfortable sharing this information during group meetings or employees who simply have a different communication style than the rest of the team. 

Ultimately, tracking and measuring employee productivity can help businesses unlock greater levels of productivity and engagement. However, managers must be careful to conduct this tracking in an ethical and measured manner. Clearly defined tracking metrics, consistent communication, and respect for an employee’s autonomy can go a long way toward ensuring program success.

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