What is Team Productivity, & Why Should You Measure It?

Struggling to measure team productivity?

Discover the secrets to measuring and boosting team productivity in this actionable video! Learn how to:

• Unlock your team’s hidden potential
• Measure what truly matters
• Boost profits and employee satisfaction
• Ditch micromanagement for empowerment

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What is team productivity?

Productivity measures indicates how well the team or an individual performs.

It is, in essence, a measure of efficiency — either of an employee, a machine, a system, or others — in converting inputs into outputs.

You can typically think of a ratio of the output generated (such as marketing materials, targets achieved, etc.) to the input invested ( time, resources, etc.) to determine the degree of productivity.

But how can you measure productivity with more precision? How can you truly know if your team is being productive and if you will achieve specific objectives?

This frustration has led to some companies altogether abandoning annual reviews. However, managers must understand the importance of it and how it can benefit both the employee and the company.

Here’s a list of the four most significant benefits of measuring productivity and performance.

1. Enables employee growth and development

Managers who don’t accurately and carefully measure their employee’s performance will be out of touch with their teams’ successes and failures.

It essentially makes it impossible to provide constructive feedback and get results. Without valuable feedback, employees will be less able to improve, grow, and develop, and that will make them move on.

2. Create goal alignment

Working with no specific goal in mind is dull. Everyone working with no particular purpose ends up feeling frustrated and demotivated.

Employees do perform better when they have goals to strive for and work towards. Measuring employee performance will allow any manager to adjust and regulate those goals by providing insight into whether someone is performing well or not.

However, goal setting must be a conversation about what the company needs and how the employee can contribute, not set only by managers with no employee input.

So, if you’re leading a team or want to build a high-performing team, you should regularly measure employee performance and discuss with employees about their projects, goals, and ambitions.

This way, they are less likely to be confronted with burnout or disengaged teams and more likely to have employees who meet goals.

3. Cost reductions

When you accurately track your time and measure your team’s productivity, you have a better sense of where you should invest.

What is making your company lose money?

When you calculate labor productivity using the output ratio and the money you invested in the production process, you can identify things that require a more significant or minor investment.

Once you’ve analyzed all the information, you might be surprised by how much money you can save by tracking and comparing productivity metrics over time or smartly investing elsewhere. This is one of the smartest ways to improve business efficiency

4. Create a fair culture of recognition

Sadly, many companies don’t pay much attention to this. If you accurately measure your team’s performance, you also accurately compensate employees with promotions, internal role changes, or other things.

By analyzing every employee’s performance, you can ensure that you fairly compensate top performers by giving them the recognition they deserve and supporting your low performers. Improving individual performance helps employees contribute to the company’s success, but it also helps with employee work-life balance. Keep in mind that work, in general, can produce effects on someone’s mental or physical health, too.

When employees think that low performers are tolerated without consequences, it can cause frustration and an unpleasant environment.

How to measure employee productivity in the workplace?

Accurately measuring employee productivity is a critical step of job management, along with understanding it correctly.

Productivity data will create an accurate picture for you and will inform your company’s productivity, performance, and overall profitability.

Depending on your team’s work, there are different ways to measure productivity.

By measuring your team’s productivity, you’re calculating how much work a team can produce over a given time, such as a month or a year. The team’s productivity depends on many factors, such as KPIs or productivity levels of each employee, as well as their skills and knowledge.

Many other factors, such as team communication, work environment, company culture, and motivation levels, also profoundly impact their individual efforts and how they feel.

You’ll find the best methods to track progress and calculate productivity in many guidelines, but remember that every company and team is unique. It would be best if you selected the effective ways that suit your workplace the most.

Considering these differences, it is evident that productivity measures will also be different.

So, if you’re a manager trying to measure your team’s productivity, ask yourself the following questions:

• What type of performance can you tag as productive?
• Is there a sales or production quota that a team must meet?
• What are the most important goals of each team?

Even though there are many ways you can track your team’s productivity, let’s see how you can do it.

1. Time management at work

Managing time is the process of organizing, managing, and prioritizing it. When taking it one step further, one needs to control their time and energy for this process to be effective.

The reason for which having a good relationship with time directly impacts productivity can be deducted without any intricacies:

This way, you’d be able to maximize your time on specific tasks or projects so that you can achieve more in less time or simply achieve certain objectives faster.

Whatever the size of your business, you can monitor the productivity of your employees based on how they manage their time.

How time tracking facilitates time management?

To improve your time management skills, you can add time-tracking to your routine or for your team.

If you and your employees have a hunch that you need to improve productivity but don’t know what to start with, tracking time spent on all your tasks can be the first practical step.

A time-tracking app will work as your employee productivity calculator without manual interference. It will inform your decisions with data on the following:

• job performance, as well as work performance;
• labor costs;
• company’s profitability ( including project profitability);
• productive hours employees work at;
• if you should assign tasks differently;
• administrative work that takes too much time and needs automation.

A productivity tracking tool can even be necessary if you work remotely or have a hybrid setup.

Your productivity measurements will boost your employee’s productivity and provide crucial information to keep your projects running smoothly. Moreover, it can ensure greater accountability among employees.

To accurately determine employee productivity, you need to know how much time was spent producing the total output, and you need to know as precisely as possible.

2. Quality vs. Quantity

quality is “how good or bad something is,” meaning quality is a measure of excellence

the quantity represents “the amount or number of something, especially that can be measured,” meaning quantity is the extent, size, or sum of something — a numerical value.

But how does all this fit into work?

It’s fairly common for management to measure employee productivity based on quantity. But this way of measuring productivity is limiting, both for an employee’s performance and as well for the company’s performance overall.

If you’ve been measuring productivity in the standard way, here are some methods you can start using :

performance metrics, quality control checks, customer satisfaction and feedback, peer reviews, error rates, the efficiency of the work process and output, innovation, and improvement capabilities.

3. Clear KPIs and goals

To determine if your team is productive, you can compare how your employees completed their work goals individually and as a team.

Check your team’s productivity by looking at their goals and those they failed to achieve. This is one of the reasons why setting goals is essential to your team; it’ll allow you to compare expected vs. actual performance.

Remember, making your employees put in more labor hours is not indicative of increasing productivity; it’s rather counterproductive. The amount of time someone spends at work is not the same as the number of hours they’re working.

So, how do you proceed from here, and what do you communicate?

Reiterate their goals and KPIS. Employees who are more familiar with their goals are proven to be more productive than employees who are less informed on the topic.

An employee feels a deeper connection with their company and has a greater sense of purpose and belonging when they know what is expected from them.

Increasing your team’s productivity may be as simple as reminding them about your organization’s goals and breaking the achievement of those objectives into smaller tasks.

4. Performance tracking

Keeping track of your employee’s performance is an objective and practical instrument for measuring employee productivity.

So, measuring productivity in this case can be assessed by checking (depending on the role):

sales targets, customer service ratings, project milestones, bugs fixed, code quality, marketing strategy effectiveness, and others.

Keep in mind that many external factors can lead to poor results at times, so have a holistic approach to assessing.

Nonetheless, performance tracking involves different indicators than goals and is much easier to gauge. For instance, it accounts for whether your employees have a good relationship with their peers and contribute to the organization’s culture.

5. Planned-to-done ratios

The planned-to-done ratio measures the percentage of tasks that were completed to those that were assigned.

By analyzing your employee performance against a given list of tasks, you will get some deep insights into your team’s capacity and potential for productivity.

Let’s suppose your team has a lot of work in the pipeline. They must complete ten tasks monthly to meet the deadlines and given objectives. However, if they could only meet five tasks a month, the planned-to-done ratio is 50%.

Therefore, if you have a low planned-to-done ratio, it may be time for you to hire more team members to finalize the workload, reduce the current amount of work, or rework your planning process to make it efficient.

Hopefully, this blog equipped you to carry out a thorough productivity measurement process and helps enhance your company’s productivity.

Moreover, some standards might also differ if your team works in the office full-time or remotely.

However, understanding how well your employees perform is essential for evaluating your business development and improving results.