February 3, 2015 Management and Training en_US Employee salaries are often a significant portion of small-business owners' operating expenses, and that makes it even more important to keep track of productivity. https://quickbooks.intuit.com/cas/dam/IMAGE/A4odEQ4lu/70f49d819906b5bf61493cff93ea4203.jpg https://quickbooks.intuit.com/r/management-and-training/how-to-measure-and-increase-employee-productivity How to Measure and Increase Employee Productivity
Management and Training

How to Measure and Increase Employee Productivity

By Suzanne Kearns February 3, 2015

Employee salaries are often a significant portion of small business owners’ operating expenses, and that makes it even more important to keep track of your workers’ productivity. In addition, by measuring employee productivity, you’ll be able to get a handle on where you can increase business profits by reducing employee-related expenses. You can use the method described here to measure the productivity of employees who create a measurable output of work.

Set a Baseline

Before you begin, you’ll need to set a baseline against which you’ll measure the employees. Do this by determining your daily business output, and divide that by the number of employees who contribute to it. For instance, if you own a plumbing business, how many service calls does your business make per day? Divide that number by the total number of employees who make those calls, and that’s your employee average. That means if your business makes 15 calls a day, and you have three service employees, your employees are averaging five service calls a day. Use this number as your baseline.

Identify Areas of Redundancy

Your next step should be to identify the areas of redundancy in your employees’ routines that, if eliminated, will increase their output. Using the plumbing example above, if you find that your employees have to return to the office for parts a few times a day, you’ll need to determine how to prevent that. You might begin stocking their work trucks more efficiently, or you could better plan for the day’s service calls to ensure the employees have everything they need for the calls they’re assigned to answer. By eliminating the extra trips to the office, each employee might be able to add another service call per day, which might allow your three employees to make a total of 18 calls a day, rather than 15.

Track Employees Individually

Once you have established a baseline and eliminated areas of redundancy, you can begin tracking your employees individually to see who is being productive and who is not. Set up a spreadsheet and begin to log their output daily, looking for high achievers, underperformers, and patterns among both groups. For example, our plumbing business owner may find that two of his employees were able to add another sales call to their day after eliminating the return trips to the office, but the third cannot. This could indicate that the owner should address the issue, and try to determine why the third employee isn’t keeping up.

Don’t Let Up

Tracking employee productivity isn’t a one-time procedure. To maintain a clear picture of how effective your employees are, you should do this on a continuous basis. Take another baseline in six months, or when you have significant changes to your staff, such as new hires or the loss of an employee.

Motivate Your Employees

Employees who aren’t motivated aren’t likely to be productive, so you should do everything possible to ensure that they want to do the best job they can. To do that, consider these tips for motivating your employees to increase their productivity:

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Suzanne has been a full-time freelance writer for 20 years. She’s written for numerous business and financial publications such as Entrepreneur, Reason Magazine, Home Business Magazine, and Money Crashers. Read more