2015-02-03 11:00:12 Management and Training English Employee salaries are often a significant portion of small-business owners' operating expenses, and that makes it even more important to... https://quickbooks.intuit.com/r/us_qrc/uploads/2015/02/istock_000003591235small.jpg https://quickbooks.intuit.com/r/management-and-training/how-to-measure-and-increase-employee-productivity/ How to Measure & Increase Employee Productivity | QuickBooks

How to Measure and Increase Employee Productivity

3 min read

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:

Easy, accurate, done. That’s payroll, perfected.
Handle withholdings, employee classifications, benefit deductions and more with QuickBooks Payroll.
Learn more

Rate This Article

This article currently has 9 ratings with an average of 3.6 stars

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Help Your Business Thrive

Get our newsletter

Thanks for signing up!

Check your inbox for a confirmation email.*

*Check your spam folder if you don’t see a confirmation email.

Related Articles

How to find growth rate and market share: what you need to know

As a new business owner looking to measure growth, you’ll quickly find…

Read more

7 KPI meanings small business owners need to know

If you set business objectives, you need to figure out how to…

Read more

Minimum Wage by State Guide

Can you navigate the complicated web of minimum wage laws and rates…

Read more