Company productivity is a perennial business issue that remains a priority to stay competitive. Happy, productive employees are valuable assets to every organization. Measuring productivity is not easy, as the definition of what it means to be productive differs per job, organization, and industry. Let’s look at some productivity metrics examples to help you get started.
What are productivity metrics?
Productivity metrics are a way to quantify the productivity of employees. They measure the various activities of employees related to the company’s goals and help highlight opportunities for improvement and maximize efficiency.
Productivity metrics can be either quantitative or qualitative. A common way to track productivity is to use key performance indicators (KPIs) to understand how product employees are relative to their goals.
It can be tough to measure productivity in many jobs. For example, how do you measure the productivity of a marketing manager? Or an events planner? It’s not as simple as a manufacturing job where the input and output are quite straightforward.
While the objective of measuring productivity is to increase efficiency, setting unreasonable productivity metrics can actually be harmful to motivation, engagement, and, ultimately, productivity. It’s not always possible to achieve 100% quality as you’re pushing productivity levels. Instead, finding the right combination between productivity and efficiency helps maximize output while maintaining quality.
The general formula for productivity is:
Productivity = Total output / Total input
However, this formula presents a very simplified view of productivity and does not apply to all jobs.
Let’s take a look at various ways to calculate productivity in different sectors. Because it’s impossible to have common productivity metrics for every job, we give examples of productivity metrics for different departments, as well as organization-wide metrics and generally applicable metrics.
Organization-wide productivity metrics
1. Revenue per employee
Revenue per employee (RPE) is a ratio that roughly estimates the total revenue a company generates divided by its current number of employees. RPE is a useful metric to evaluate productivity. The more productive an organization is, the less likely there will be losses (e.g., decreased turnover, no sales), and it increases the likelihood of profits.
Ideally, a company strives toward a very high RPE ratio because this indicates a greater level of productivity, which usually means more profit. An increase in revenue also allows an employer to pay employees better.
The formula for revenue per employee is:
2. Employee utilization
Employee utilization refers to the amount of an employee’s working time that is used for billable work, expressed as a percentage. It’s often used in professional services (e.g., for accountants, consultants, etc.). Utilization varies from job to job as no employee will spend all their time on work classified as “billable work .” Every project requires other activities, such as admin tasks, emails, billings, and meetings.
Tracking employee utilization helps make sound hiring decisions, for instance, if you need more employees in a certain role. It also enables you to understand if employees are being over- or underutilized. When each employee is fulfilling their job description, they’re helping the organization achieve revenue increases. When calculating employee utilization, ask yourself: How many hours of an employee’s working week need to be billable for your business to remain profitable?
The formula for employee utilization is:
Utilization Rate = Billable Hours / Eligible Working Hours
3. Total cost of workforce (TCOW)
As the name indicates, total cost of workforce (TCOW) measures the total amount of money a company spends on its workforce. This includes all costs of the workforce, including salaries, onboarding, recruiting, training, HR operation expenses, and development costs. Labor costs, in many instances, make up the majority of expenses for an organization. So, measuring TCOW is paramount to understanding the overall productivity.
Having an accurate understanding of your TCOW answers questions such as:
- How is the total cost of workforce developing over time relative to the revenue and to total expenses of the company?
- What are the components of our TCOW, and how can we optimize them?
To calculate TCOW, add up all your variables (e.g., HR expenses, training, salaries, etc.). Importantly, be sure to include all expenditures outside of your fixed expenses, such as freelancers and contingent workers – especially if they make a big part of your workforce.
General productivity metrics
4. Self-rated productivity
Depending on the maturity of a team, team members can self-rate their productivity and present it on a productivity scorecard. Although rating one’s own productivity can seem to be an ambiguous task, it becomes clearer by asking the right questions, such as:
- On a scale of 1 to 10, how confident are you that you will finish your goals this month?
- How many hours of focus work did you get done this week?
- How many interruptions did you experience this week?
Based on the outcome of this, managers can coach employees to improve productivity over a period of time. Team members can share their productivity scorecards. Then, managers and coworkers can make suggestions for increasing productivity – as many team members may be experiencing the same issues.
5. Planned-to-done ratio
The planned-to-done ratio is a measure of how much work is assigned to an employee and how much of it gets done. It looks at dividing the number of tasks assigned and comparing it to what has been completed, presented as a percentage:
Planned-to-done Ratio = # of Tasks Assigned/Planned / # of Tasks Completed
This is a good measure of employee productivity as you’re able to compare % from employee to employee. Let’s say that two employees receive the same number of tasks. One has a planned-to-done ratio of 30%, and the other has it at 95%. Then you know there’s something to look into. This is also useful to track over time and see what initiatives have increased or decreased productivity.
In addition, it puts a spotlight on the complexity of tasks and highlights if there are any constraints such as scope or budget holding back productivity.
6. Focus hours per day
Focus hours per day look at completely uninterrupted work time. It’s dedicated work, focusing on a task with undivided attention. It’s a productivity technique to eliminate distractions and unnecessary noise. The recent shift to an increase in remote work has brought focus hours per day to the forefront, as there have been discussions about whether the office or work environment is more distracting.
Focus hours per day fall into two categories:
- Deep work – This relates to the time employees focus on tasks without interruption. One way to determine this is by looking at an employee’s calendar and the number of interruptions. If an employee has meetings with only 30-minute breaks in between, it’s likely they’ve not engaged in focused or deep work.
- Operational work – This is the work done to ensure you can be productive. This can be addressing emails or small tasks that take up to 15 minutes (or 2 hours if not addressed immediately!). To measure this, add up on a daily basis how long these tasks take and average it over a month.
Now, let’s dive into some industry-specific productivity metrics.
Customer service productivity metrics
7. First-call resolution
First-call resolution or first-contact resolution, as the name indicates, refers to a company’s ability to resolve a customer query at the first point of contact. This means that after the customer contacts an employee or the company the first time, there is no need for a follow-up.
Increasing the number of first-call resolutions increases productivity, as customer service agents are able to take more calls and, therefore, service more customers.
The formula for first-resolution is:
First-Call Resolution = 100 x (Issues Resolved the First Time / Issues Handled by Customer Service Agents)
The calculation result is a percentage, and the goal is to increase this over time.
8. Ticket creation to full resolution time
Unlike the first-call resolution metric, full resolution focuses on quality instead of immediacy. It looks at the time in which the customer’s issue was actually solved. In a well-run company, these two metrics work well together to improve customer service quality over time.
To understand full resolution time, analyze each ticket (and look at the stats, dashboard, etc.) to see if it has been resolved and what’s not working vs. what’s working well. Full resolution time is measured in hours (or days).
The formula is:
Average Resolution Time = Total Resolution Time for All Tickets Resolved / Number of Tickets Resolved
9. Support ticket response times
A ticket response time indicates the time between a customer submitting a ticket and a customer service agent responding to it.
However, each ticket should have its own unique measurement metric. For example, if you worked for an airline and a customer asked a complex and urgent question about changing a ticket vs. if a customer wanted readily available information around baggage allowance, these are different scenarios that would have different response times.
To calculate support ticket response times, take the average time to respond to the ticket per type of classification and level of complexity.
Sales productivity metrics
10. Sales growth
Sales growth looks at a company’s ability to generate revenue over a fixed period of time through sales. It’s vital to understand sales growth to improve productivity and implement various initiatives to stimulate sales growth.
The formula is:
Sales Growth Rate = (Current Period Sales – Prior Period Sales) / (Prior Period Sales * 100)
11. Revenue per sales representative
On an individual level, revenue per sales representative clearly indicates each sales rep’s productivity. It helps evaluate an individual’s or team’s ability to generate revenue. Having a clear understanding of this metric helps foster a healthy competitive team environment if done correctly.
However, it’s essential to establish a baseline. Not all employees are equal. Some are more senior; others operate in more favorable locations.
You can calculate the average revenue per sales rep and then compare it with the revenue per each employee in the sales team.
The formula for average revenue per sales representative is:
Average Revenue per Sales Rep = Revenue from Sales / Number of Sales Reps
Software development productivity metrics
12. Defect escape ratio
This is a software development-specific productivity ratio that looks at how many defects are found in software before it gets to production. A higher defect escape ratio means there is an issue with testing the processes, thus slowing down productivity. A lower defect escape ratio indicates that the software is of a higher quality and, therefore, further down the line, ready to go live.
The formula is:
Defect Escape Ratio = (Bugs Found in Production / Total Number of Bugs) * 100
A final word
When putting productivity metrics in place, discuss with your employees what they think should be tracked and how. That way, you’re ensuring that the metrics you’re measuring are relevant and truly help the team perform better, instead of making them feel pressured and micromanaged.
