13 November 2024
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Measure to Maximize: A Small Business Approach to Employee Productivity

Well, you’ve finally done it. You’ve quit your day job. Good for you! You were wasted there, anyway. Now you can bring that wealth of unused talent and those underappreciated skills to take your fortunes into your own hands.

But if there’s one guiding principle that should influence every decision you make whether you’re starting out as a freelancer or establishing your own SME it’s the age old adage that time is money.

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When you had a salaried job, productivity most likely wasn’t a priority for you. Bathroom breaks could be stretched out as long as possible and trips to the water cooler also doubled as opportunities to check on all your social media feeds. Checking out your Facebook timeline on company time? That’s the dream right there!

A Small Business Approach to Employee Productivity

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When you run your own business, however, the stakes are real. You don’t have the luxury of a salary to fall back on. Your livelihood is now intrinsically linked to your productivity. Not only must you be able to motivate yourself and manage your time as effectively as possible, you also need to maximize productivity among your workforce.

There are a great many strategies that can help you to maximize your productivity, but before you can do this, you must first find a way to measure it.

You’ll find that success in small business comes with the ability to quantify everything, from your spending to online reach to your social media engagement to, of course, productivity.

But while online engagement is easy enough to measure when you have a decent analytics tool at your disposal, measuring productivity requires a little more legroom on your part…

Small Business Approach to Employee Productivity

#1. Input/Time

You can always make more money, invest in new materials and buy new resources, but time is an entrepreneur’s most precious commodity. It’s the one thing that you can never make more of.

Thus, measuring employees’ time on task is the first step to measuring their productivity. There are lots of ways you can do this. For decades employers have used time clocks to quantify how long employees have spent on task.

You needn’t worry about old fashioned punch cards, though, the among your workforce has come on quite some way in recent years. In fact, most time clocks now enable employees to clock on and off of tasks using a mobile app. When you have measured employees’ time on task, this is your input.

#2. Output

Depending on the employee’s role output may be measured in different ways.

For sales executives it might be units sold or deals closed. For customer facing employees it might be customer queries dealt with. For employees involved in manufacture it could be units produced.

For software developers of employees working on complex projects this is a little harder to quantify (which is why target setting is so very important).

Whatever form output takes for each individual employee, it’s important that they have a uniform means with which to quantify it. Ideally, this is best expressed in monetary terms. This will allow you to easily…

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#3. Apply the Formula

So, now you have your time spent on task (input) and your output, it’s time to apply the formula.

Output divided by input equals labor productivity. So, let’s say that your enterprise created $80,000 net worth of product using 1,500 hours of employee time. Thus, we need to divide 80,000 by 1,500 which gives us a productivity figure of $53 per hour. So, now we have this figure, what do we do with it?

Small Business Approach to Employee Productivity

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#4. Benchmarks, Targets and Driving Productivity

Now that we know that our employees are generating $53 per hour for our business, we can multiply that by the amount of hours we spend trading in a week, multiply that by four for every calendar month and deduct our monthly overheads to determine our profit margin.

Whatever that profit margin is, we likely want it to be higher, right?

So, we find ways to bring that figure up from $53 per hour to a nice round $60. Now that our employees have a specific goal to work towards they have a framework for success, thus driving motivation. They have a benchmark which they need to overcome, and it’s your job to establish a system of incentivization to allow them to do that.

Wrap up

Now that you’ve quantified employee productivity, used it to establish a benchmark and used incentives to motivate employees, it’s simply a matter of keeping a weekly eye on those metrics to enable us to make sure that employees stay productive and profits stay high!

A Small Business Approach to Employee Productivity
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Gaurav Jain
Article by Gaurav Jain
Hey There! My name is Gaurav Jain, a full time affiliate marketer since 2007. The reason for starting eMoneyIndeed.Com blog is to help you Save & Make Money Online. I write about Blogging, Online Marketing, Webhosting, SEO, Affiliate Marketing, Startups, Social Media, Email Marketing and more. Hope you enjoy the posts on eMoneyIndeed.com

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