Employee productivity has always been and remains today as a critical factor for business success. The efficiency and output of a company's workforce directly impact its profitability, innovation, and overall growth.
As businesses navigate the challenges of a rapidly changing world, improving mental health and employee productivity in the workplace becomes paramount.
Here, we explore the various facets of employee productivity and performance, its importance, how to measure productivity, common challenges, and actionable strategies to improve employee productivity and create a high-performing workforce.
What is Employee Productivity?
Generally speaking, employee productivity refers to how productive employees are in regards to how much effort and work accomplished over a certain period of time.
To measure employee productivity, businesses can use the labor productivity formula below.
Productivity = output / input
For example, a company may have generated $100,000 worth of goods over 1600 hours. This would result in $62.50 per hour of work.
Conversely, you can measure employee productivity with this formula and the number of employees, versus hours. So, $100,000 of goods from 50 employees would equate to company productivity of $2,000 per employee a week.
Why is Employee Productivity Important?
Having high workforce labor productivity is essential for a few reasons:
Typically, a highly productive team means a highly efficient one. While productivity refers to the amount of work that can get done in a certain amount of time, efficiency measures how well resources (such as time) are used to get a task done.
High productivity means that employees can accomplish more in less time. This efficiency leads to faster completion of tasks and projects, which means being able to tackle more projects throughout the year.
This can result in higher profitability and better resource utilization for the organization.
Highly productive employees can produce more output with the same resources, which reduces the overall cost per unit of output. This cost-effectiveness can result in either higher profits or allow the organization to offer more competitive prices to customers.
Better Customer Service
When a company has high productivity, their employees don't get bogged down in time-consuming processes. This can allow them to handle customers more efficiently.
Productive employees can handle customer requests, inquiries, and complaints more effectively, leading to improved customer satisfaction. Plus, satisfied customers are more likely to be loyal and recommend the company to others.
This may be a chicken-or-the-egg situation, but employee engagement and productivity go hand in hand.
According to Gallup, organizations with a high level of engagement report 22% higher productivity. Because when employees are engaged, they're fulfilled by their work, making them more productive.
On the flip side, employees who are productive often experience a greater sense of accomplishment and satisfaction from their work. This can lead to increased morale, motivation, and a positive work environment, contributing to higher employee retention rates.
All of this culminates into an overall competitive advantage for companies. And in today's fast-paced business environment, companies need to stay competitive to thrive.
High productivity allows organizations to outperform their competitors, deliver products or services quicker, and respond more effectively to market demands and changes.
Which Factors Affect Employee Productivity?
There are many factors that can affect productivity. Knowing what they are, however, can help stop them before they cause irreparable damage and improve overall productivity too.
As fewer workers have offices and more companies are embracing the open floorplan concept, distractions are a constant battle. Colleagues no longer need to wait for an open door and instead, can now typically approach anyone at any time.
Not to mention the ever-present instant messages that apps like Slack and Teams have made commonplace.
Although these concepts were developed with collaboration in mind, they come with inevitable distractions, as well.
Burnout and Stress
A study from Future Forum found that out of 10,243 full-time desk-based workers polled in six countries, over 40% said they are burned out. This marks a new record high since they began tracking burnout in May of 2021.
Burned out employees oftentimes feel disengaged from their work. They lack motivation to perform and tend to have a negative outlook, all resulting in decreased productivity.
Disengaged employees tend to perform with lower efficiency and are less productive. However, it's important to remember that employee disengagement doesn't just happen. There are likely factors at play that turned an engaged employee into a disengaged one over time.
Dig deeper into this issue by having conversations, conducting pulse surveys, and taking action based on what your employees say.
It's common in the corporate world for processes to develop with good intentions. However, these processes can all-too-often snowball into cumbersome protocols that cost time money, and productivity.
Additionally, outdated technology - like slow computers, bad internet, or outdated programs - can not only hamper productivity, but lead to frustration, as well.
Strategies to Improve Employee Productivity
While there are plenty of factors that can deter workforce productivity, there are ways to increase employee engagement and productivity. Here, we'll explore some common actionable steps for encouraging employees and improving employee productivity.
Cultivate a Positive Work Environment
There are many factors that go into cultivating a positive work culture, and doing so is critical for organizational success.
A positive work environment isn't just a morale boost, it fosters motivation, job satisfaction healthier work relationships, and overall business productivity.
Furthermore, employee disengagement is on the rise, with 18% of employees now reporting being actively disengaged.
While there are many factors that go into employees disengaging, company culture is one that leaders have the power to influence.
Start improving workplace productivity by performing a culture audit to see what areas your company is doing well and where you need to improve.
In general, a healthy company culture should:
- Promote open communication,
- Offer recognition for achievements
- Create a sense of camaraderie among team members
- Encourage a healthy work-life balance, and
- Provide opportunities for professional development
Invest in Career Growth Opportunities
Another way to increase employee productivity is by investing in employees' skill development.
WorkStep surveyed over 18,000 hourly workers across 150 companies and found that lack of career growth was the top reason for turnover. In truth, this finding should be unsurprising.
The ability to develop skills is a fundamental component of employee engagement, which is especially true for younger employees.
According to a LinkedIn study, 40% of young workers said they were willing to accept a 5% pay cut to work in a position that offered career growth opportunities.
Additionally, 76% of Gen Zers want more opportunities to move up or increase responsibilities at work.
So, providing opportunities for growth not only enhances an employee's productivity, productivity but also improves job satisfaction and loyalty to the organization.
Employee development opportunities may include:
- Career development conferences
- Online classes or higher education
- Taking on more responsibilities and challenges
- Setting up a mentoring program
Allow Flexible Working Hours
When it comes to boosting employee productivity, it's important to allow employees to work in a way that's best for them.
While you likely won't be able to let employees have free reign on their schedule, there are things you can do to help support your own team's productivity levels.
It could be letting employees start work later in the morning and finish later in the evening. It can be offering remote or hybrid options when possible. It can even mean embracing mistakes as a learning opportunity when they inevitably happen.
Essentially, flexibility at work embraces the idea that employees can be productive no matter when or where they perform their work.
Rather than enforcing a rigid workplace environment or schedule, workplace flexibility puts trust in the individual employee and empowers them to do their work in a way that’s best for them.
Create an Employee Recognition Program
Employee recognition is arguably the simplest thing companies can do to improve not only their work culture, but drive employee productivity, improve retention, and improve the overall employee experience.
In fact, research shows that:
- When employees believe they’ll be recognized for their work, they’re nearly 3 times more likely to be highly engaged. (Quantum Workplace)
- 37% of employees surveyed said that more appreciation would motivate them to produce better work more often.
- Employee productivity, engagement, and performance are 14% higher in organizations with recognition programs than those without. (Forbes)
Keep in mind that employee recognition programs aren’t a cure-all. If you have culture issues or ineffective business leaders, for example, recognizing employees’ hard work will only be a band aid for the deeper problems.
However, as you work towards increasing employee productivity levels, recognition is a critical element.
There are all kinds of employee recognition programs available today, including:
Just be sure to find the right program for your needs, culture, and goals.
Employee productivity is a fundamental aspect of any successful organization. By fostering a positive work environment, investing in training, embracing flexibility, and prioritizing appreciation, employers can create a high-performing workforce capable of driving growth and innovation.
Continuously improving productivity strategies and adapting to evolving workplace dynamics will position businesses for long-term success in an ever-changing world.
Contact Terryberry today to see how we can help you maximize productivity and improve employee productivity at your company.