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11 Employee Productivity Metrics and KPIs That Matter
Company productivity is a recurring business topic since it is critical to staying competitive. Productivity is defined as an organization’s output divided by its inputs. A corporation must not only track productivity but also show how it may be improved. This necessitates selecting the productivity measures that will most impact your firm and then regularly monitoring its performance against them. Productivity can be defined as the efficiency with which individuals, businesses, industries, or entire economies turn inputs into outputs. These four levels are inextricably linked. The aggregate productivity of all individuals in a firm represents the company’s productivity. Productivity is easier to assess accurately if, of course, you use KPIs. What are KPIs? KPIs, or Key Performance Indicators, are measurable values organizations use to assess and track the effectiveness of various business processes and activities in achieving their strategic goals. KPIs are crucial for evaluating performance, identifying areas for improvement, and making informed decisions. Here are some key points about KPIs: Why does Measuring Employee Productivity Matter? Measuring productivity can help managers understand how their teams work and ensure employees can meet their goals. It also allows organizations to provide timely feedback to employees. This feedback helps employees adjust their efforts to achieve business goals. Thus, it is a collaborative effort that requires timely communication and direction from both parties. Productivity metrics also help businesses identify areas for improvement on an individual, team, and organizational level. Therefore, there are several benefits to measuring employee performance and productivity. 11 KPIs For Measuring Employee Productivity Here are 11 KPIs that you must look at closely. 1. Projects Completed This is one of industrial organizations’ most basic definitions of productivity when the same “job” is repeated with little modification. It is a simple counting exercise to calculate: How many jobs did the company accomplish in a given period (as defined by the number of jobs done divided by the period)? The target number will obviously vary depending on the task’s complexity and output. This is a good starting point as it helps evaluate how much work is actually getting done, the status of tasks, and an organization’s output. It also helps prioritize important tasks, and it will vary from team to team and organization to organization. 2. Revenue Generated The revenues generated by a corporation from selling items or services to its consumers are referred to as sales. They are one of the most fundamental indicators of a company’s financial security. It is critical to distinguish between sales and revenue since businesses have additional income sources such as interest, money from litigation, royalties, and other avenues and sectors. As a result, income is almost always more than sales unless the company is facing extreme losses and has high expenses. Unlike net sales, Gross sales can surpass revenue because they are not adjusted for returns and discounts. It helps organize a business’ growth, revenue, and income. It helps put things into perspective and change tactics if necessary. 3. Sales Close Rate Rather than churn rate, which is the rate at which existing customers stop subscribing to your products and services, your sales closing rate is the number of new leads that convert into sales. If your sales win rate is below these numbers, you must improve and adapt to modern trends. However, how can you begin to make changes if you don’t know your closing ratio? To start, you only need to figure out the total number of sales leads you have had over a certain period. For instance, you can use sales leads from a particular quarter to give yourself a number. Once you have that total, compile your total closed sales during that same period and divide that number by your total leads. Finally, multiply that amount by 100 to give yourself a final percentage—this total is your close rate. 4. Sales Growth Sales growth is the increase in sales of a product or service over time. It measures a business’s revenue from sales performance. Sales growth can be measured by comparing the year-over-year, quarter-over-quarter, or month-over-month sales. Here’s the formula for calculating sales growth: Companies use sales growth to assess internal successes and problems and by investors to determine whether a company is on the rise or starting to stagnate. 5. Revenue per Employee Revenue per employee is an easy calculation to assess the value of each employee. You divide your total revenue by each employee to calculate revenue per employee. This KPI indicates how expensive or profitable a company is to run. This helps assess a business’ profitability/survivability against competitors in the same industry. This calculation offers a better comparison in companies where employees directly impact the profit, such as sales companies or investment banking. When comparing revenue-per-employee ratios, consider how each company completes its daily operations. For example, a company that runs entirely online and a similar company that relies on in-person sales can differ in their ratio. 6. Total Cost of Workforce The Total Cost of Workforce (TCOW) is a metric that includes the total amount invested in human capital. It’s more than just employee salaries; it includes direct compensation, health benefits, taxes, and workforce overhead. This KPI provides management with labor costs and the factors indirectly causing these costs. Nearly 70% of a company’s expenses come from workforce costs, so calculating this KPI is crucial. TCOW should also include expenditures on the contingent workforce, outsourcing workforce, or gig workers if they work exclusively or spend a substantial amount of time each month working for your organization. Historically, companies omitted these expenses from the calculation, which missed this important source of expenditure. 7. Overtime Hours The frequency with which employees have to work overtime leads to burnout. It means that workers are unable to meet deadlines during normal work hours and have to work extra time. Employers should use this KPI to evaluate why their employees are having trouble, whether they need extra time, or whether they simply need more workers to meet demands. These questions will
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