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4 Types of Productivity Measures (and How to Use Them)

Productivity is central to your organization’s success. Measuring productivity can help keep your team on track to reach their goals.

By Fellow.app  •   May 6, 2022  •   7 min read

Your team works hard to keep your projects moving and your organization profitable. But are there ways you can improve your team’s workflow and do even more in the same amount of time? Measuring your team’s productivity can give you the answer. Below are four types of productivity measures to help you assess your team’s productivity, keep everyone on track, and maximize your profits.

What are productivity measures?

Productivity measures are metrics that track your team’s efficiency in accomplishing their tasks. They can help you manage your team’s performance and figure out where everyone can improve.

Productivity measures compare the resources – time, tools, energy – your team uses to the amount of work they do. From there, you can figure out whether your team is making the most of their time and resources.

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4 types of productivity measures

There are a few different measures you can use to assess your team’s productivity. Each one looks at different factors in the big, complex wheel of getting from the starting point to the finish line. Below are four types of productivity measures.

1Capital productivity

Capital productivity measures how well your team is using physical capital to produce goods or services. Physical capital includes human-made items such as labor materials, warehouse supplies, computers, and vehicles. It’s basically anything tangible that you use to make your products. 

To calculate capital productivity, you subtract your liabilities (debts and expenses) from your physical capital. You then take that number and divide your sales by it. The result is your capital productivity. The higher the number, the better – that means your tools are letting you sell enough to do well. To increase this number, you can upgrade your physical capital (or get more of it) or decrease your liabilities. 

2Material productivity

If your organization provides services instead of products, material productivity might be your go-to productivity measure. It’s similar to capital productivity, but instead of looking at physical capital, it looks at materials. 

You’ll also see materials called “natural resources” – which, here, doesn’t mean water and land – or “raw material.” To figure out your team’s material productivity, use the capital productivity formula but replace physical capital with natural resources. 

3Labor productivity

Labor productivity can help you see whether each team member is being productive enough. This type of productivity is the ratio of output per person. It compares the value of your team’s products to how much time your team needed to get the product to market. To calculate it, divide the value of your goods or services by how many hours your team took to make them.

4Total factor productivity

Total factor productivity is what experts call a “multifactor” productivity measure. Here, “factors” go beyond the usual workplace nets – capital, material, labor productivity, things like that. They also include your management style, knowledge, and organizational structures – and how they affect your output.

To get to your team’s total factor productivity, divide the value of all your products by the weighted-average value of all the factors. Sounds like a bit much? Here it is in plain English: To calculate total factor productivity, you’ll need to determine the importance of everything that goes into your processes. Knowledge, workflows, and really anything else can come into play here.

That said, there are a few simple formulas that make it easy to figure out your total factor productivity. One of the most popular ones is the Cobb-Douglas function. But it can get wild pretty quickly since it can include so many different factors. There’s really no ceiling to how many factors you include – the only limit is how far you’re willing to go.

How to use productivity measures in the workplace

Since there’s more than one way to measure productivity, there’s more than one way to use productivity measures for your team. Below, you’ll find some of the simplest ones.

1Time tracking

If your team is working remotely, you might find it tough to keep up with each person’s work, let alone all their “factors.” Tracking your team’s time – and how they spend it – can be a great solution.

To start, you’ll need a time tracking tool that goes really deep on how each of your team members is spending their time. For example, Monitask, an employee monitoring software, integrates seamlessly with Fellow and records your team members’ time entries, activity levels, and internet usage. From there, you can see the average amount of time your team members need for their work. You can use those numbers as a baseline for their productivity levels.

2Simple productivity output calculation

Simple productivity output calculations are best for assessing the basic products or services your team members have brought into the world. They mainly apply to labor productivity since they only include a few factors. 

To start, pick an output figure – say, the value of everything your team produced last week. For example, maybe your team designed two websites worth a total of $7,000. You’ll then need to tally the number of hours your team put into creating the websites.

Let’s say that, collectively, your team spent 150 hours working on the websites. Now, you’ll divide the output ($7,000) by the input (150 hours) to see how much money your team made per hour. In this case, you’ll come up with $47 per hour, which is your team’s labor productivity.

3Measuring efficiency

Though similar, productivity and efficiency aren’t identical twins. Where productivity looks at quantity, efficiency is more about quality. That’s why measuring your team’s efficiency and productivity is the best way to make the best of your team’s performance across the board.

To calculate your team’s efficiency, start with the usual number of hours it takes to get a product or service 100% ready. You’ll then note the number of hours your team took to finish the job. Finally, divide your usual labor hours by the actual hours worked. Multiply that result by 100 percent to get your team’s efficiency percentage.

4360-degree feedback

If formulas and math aren’t your friend, you can skip the equations entirely and just listen to what everyone has to say. This 360-degree feedback gives everyone a chance to chime in about the team’s overall productivity.

To start, give your team members instructions on how to properly share feedback about their teammates. Give them clear factors to consider, such as time management and task prioritization. You should also make sure everyone knows who’s actually responsible for what so their feedback is fair.

You can then ask your team members to give feedback on all their teammates – managers and leaders are on this boat too. To help you get the best feedback possible, Fellow includes pre-built templates and smart suggestions for asking for and reviewing peer feedback. This way, you can easily keep up with everyone’s responses and share your own thoughts. You can use all this feedback to get a holistic view of your team’s performance from all sides.

Why is measuring productivity important?

Your team’s productivity is a big part of your organization’s success. The higher your productivity, the better your team is using everything in its court to get results. Measuring your team’s productivity is important for so many reasons, including the five below.

1Achieve more in less time

Think about the times you’ve said, “Wow, I had a productive day today.” You probably scratched more items than usual off your to-do list on those days. That’s the essence of productivity – it’s all about achieving as much work as possible within a certain time frame. Regularly assessing your team’s productivity can help everyone make the most of their workdays – and point out problems while hinting at how to fix them.

2Higher revenue using fewer resources

The more work your team does, the more your organization can put on the market. When you measure your team’s productivity, you can pinpoint areas where your team might be wasting resources. Once you correct that, you can create more from less. That’s better for both your team and your bottom line.

3See whether you’re meeting targets

You have big goals for your organization – and big plans for how to reach them. But how do you know how close your team is to the finish line without any idea of their current status? When you measure your team’s productivity, you can see exactly how much everyone is doing – and how close they are to crushing their goals.

4Help with scheduling projects

Once you know how much work your team can do in a certain amount of time, you can way more easily schedule and plan projects. You’ll have a good idea of the load your team can carry, so you can set realistic expectations. You can set deadlines that fit your team’s abilities and stand a better chance of keeping your projects on track.

5See if everyone is pulling their weight

Measuring your labor productivity can give you a clear view of how your team is performing. You’ll know your team’s average productivity levels, so you can easily pinpoint team members who are struggling to keep up with everyone else. From there, you can make a plan for productivity improvement and take a major step toward doing more.

Making room for productivity

You and your team can do amazing things – and maybe you can do more of them too. Knowing your team members’ productivity can help you make the most of their time and resources. Whether you do math or get everyone’s feedback, productivity measures can help you make the most of all your resources – and all your best minds.

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