Research by Opus Energy reveals that eighty-six per cent of UK SMEs claim that productivity is an issue. Given that there are more than 5.7 million SMEs in the UK, making up 99 per cent of the UK’s businesses, inefficiencies in productivity will be having a significant impact on the UK economy.
Productivity hinges on employing and retaining the best staff. There are positive signs in the business community with many SMEs looking at ways to inspire employees and improve efficiencies. Many businesses are addressing productivity concerns by introducing a wave of measures from flexible working to workplace wellness plans, bonuses and perks.
But how do SMEs measure the result of their renewed efforts? Accurate productivity measurement is fairly complex but can be helped using productivity calculators. In most cases, it is not a simple case of counting up how many widgets are produced by each employee in a day. Many tasks are difficult to measure and quality of work also has to be factored in.
A factory worker may turn out 100+ products each day, but if the products aren’t made to a sufficient standard, both time and materials are being wasted. It goes without saying that quality is the hardest aspect of employee productivity to measure.
Our recent research found that three quarters (75 per cent) of SME decision makers are happy with their business productivity and one in five (22 per cent) businesses are not measuring productivity at all. A further survey carried out by merchant bankers, Close Brothers, of over 1,400 SMEs across the UK, France and Germany, found that of those SMEs who don’t measure productivity, 28 per cent don’t know how.
In today’s global economy competition is fierce. Productivity is a serious issue. Not measuring productivity means insight can’t be gained into how to improve it. Business success depends on tracking performance and identifying problem areas.
There are obvious issues around unquantifiable tasks. One hour spent on the phone resolving a query from an unhappy customer could be worth a lot more than one new sales’ call. Why? An unhappy customer can do more damage to your business than you think.
So how do you chart employee productivity to gain a better understanding of how your business is performing?
1. Establish a baseline
First and foremost you need to establish some baseline metrics to measure against. You will need to identify expected work outputs for each position. While it may be easy to apply productivity metrics to roles with specific tasks, it may be less clear how you apply the same metrics to more general roles, such as receptionists and administration staff.
However, expectations should be set for every role. This provides clarity for both employer and employee. It creates a reference point for the baseline measurement of performance and holds the employee accountable.
2. Define and measure tasks (not hours)
Define measurements that relate to key functions of the job or use broader measures. Useful measurement include how quickly customers are served, how many invoices are sent out, how many sales calls are made, how many orders are dispatched and so on. In some cases it may be easier to measure group output.
3. Set clear objectives and goals
Consider how your employees’ performance is contributing to your business’s goals and targets. Set clear objectives and use regular performance reviews to evaluate progress.
4. Carry out a client survey
Poor employee performance ultimately has an impact on your customers. A client survey can be a good way of getting feedback and tracking back to individual employees when a particular order or service hasn’t gone to plan. Outstanding performance can also be identified and praised.
5. Place a value on quality of work
The timely completion of tasks to a high standard is a key indicator in measuring employee performance. By monitoring quality of work, as well as quantity, training needs can be quickly addressed.
6. Monitor absenteesim
Monitoring absenteeism is an essential component of measuring employee performance. If an employee performs brilliantly when at work, but takes an excessive amount of time off sick due to work stress, productivity overall will be affected.
7. Consider presenteeism
Presenteeism (employees who attend work when they are ill) impacts significantly on performance. Putting a value on presenteeism is extremely difficult, but it is worth addressing. In the long term, employees who attend work whilst they are ill have a negative impact on overall productivity. Attending work while sick also increases the chances of infecting other staff and extends recovery time.
Measurement difficulties relate to identifying episodes and relating those to productivity. Employee surveys can be helpful. For example, ask employees ‘When over the past 12 months did you work when you were sick?’ Workplace well-being programmes can help to identify and address presenteeism.
The importance of understanding employee engagement
Productivity is obviously one of the pathways to success. Employees are central to driving your business forward, so equal attention should go into understanding employee engagement and managing change. Measuring employee productivity is crucial if SMEs want to identify problem areas and support staff to be the best they can be.