Productivity Metrics: The Stats You Need to Know
A company’s success relies on the work of its employees, yet it is surprising how many companies don’t get to use the full potential of their workforce. This can happen because of a series of reasons, but it’s most commonly attributed to the fact that most businesses don’t have an efficient system to measure productivity rates within the company.
Such a problem can be solved in several ways; most of them involve analyzing a series of indicators similar to those used to measure the economic status of the enterprise.
For that reason, we’ll present you here with some productivity metrics to help you have a clearer idea of how many of your resources you’re making use of:
Revenue per Employee
This productivity metric can help you better understand the value each member of the team provides to the company. It is calculated dividing the total revenue by the total number of employees. It can also be used to demonstrate how effectively a company is using its resources. The higher the revenue per employee, the better. This can be taken into consideration when deciding to add or cut employees.
With this productivity metric, you can have an insight on the effectiveness of your team as a whole. To calculate it, divide your total gross profit by the total cost of your workforce (see above). If you’re above one, it means you’re doing well; you might use this information if you’re considering an expansion (or reduction) of your workforce.
Total Cost of Workforce
To calculate this one, just add all your compensation, contractors, benefits and any other expense you may have. This number indicates your total workforce spend and could help you determine if any changes are needed.
Monthly Profit or Loss
Monthly profit or loss statements are a good indicator to look at when trying to measure your company’s productivity since you can perceive changes associated with the labor of your workforce. Given the fact that income and outcome sources are carefully listed, you can tell when lower (or higher) productivity rates have affected your company each month if other variables have remained constant.
Hours Worked per Process
You also need to have a way of measuring the labor hours spent on the different functions inside the company. Labor is the most expensive raw input you have, particularly in aspects of manufacturing, assembly and support operations. You can use this metric if you’re considering in adopting automation in a given stage of production. Return on investment (ROI) of automated manufacturing is usually worth the cost and time, even if it doesn’t seem to have an immediate effect.
Productivity metrics are a strategic tool, analyzing them correctly and using them for decision making can have a serious impact on your business. So take these tools and get the most out of every single resource at your disposal. If you want to know more about the use of metrics you can check this article about it in Forbes magazine.