How Do You Measure Productivity?

If I were to help you dramatically increase your productivity, how would you know it? What metrics would you expect to improve?

When thinking about productivity, most people immediately think of three types of metrics:

  • Production metrics – such as throughput, rework, and units per hour
  • Sales metrics – such as sales, length of sales cycle, and conversion rates
  • Financial metrics – such as return-on-assets, account receivable days, and margins

Nothing wrong with these, but think about all the productivity that is not being measured by these and similar metrics. Think about all the executives, managers, and staff who aren’t selling or directly involved in moving product one step closer to the shipping dock all day long. How are you measuring their productivity?

Oh, and while you are considering this, try estimating the percentage of total compensation that goes to people whose productivity is not really measured by these standard metrics.

Several years ago, my boss, the CEO, asked me to justify the investment in a new hire. I responded by pointing to the VP across the corridor and asked if he was worth the investment. End of conversation. It is easy to pick at lower level employees who produce fairly tangible outcomes. No one is paying attention to the productivity of the highest paid employees. While those employees are likely being measured against results, how do you know you couldn’t manage with half as many?

Here are some metrics that would provide insight into the productivity that is not currently being measured. Hours, energy, and dollars devoted to:

  • Indecision, re-decision, second guessing, and prolonged decisions
  • Undoing the damage of poorly communicated decisions
  • Meetings that produce few, if any, tangible outcomes
  • Trying to increase compliance when commitment was needed but never achieved
  • Arguing about alternatives without first agreeing on objectives
  • Improving employee morale caused by poor management
  • Change management and improvement programs, as opposed to actual change and improvement
  • Repairing damage caused by not getting input from the right people
  • Attempts to solve problems without first understanding the cause of the problem

I could go on, but all of these boil down to one thing: a lack of clarity in thinking and communicating. This affects everyone in your company, but has the greatest impact on management and knowledge workers – your most highly paid employees.

If you had these metrics in place and could create the clarity that shrunk all of them dramatically, what do you think that would be worth to your company? I’d love to know. Furthermore, I’d love to help you do exactly that.

In the meantime, here is a tip to get you started toward greater clarity: No matter what you are doing, pay attention to process before getting lost in the content. In other words, start with these two questions:

  • What are we trying to achieve?
  • How can we best do that?
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