rganizations measure productivity because productive employees make the best use of their time and are more likely to generate profits for the business. To measure business performance, it’s important to measure employee performance.
How productive are employees on average? One study by the University of California, Irvine, found that the average employee is interrupted every three minutes and five seconds. To make matters worse, it takes them 23 minutes to regain their focus after an interruption, and another study found that office employees are productive less than two and a half hours a day.
So, why are employees so distracted all the time? Social media is a huge factor in work distraction. A study by TeamLease discovered Facebook takes up 32% of employee time, costing organizations $28 billion a year! Every time an employee is browsing social media, they are using precious time that could be spent being productive.
So how do we solve this dilemma? By measuring employee productivity, of course. But how should companies go about measuring productivity? Well, there are typically two ways—measuring outcomes or measuring output (or activity). Many organizations have relied on measuring output, since it tends to be easier to track and measure. Recently, however, companies are starting to see the value in measuring outcomes, especially since more employees have gone remote.
So what is the difference between these, and which is a better area for your company to measure? In this article, we’ll go over the differences between measuring output vs. measuring outcomes, and discuss the pros and cons of each approach.
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Measuring output for productivity
Measuring output involves measuring the amount of activities an employee takes. For sales people, this might include sales calls or emails sent, the number of meetings booked, etc. For employees who work in support, this might be the number of tickets closed, the number of calls taken, and so on. And for many companies, this may even simply be boiled down to the number of hours worked. This is the traditional method of measuring productivity—input vs. output—a simple calculation. It was long held that this was the best way of measuring how hard an employee works. The thinking being that since the employee accomplishes more, they must be more productive.
Unfortunately, this method hasn’t worked out so great.
One management consultant breaks this down simply, by asking who makes a better burger—McDonald’s that sells 33 million burgers in a day or Five Guys that sells 350,000 in a day?
From an outcomes based measurement, McDonald’s makes way more hamburgers - so that implies they also make better hamburgers. But how many people would actually prefer a McDonald’s burger over a Five Guys one? The outcome-based approach here neglects key data around quality, nutrition, taste, and more.
That example applies to measuring employee productivity. Measuring employee output doesn’t tell you about the quality of their work or the impact their work has on customer satisfaction. For example, what if one employee completes 100 tickets per week, and the other employee completes 50? At first glance, the employee who completes more tickets is doing a better job. But if that first employee is only completing 50% of the tickets accurately, while the second is completing 100% accurately, then suddenly the employee with lower output actually looks like a better performer.
For these reasons, productivity and company success shouldn’t just be about numbers. Organizations should incorporate human elements, such as connectedness and happiness to their definition of productivity.
Measuring outcomes for productivity
Even before the start of the pandemic, companies were increasing their use of employee monitoring software. These tools can measure the number of hours employees spend on their work computers, as well as take screenshots and track keystrokes. But since the lockdown forced so many employees to work from home, these monitoring tools have become even more rampant.
A problem with these tools is that they can incentivize employees to look like they’re being busy rather than actually driving them to be productive. Should managers and employers be happy knowing that their employees have worked 40 hours in a week? Or based on the above example, should they be happy knowing that their employee is completing 100 tickets per week? Or should they better define what success means to their organization and measure that instead?
There’s a good reason measuring outcomes has started to pick up steam. Outcomes are the result of employees’ efforts, not the amount of work employees put forth. That’s why KPIs (key performance indicators), OKRs (objectives and key results), and other goal-setting frameworks have become so popular in recent years.
For different industries, companies, departments, positions, and employees, outcomes will look different. For a salesman, outcomes might look like driving sales that don’t churn, or fostering customers coming back for a repeat purchase. For a customer service person, outcomes might involve accuracy of completed tickets, or satisfaction by the customers they interact with. In other words, it’s about the results, not the process.
Outcomes are what matter to a company’s bottom line. By shifting toward measuring outcomes, businesses can position themselves better in the long run to achieve their goals.
Employees will be better off as well. Employees will be happier knowing that their every movement isn’t being tracked in monitoring software. And they’ll know that the quality of their work is more important than the hours spent at their desk, which can drive them to be more engaged. They can do things their way and solve problems by thinking outside the box without being micromanaged.
Tools for measuring output and measuring outcomes
As we acknowledged earlier, one of the reasons that measuring output has been the predominant approach is because it’s simply easier. Even during the pandemic, the rise of the aforementioned employee monitoring tools hasn’t enabled better management. While these tools might make managers feel better knowing what their subordinates are up to, they simply don’t foster a productive workplace environment. With these tools, along with time tracking tools, employees often just feel untrusted and spied on.
With tools that measure productivity in terms of outcomes, such as OKRs, employers can get a better grasp of how an employee is performing. And with so many employees working remotely, these tools enable flexible hours as well. That way, employees can work when they’re most productive rather than the typical 8-hour block.
MetaSpark was built from the ground up with a focus on allowing you to measure employee productivity based on outcomes. You can set goals and view progress without having to micromanage. This ensures employees have what they need to complete work on time, without distractions. You also gain full visibility into individual employee performance against OKRs, with live dashboards and analytics.
Would you like to see how MetaSpark drives productivity through measuring outcomes?