What is employee efficiency and how to proceed with measuring efficiency in the workplace?
In this article, we are going to find out what efficiency means for business and how is staff efficiency measured by the most successful companies.
Defining employee efficiency
It is a frequent occasion where people start discussing a topic and end up disagreeing with each other solely because they are, in reality, are speaking about two different things, despite the fact that those things have the same name. This is why it is of utmost importance to have the same understanding of the terminology being used.
Let us look into the dictionary and see what is the meaning of ‘efficiency’ first.
Cambridge dictionary says that efficiency is- “the good use of time and energy in a way that does not waste any” .
Therefore, let’s speak about employee efficiency as the form of the working process where workers are performing their task within the given timeframe with as little energy or resources spent as is possible.
Difference between efficiency and productivity. Why balance is important?
Often, when discussing the performance of the workers or a company as a whole, people use the word “productivity” as a synonym for “efficiency” which is not correct. However, they both are very relevant and correlate.
When speaking about efficiency we speak about the QUALITY of the performed activity: lesser resources spent per task within a certain time period the better the efficiency. However, when speaking about productivity, we mean QUANTITY: the more work is done within a certain time period, the better, regardless of the effort/energy/resources spent.
Both efficiency and productivity are important, but no business can be successful and be able to last long relying solely on productivity. Often, its high levels are achieved through “burning” money, investments or unwise exploitation of the workforce. This, inevitably, leads to disaster. Budgets get wasted and “burnt out” employees leave before the business becomes profitable.
This is why both should be kept in balance.
Measuring efficiency in the workplace
Having understood the meaning and importance of “employee efficiency” and its difference from productivity let us discuss how entrepreneurs and managers can measure it.
Thanks to technological progress, there are plenty of tools available to assist in this endeavor.
Taking into consideration our experience and research, in order to measure efficiency in work performance, we will need to know what was the output in the predetermined period of working time.
In order to find this out, we need to see how much time the employee is spending at work (or supposed to be spending) and how productively he or she works.
Therefore we need the tools which will be providing the following:
- Details of the task/project- it’s supposed time duration, expectations, and deadlines as well as distributing the activities within the team.
- Performance monitoring capabilities- we need to see exactly, how much time is productively spent on those tasks by the team members.
There are 2 types of software which could be jointly used for those above described purposes:
- Task managers
- Time trackers
Task managers like Trello and Jira redistribute tasks, assign items, and reschedule activities to ensure that everything goes according to plan.
They allow users to create tasks, schedule projects, and establish deadlines to get their work done on time.
Time trackers like AtTrack, on the other hand, will help to see how much time is being productively spent on each activity. It will help the management to see the actual time their workers spend on the tasks without getting distracted.
Then, when you know your stats, divide the actual time spent on the tasks (productivity, measured by Attrack) by the time which was spent for the task/project completion (predefined by Jira) and multiply by 100. The closer the final figure is to 100, the more efficient is your workforce.
Here is the example of this work and efficiency formula:
Your employees have spent 40 hours testing the software product. The actual productive time was 30 hours. 30/40*100= 75%. 75% here is their efficiency rate.
And here is an example of another formula which might help you to see what this figure can mean when you are calculating the project costs:
Project expenses - (efficiency/100* project expenses)= Losses due to inefficiency
Let us say we have invested $10000 into that marketing research where the efficiency of people doing that was at 75%.
10000- (75/100*10000)= 2500
In this case, $2500 was theoretically lost due to the low efficiency of workers.
This might give a better illustration of why measuring efficiency in the workplace is very important. Figures speak for themselves.
In this article, we have tried to help you to understand better what is employee efficiency, difference between productivity and efficiency, and what are the real benefits of knowing what your employee efficiency is in real numbers. We have suggested that a perfect combination of 2 types of software is needed to be applied to get the necessary data to do the calculations: task managers and time trackers.
We would recommend using Trello or Jira which will give you a good overall perspective of the processes happening within projects while using AtTrack (which has integration with both of those tools) and measure the productivity of the people working on them. Data collected will help you to correctly measure the efficiency of your workforce and then, as a manager or a business owner, you will be able to make all the necessary steps to improve your business performance.