Increased employee productivity – the contribution of employee effectiveness
Author: Eric Thompson
Eric Thompson explores the impact that the effective employee has on the overall productivity of the organisation.
Employee productivity is a topic that barely needs introduction. It gets a lot of coverage in the media. Switch on the television news or pick up a newspaper and you are besieged by articles on the topic. At least that is true for those aspects or employee productivity that make interesting headlines as we shall see.
To address productivity and seek to make improvements we need to understand the factors that contribute to it. In this article we will explore some of the factors involved, and in particular we will discuss how it is impacted by employee availability, employee engagement and employee effectiveness.
Employee Productivity
Let's start with what we can measure, the actual productivity of an individual or a group. In certain work environments, for example in manufacturing, it is relatively easy to measure the output. Where items are being produced, our definition of productivity boils down to items produced per worker per unit of time. In other situations, the measurement might have to be defined differently. If you run a call centre, for example, the key productivity measurement might be customers dealt with per hour, and if you run an educational establishment it might be qualifications achieved per student per year.
“…to make improvements we need to understand the factors that contribute to productivity...”
The key value of such a definition is that it provides the organisation with something specific that it can measure through time and can seek to improve. If we measure productivity and take action to improve it, then any increased employee productivity brings added value to the organisation.
Our measurement of productivity tells us how much is being produced, but unfortunately gives us little insight as to why it is at the level it is. For that we need to explore further.
Ideal Productivity
In our quest for understanding we have one other fixed point of reference and that is the ideal (or theoretical) productivity that could be achieved in perfect conditions.
We might wish that productivity was infinite, but the reality is that it can never be so. A manufacturing worker will take a finite time to make an item. A call centre worker will take a finite time to deal with a customer enquiry. What is possible is to define what that time might be in ideal conditions and calculate what the ideal productivity would be if those ideal conditions were maintained.
The actual productivity is related to the ideal productivity by a productivity factor or a series of productivity factors. Experience tells that that productivity is influenced by a number of things. It is influenced by time that the employee does not spend working on the job. It is influenced by how effective the tools and equipment that the organisation provides are, and it is influenced by human factors such as motivation. These are the factors that produce the newspaper headlines and we shall explore them now.
Availability
From the perspective of the organisation, it wants the employee to be productive for as many of the hours for which they are paid as possible. However a number of interests conspire to make sure that the individual is seldom available for all of that time.
We can define an employee availability factor as the ratio of the number of hours that they are actually available for work, to the number of hours for which they are paid.
Although it is a bit of a digression here, it is worth noting that availability is made up of a number of components. Firstly, hours absent from the workplace to which the employer is contractually committed, such as holidays and rest breaks. Secondly, those hours which the employer tries hard to avoid that keep the employee from working. Absence and illness are the main culprits that keep employees away from the workplace for substantive periods. Illness produces the first of our productivity news headlines:
“Hay fever costs UK business £7.1 billion annually.”
A day's illness may be a minor issue for the employee, but the impact on the productivity of the organisation can be significant.
Thirdly we have hours away from the job that are actually planned that way by the employers. Examples include time spent on training and attendance at communication meetings. Why would employers do that? We shall explore further later in this article.
Organisational Capability
How much an individual can produce in the hours that they are actually working depends in part on the individual, but a significant part depends on the resources that the individual has at their disposal.
It doesn’t require a great deal of insight to see that an equally motivated and skilled individual equipped with hand tools will produce less than one who is able to use a machine. The organisation’s investment in that machine was the key to its subsequent productivity. For a manufacturing organisation the need to invest in equipment may dominate in its bid to remain competitive.
“SME’s lack of IT investment could prolong the downturn.”
For any organisation, its overall productivity depends significantly on the investment that the organisation has made in the tools, systems and processes that support the individual. What is being invested in is the organisation’s capability.
Underinvestment will reduce its capability, as will non availability because of breakdowns of equipment that has already been acquired. We can define our organisational capability factor as the percentage of the organisation's ideal output that can be produced on average on a long term basis. A more challenging definition would define the factor as the percentage of the output that benchmarking demonstrates is possible in similar organisations that outperform yours.
Employee Capability
“Under investment in language learning costs UK business billions.”
The headline makes the point that the individuals in the organisation require investment as well. We can take the individual’s capability to be the sum of the individual’s behaviours, competencies, skills, knowledge and experience that has been accumulated up to that point in their career.
While an organisation will hopefully check that the individual has at least got the minimum level required for the job before being appointed, there is no sense here of a tank being full. Individual capability can be extended all the time through investment. The organisation will benefit from increased productivity as a result. In this case we are deliberately taking the employee away from the job and making them less productive in the short term, in order to invest in capability that will make them more productive in the long term.
Our employee capability factor can be defined as the ratio of the amount that a specific individual can produce to the amount that could be produced by the most capable employee. Again we could give this an external perspective by defining it in relation to the most productive individual known from benchmarking.
Employee Engagement
Employee engagement is generally held to be the combination of the employee’s motivation and their alignment with the values and direction of the organisation. Its practical manifestation is the willingness of the employee to go the extra mile on the organisation’s behalf. It is a measure of how committed they are. Clearly, the higher the level of engagement, the higher is the contribution to productivity.
This is not the place for a discussion of the factors that motivate individuals in either the short or the long term.
“81% of employees can’t concentrate in hot weather”
“£11.2 billion in UK lost through time spent on the internet”
Suffice to say that there are plenty of competing distractions, and the individual’s manager will have to work pretty hard to keep the individual motivated and fully engaged at the sort of level that is required to sustain competitive levels of productivity.
Our employee engagement factor can be defined as a ratio of the average that the employee is producing now (all other factors excluded) to the best that they have ever achieved. Once again we could relate it to external data through benchmarking.
The Impact on Employee Productivity
“…actual productivity is related to the ideal productivity by a series of factors that identify the impact of availability, capability and engagement.”
From our discussion it can be seen that an employee's actual productivity is related to their ideal productivity by a series of factors that identify the impact of availability, capability and engagement.
In mathematical terms, the relationship might look like
PA = PI x KA x KOC x KEC x KEE
where PA is the actual productivity, PI is the ideal productivity, KA is the employee availability factor, KOC is the organisational capability factor, KEC is the employee capability factor and KEE is employee engagement factor.
The Link to Employee Effectiveness
The factors that we have described here as Organisational Capability, Employee Capability and Employee Engagement can be collectively defined as Employee Effectiveness. If you want to understand more about this you can read our article “Understanding Employee Effectiveness”
We can simplify the relationship defined above to show that the actual productivity of an individual is the product of their ideal (or theoretical) productivity, their availability and their effectiveness.
Pa = Pi x KA x KE
where KE is the employee effectiveness factor
The Next Step
By defining employee productivity in this way we can explore the individual factors and set about measuring them and observing the trends. Based on our observations we then have the data to inform our strategy for achieving increased employee productivity fore each employee.