How to Calculate Employee Efficiency

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Bad measurements of employee efficiency may be worse than no measurement. For example, if you measure your sales staff's efficiency by how many calls they make, a busy but unsuccessful salesperson may look better than one who makes fewer calls but closes every sale. A good system for calculating employee efficiency distinguishes the importance of activities, accomplishments and outcomes. Filing patient data is an activity; filing everything correctly is an accomplishment; having the doctor able to learn a patient's history quickly is an outcome.

Talk to your employees about their jobs. Ask them about the activities they perform during the workday, and which of those activities are most important for generating positive outcomes for the business. Then, get their view of what a realistic standard for peak efficiency in their job would be.

Speak with your customers. Ask them what's most important about the work your employees do. For some customers, on-time delivery may be the priority; others might prefer you delay delivery if it means your employees catch more billing errors or broken widgets.

Identify the critical elements of your employees' jobs. The critical elements are the essential parts of the job -- activities that, if they aren't done well, that means the entire job was done badly. In IT, for example, you might appraise one employee's efficiency based on how many lines she coded per unit of time and another on the number of errors he fixes.

Establish your priorities. Activities, accomplishments and outcomes can all play a role in measuring employee efficiency: You want salespeople to make plenty of calls on customers -- an activity -- but you also want them to close sales, which is an accomplishment, and generate profit for you, which is an outcome.

Set standards for measuring efficiency. If you've done your research, you know what's important to you; what matters to your customers; and the essential parts of your employees' jobs. This should give you enough information to calculate whether employees are delivering value.

Tips & Warnings

  • Remember that making money isn't always the same as efficient. If you run a law firm, for instance, attorneys filing lots of billable hours will generate profits. If the work isn't done to the client's satisfaction, it's not efficient and could come back to bite you.

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