Measuring Individual Worker Productivity

time-is-money-1552761_640Over the years we have seen a lot of focus on supplier margins, not to exceed bill rates, pay rates and many ways of measuring and managing current expenditure and predicting future costs.

One thing that has always fascinated me is how we measure worker productivity.

An individual worker’s hourly rate might be twice as much as that of another worker doing exactly the same job, however, if his or her output is four times than that of the worker paid only half as much, then surely this would represent good value for money?

If the measure of cost versus productivity is straightforward, for example where the worker is packing crates of apples, then it can be easily argued that the worker paid 100 units per hour yet is packing four times crates the per hour of a worker paid 50, then so long as that rapid work rate works in your favour, I know which one I would prefer to engage.

The equation, however, becomes far more difficult when the worker is contributing to a much more complex project and where ‘their’ output is less ‘measurable’.

Let’s say that you have a team of software engineers working on a project that has a deliverable to produce a new billing system for your customer in the next six months.

No doubt there will be a budget set aside for this work and so long as that project comes in either on or below budget, everyone will be happy (assuming of course that the end customer is happy with the deliverable), but is the end project the only way to look the deliverable?

I have read numerous articles on the topic of measuring worker productivity. They all speak of ‘what’ you should do but not ‘how’ you should do it. Without exception, every article talks about setting up measuring processes, measure this, measure that, nothing actually tells you how and what measures to use.

One excellent article that I read on a No-Nonsense Guide to Measuring Productivity sets out a very simplistic formula of:

Productivity = Units of output/Units of Input.

Units of input can generally be measured in terms of time and money. But in the complex project scenario, how do you break this down and measure the individual units of output per team member. You will need to do this if you are to measure the true productivity of an individual worker within a complex project. And if you could do this, would this influence your hiring decision?

Can you imagine a situation where workers in the future were able to apply some kind of universally accepted rating (I would call it their ‘productivity multiplier’), which, when, combined with their hourly rate, provided buying organizations with a better indication of their ‘value’  for a particular task.

As measures of rating productivity improve through the use of technologies such as VMS and HCMS, it is surely possible that for many categories of worker, such a multiplier is possible and would become more reliable.

Maybe it will viewed as a form of data-driven endorsement.

Peter Reagan, CCWP

Peter Reagan, CCWP
Peter Reagan, CCWP, is director, contingent workforce strategies and research (EMEA, APAC & LATAM) at Staffing Industry Analysts. He can be reached at preagan (at) staffingindustry (dot) com.

Peter Reagan, CCWP
Peter Reagan, CCWP, is director, contingent workforce strategies and research (EMEA, APAC & LATAM) at Staffing Industry Analysts. He can be reached at preagan (at) staffingindustry (dot) com.

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One Response to “Measuring Individual Worker Productivity”

  1. nickwalshe says:

    Hi Peter, 

    I agree that life would be a lot simpler if we could measure each worker’s productivity. However, I think the main issue would be that this measure would put the full emphasis on the individual carrying out the work, and ignore the multiple factors that impact on productivity.  Specifically, things such as the manager the person works for, the tools they are provided, and even their personal situation. 

    Mathematically, it would be just as effective to increase lower productivity through the mentioned factors. I think the issue with any data-driven test to give a data-driven endorsement would surely be related the context it was given in.

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