How to Measure Productivity

Our culture is obsessed with productivity. We’re always trying to get more done in less time.

In fact, there is a societal feedback loop that associates hard work with reward. You receive praise for doing and having more. Most people earn money through hard work, not by lounging around. People rarely commend you for putting up your feet and relaxing when you could be working.

Paying attention to productivity isn’t completely terrible, though. Productivity is a valuable way of assessing whether you’ve met your goals.

Measuring productivity is important because it helps you determine if you’re staying on course. If you don’t analyze it, you might go off the deep end, running yourself ragged with all of your hard work without anything to show for it.

How to measure productivity is often discussed from a business perspective. In this article, we’re also going to address productivity as it pertains to your personal life.

What Is Productivity?

Before we get into the importance of measuring productivity, we need to address what productivity is. According to Merriam-Webster, productivity has two definitions:

  • The quality or state of being productive, which means: effective in bringing something about; yielding results, profits or benefits; or devoted to satisfying needs and wants
  • The rate per unit area or volume at which biomass consumable as food by other organisms is produced

The first definition indicates that productivity is related to the act of creation. It’s associated with delivering results that are related to desires and necessities. The second definition is more scientific. However, if you look at it from a broader perspective, you can see that it relates to goods and services that are consumed by others.

The Definition of Productivity From a Business Perspective

From a business perspective, productivity is output divided by input. Some examples of input are capital, materials and labor. If you can put out the same number of products or services while reducing your inputs, you are considered to be more productive.

But productivity isn’t based on a single factor. Let’s say that a company makes engines. They have to make several parts to produce an engine. What if the organization begins to buy the parts pre-made instead of fabricating them?

The pre-made parts cost 20 percent more than the materials. By using them, however, the company can lay off some employees and sell some of their machines. The output is the same.

Because the number of workers has diminished, labor productivity has risen. Capital productivity has also increased because there are fewer assets to pay for. But the price of purchased materials has risen while keeping the output level. Material productivity, therefore, has declined by 20 percent.

The Definition of Productivity from a Personal Perspective

It’s easy to think that you can gauge personal productivity in the same way as business productivity. If you cross off more on your to-do list while spending less money and time, you’re more productive, right?

Technically, you would be correct. However, this doesn’t necessarily equate with getting more tasks done.

If you set your goals correctly, you can measure personal productivity by the time, money and effort that you expend achieving them. But your goals don’t have to be outcome based. If you focus on the process instead of the results, you can be productive when you’re being the person that you want to be instead of just checking off tasks.

In other words, personal productivity can measure how you do things instead of how many things you do. You might consider yourself productive when:

  • You are a good listener
  • You don’t yell at your kids
  • You exercise regularly
  • You give people compliments
  • You listen to your body and rest when necessary
  • You feed yourself nourishing foods

You might also consider yourself productive when:

  • You see your friends every Friday night
  • You spend an hour playing with your kids every afternoon
  • You lose 10 pounds
  • You have 7 close friends
  • You earn a vacation
  • You get through a week without eating junk food

The first example of productivity involves process-based goals. These may be easier to achieve. They might also be more fulfilling. However, they’re harder to measure.

The second example uses outcome-based goals. These are tied to specific, measurable results. It’s easier to gather data from productivity examples like these, but they can be harder to control.

The Benefits of Measuring Productivity in Business

Some of the key metrics that businesses keep track of are income, expenses and productivity. Monitoring income and expenses is important because it tells you whether you’re turning a profit. Assessing productivity is valuable for helping you improve performance and efficiency. There are several other reasons to measure productivity in a business environment.

Performance Management

You can evaluate employee performance when you measure productivity. This type of data provides valuable feedback that allows workers to see where they can improve and where they’re already excelling.

Let’s say that you supervise the customer service department in your organization. You might measure productivity by the number of emails that your representatives answer each day. Maintaining a certain standard can help you monitor your employees’ performance. You’ll be able to see if someone is having a hard time or slacking off.

If you measure productivity, you can use it to motivate your employees. Consider holding contests to improve productivity. Using this measure as part of a review can give your personnel specific ways to improve their work.


Productivity metrics allow you to plan for the future. When you measure productivity, you will have a good sense of the time and cost necessary to complete certain projects. When those tasks come up again, you will be able to forecast what you need to do to accomplish them. Productivity data lets you allocate your resources as efficiently as possible.


Are you trying to showcase your business for some reason? Whether you’re trying to sell the company or establish meaningful partnerships, you should be able to show data that corresponds to your productivity.

Demonstrating productivity can help you negotiate with clients. You’ll have a better understanding of what it takes to satisfy your customers. You’ll be able to deliver better quotes and forecast success.

These metrics can show how well you’ve done in the past and how you plan to succeed in the future. The data also demonstrates whether you have the resources that you need to maintain or improve your bottom line. This can help you increase your profits from quarter to quarter even if you don’t need to demonstrate your productivity to another entity.

Eliminating Unnecessary Waste

Where are you wasting time, resources or money? Measuring your productivity can help you figure this out. Doing so should ultimately improve your efficiency if you take action to improve your policies and procedures to take these measures into account.

The Disadvantages of Measuring Productivity

Sometimes, we become so obsessed with measuring quantity that we forget about quality. In the example above, we talked about gauging productivity by the number of emails that your customer service reps respond to each day.

One employee might answer the most emails. But what if that individual was doing the bare minimum and responding to queries with one-word answers? More customer service requests would likely come in and go out before the customer was satisfied.

From a business perspective, this might make you feel like you’re more productive because you’re churning out more emails per day. However, the customer might be frustrated that the responses aren’t comprehensive or well thought out.

Many businesses measure productivity based on cost. This is another example of focusing on quantity instead of quality. Accounting software can show increases in revenue. However, financial records don’t give you insight into how and why your budget and profits are the way that they are.

Measure Time + Money

As well as keeping track of your income and expenses, you need to have a sense of how much time it takes to perform a certain task or job. Time tracking tools allow you to do this.

You can simply divide the total value of your output by the number of labor hours. For example, if your employees worked 1,000 hours to generate $100,000 in goods or services, your labor productivity calculation would be 100,000/1,000. Your company would generate $100 per hour of work.

However, you can also determine how much financial productivity each employee produces. If you have 50 employees doing the work described above, you would divide $100,000 by 50. Each employee produces $2,000 for your company.

Knowing these measures can give you a better idea of whether you have enough employees, you’re paying them appropriately and they’re working efficiently. If you keep track of these numbers over time, you can determine whether to hire more employees, lay people off or offer training to help people improve their proficiency.

Outputs Aren’t Always Financial

Productivity isn’t always measured in terms of money. Understanding the way that your company converts leads into profits can help you measure productivity.

Let’s say that each member of your sales team makes 100 cold calls a day. From those calls, you get 20 people who ask for more information. You send out 20 brochures about your business. Five clients end up buying from you.

You might think that your team is productive if you pay each employee $100 a day and each conversion brings in $200 in sales. In that case, you would have a profit of about $900 per day.

But what if your clients are only buying $20 worth of goods? For 100 cold calls that bring in only five clients, you’d break even if you paid your employees $100 a day. This shows you that you either need to pay your employees less or increase your price points.

Your employees could also increase their productivity. In other words, they would need to make more cold calls per day to attract more clients. If this isn’t possible, you need to determine how to streamline the cold-calling process. Companies who come across these challenges usually need to automate processes to get more done in less time.

How to Measure Business Productivity

Now that you have some general knowledge about business productivity, you can consider measuring it. Before you do that, you have to remember that productivity is relative. This is true for both business and personal productivity. Your data only makes sense when compared to similar data taken from your competitor or measured over time.

The Simple Productivity Formula

One of the most streamlined ways of measuring productivity uses the Simple Productivity Formula. To do this, follow the steps below:

  1. Select the output that you will measure. This could be one of the following:
  • Number of goods produced
  • The value of those goods
  • Number of tasks completed
  • Number of customers contacted per day
  1. Determine your input figure. This could be one of the following:
  • Hours of labor
  • Number of employees
  • Amount paid to employees
  • Energy used
  • Capital
  • Materials used
  1. Divide the output by the input.
  2. If the amount is not in dollars, give it a value. Doing this can help you determine your cost-benefit ratio.

You can use this formula to measure any input or output. The key is to measure the same input/output ratio over time so that you can compare them. You should be using this for multiple inputs and outputs to get a comprehensive sense of your organization’s productivity.

Some organizations measure productivity by the number of service tasks that are completed without taking time or money into account. They might also look at the number of customers served per hour. This can be beneficial for companies such as UPS, which deliver products to people’s doors.

Measuring Productivity Using Software

If you have a more complex business, you might want to use software to measure productivity. We’ve talked about time tracking software. You can use this alone or combine it with project management software to see your metrics at a glance.

Software lets you monitor employees from anywhere in the world. Your staff can use software to keep track of their timesheets, individual tasks, workflows and projects.

You can use software to run reports that tell you how much your employees are working, what they’re accomplishing and what jobs are being completed.

360-Degree Feedback Method

One method of tracking productivity is highly subjective. The 360-degree feedback method requires people to give feedback on their coworkers’ productivity. This is a valuable way of measuring productivity if your employees interact with one another frequently.

With this strategy, employees are assessed by everyone that they interact with. These individuals may be people who are on, below or above their skill level. The people doing the evaluating must be aware of their coworkers’ general role, duties, responsibilities and function.

To ensure the accuracy of this method, the employees doing the evaluating must be trained on how to offer balanced, impartial input. Their assessments have to be based on objective criteria instead of emotions or opinions.

How to Measure Personal Productivity

Measuring productivity in your personal life can be highly subjective. If you’re the kind of person who has a to-do list stuffed with tasks, you might have an easier time measuring productivity. But can you really find true happiness when you have so many things to do?

Measuring Productivity Based on Goals

Goals can direct behavior, action and productivity. This is true in the workplace or in your personal life. Feel free to adapt the information below to help you in a professional setting or at home.

One of the reasons that we’re incorporating this into the section on personal productivity is that many people neglect this area of their life. They may create objectives for their career or finances, but they don’t always use goal-setting strategies to manage their everyday existence.

It’s no wonder then that people often feel unfulfilled. Have you ever gone through a day and wondered what you’ve accomplished? Establishing goals can give you a guideline for what’s possible and a basis for which to measure your achievements.

If you’re trying to measure productivity in your personal life, start by writing down your short and long term goals. As you go over the list, make sure that it contains a combination of process and outcome based goals.

When you’re feeling unproductive or stuck in a rut, you can refer to your goals if they’re written down. As you move through the list, as yourself, “Have I accomplished this?”

Measure Productivity From Your Standards

Some people measure their productivity by someone else’s standards. For example, your parents might tell you that you’re only productive if you do community service, graduate high school, and get straight A’s in college. But you may have a different idea of what it means to be a productive human being.

Don’t let other people’s criteria for productivity make you feel like you’re not good enough. As long as you’re following your desires and living according to your values, you’re being productive.

Look at Productivity From a Behavioral/Emotional Perspective

When you center your goals around the way that you’d like to behave or act, you tend to be more fulfilled. But gauging productivity in that way can be tricky.

It’s easy to determine whether you checked off all of the tasks that you put on your to-do list. But what if your goals involve treating people with kindness or living with integrity?

In those cases, your answers will be more subjective. That’s ok, because, as we mentioned before, productivity is relative. As long as you believe that you’re productive, who cares what anyone else thinks?

Here’s a Strategy for Measuring Personal Productivity

If you’re concerned about measuring your productivity in your personal life, make sure that you set up your goals properly. They should be balanced. Focus on creating just as many task-oriented as emotionally oriented goals.

Don’t forget to include goals that involve rest, relaxation and personal enjoyment. Allowing yourself to enjoy leisure time is just as important as folding all of the laundry.

You might want to consider using the following technique for developing a personal productivity standard:

  1. List 4 goals from the following categories. Two goals should be quantitative, and two of them should be qualitative, or based on emotions/who you want to be:
  • Health
  • Wealth
  • Career
  • Family
  • Friends
  • Education
  • Leisure time
  • Spirituality
  • Community
  1. Divide each goal into action steps. Give the goals and the action steps a deadline. For example, you could go through this process on a weekly basis to plan for the next seven days. You could also create a yearly schedule that breaks down 12-month goals into monthly and weekly action steps.
  2. Write down the action steps in a planner or a calendar. At the end of each day or week, ask yourself whether you’ve accomplished those action steps. The number of tasks that you’ve completed indicates your productivity.

Tips and Tricks for Improving Productivity

Establishing goals, writing down your to-dos and planning for the day, week, month or year can seem daunting. It can also take up valuable time. There’s a learning curve involved with developing this level of organization.

At first, it can be challenging and eat up your time. But the longer you do it, the better you get. You might say that you become more productive when you practice productivity. Imagine that!

Here are a few tips and tricks for enhancing and measuring your productivity if you’re new to the concept.

Become Aware of Your Current State

Most people want to improve their lives. They often dive straight into change without being aware of their current state of being.

However, if you don’t know where you are, you can’t get a good idea of what needs to change. Trying to improve yourself without gaining a precise understanding of your present circumstances is like trying to follow a map without the “You are here” symbol.

You might know where to go, but you’ll have a hard time determining how to get there. You’ll use a lot of trial and error before you know that you’re on the right path.

Therefore, if you’re trying to gauge your productivity, get a sense of what you’re accomplishing right now. Instead of planning your day in the morning, spend a week looking back at your day in the evening.

You can even use an old planner to record what you do every hour. The benefits of doing this include:

  • Knowing exactly how long it takes you to do a certain task
  • Recognizing how much you’re resting vs. working throughout the day
  • Seeing patterns in your energy levels and accomplishments
  • Being more realistic about your time

Are you the type of person who underestimates how long it will take to do anything? That can get in the way of your productivity. It’s discouraging when you write 10 things on your daily to-do list and work diligently all day but only cross off three items. Looking backward at what you typically accomplish in one day gives you a good idea of what’s possible.

Then, as you plan for the future, you can schedule your time in realistic increments instead of expecting too much from yourself. This is also a good habit to get into if you aren’t aware of how much time you spend browsing the internet or scrolling through your social media accounts.

Keep Your To-Do Lists

If you’re the kind of person who writes to-do lists on their hand, scrap pieces of paper, envelopes and receipts, you might have a hard time monitoring your productivity. Improve your awareness by keeping your to-do lists.

Like recording your daily activities in a planner, this can give you a good idea of what you’re capable of accomplishing in a day. It doesn’t make sense to set high expectations for your productivity level if you can’t meet your goals.

If you keep your to-do lists, you can look back on them frequently. If you notice that you only accomplish three tasks a day, you can use that information to schedule your days better without bombarding yourself.

Plan to Rest

As we mentioned above, you should make rest and relaxation a goal. If you work it into your to-do list and daily planner, you can consider it a measure of productivity.

It can be tempting to try to work through lunch every day or stay on the computer all weekend long. But if you don’t schedule time for self-care, you’ll end up feeling overwhelmed. Then, you’ll pull the plug on your other tasks and end up feeling completely unproductive.

To determine how much leisure time you really need, go back to your awareness exercise. Look at how much rest or self-care time you typically get in a day. At the end of each day, you might even consider jotting down how you felt.

You might start to notice that you’re constantly struggling because you don’t give yourself time to rejuvenate. You might end up taking more breaks throughout the day, making you less productive when you’re actually trying to get things done.

Making plans to take care of yourself can help you restore the energy that you need to navigate the rest of your life. Ultimately, planning to relax will make you more productive. Plus, if you count rest as a productivity measure, you’ll never feel guilty for giving yourself what you really need.

Leave a Comment