Must-Have Metrics for Today's Top Workplace Challenges & Human Capital Risks
Companies that successfully create effective people strategies often find the ideal balance between hours worked and employee productivity. These concepts have been around for many years and continue to drive decisions about hiring, workplace improvements, and HR strategies. In this post, we’ll discuss the difference between hours worked and productivity.
Tracking the number of hours worked and employee productivity should be part of a comprehensive strategy to improve workforce performance. Failing to create a productive work environment can lead to burnout and issues retaining your top employees. While these concepts may seem complex, they can often be managed effectively when you implement the right strategies and measure your results to make continuous data-driven improvements.
The average workday in the United States is 8 hours a day, with the typical worker working 5 days per week for a total of 40 hours per week. This is what most HR professionals are describing when using the term “hours worked” to define the number of worker hours per day or per week. Most often, this means the number of hours an employee is present at a job and, alone, does not account for time spent on non-working activities such as:
Many of these activities are certainly done for the benefit of the company, but many are not related directly to employee output. In fact, industry data shows that the average U.S. worker only produces output for an average of 3 out of every 8 hours worked. This reality is the main reason for shifting the focus to the concept of employee productivity.
Employee productivity is defined as the amount of tangible output (performance) produced by the individual over a set time period. This is often expressed as dollars per hour in the United States and can also be measured based on other metrics, such as deliverables completed or whether goals and objectives were met during a specified period. Productivity may be calculated on an individual, team, department, or company level.
Many companies use this data as a benchmark to determine if they are achieving more or less over time. It’s also often used to gauge performance against other companies in the same industry, of the same approximate size, or in the same geographic region. Employee productivity is an excellent baseline metric to use when designing workplace and business process improvements and measuring the impact of those improvements.
The above definitions help us understand that hours worked, and productivity must both be considered when developing an effective work culture. If an employee must work for an excessive number of hours per week they may achieve greater output in the short term, but this is not likely to be sustainable. Here are a few important reasons why it’s important to differentiate between hours worked and productivity.
Some cultures believe that working more hours results in greater performance and expect a great deal of time from individual employees. There are also many socioeconomic factors that influence these differences. Data that compares individual countries shows that many developed, industrialized nations have a higher level of productivity with fewer hours worked while emerging markets see a lower level of employee productivity and increased number of hours worked. Working more hours alone does not always result in greater output.
It’s unrealistic to expect that employees are always working at optimal productivity. The human body requires regular breaks and downtime to recover from periods of intense focus, especially when using electronic devices. It has also been shown that when the number of hours is increased beyond a certain level, it can actually lead to a reduction in productivity. Savvy managers look at hours worked, performance, and productivity together to create a holistic view of employee productivity. Performance management practices and the use of workforce analytics can be used to track clear metrics and develop effective improvement plans.
Without understanding employee productivity and the number of hours worked, it’s impossible to get a true sense of how your workforce is performing. If a company only measures performance based on goals, then business leaders may miss the opportunity to encourage greater work-life balance and increase effectiveness. Many businesses find that when they create clear metrics, share training and tools, and solicit real-time feedback, they end up with happier and more productive employees.
In some cases, longer working hours can have a detrimental impact on productivity, but getting the full picture is key. For example, one multinational technology company leveraged the Humanyze Organizational Health Platform™ to measure the impact of the shift to remote work on its workforce. The data revealed that employees were working longer hours, on average, compared to the average length of the workday prior to the shift to remote work. Initially, it appeared as though longer workdays and increased after-hours work were leading to employee burnout. However, further analysis revealed that workers were spreading their work out over longer periods, taking more frequent breaks to attend to family and personal tasks.
This example illustrates the importance of analyzing multiple data points to gain a complete picture of employee productivity. Armed with holistic workforce analytics, companies can more accurately determine how factors such as work hours, communication, the physical work environment, and other factors are impacting productivity and overall performance.
Understanding employee productivity and hours worked can help HR and leadership teams develop better employee engagement goals. Even simply encouraging breaks and helping managers avoid micromanaging can have a positive impact on a work environment. By developing a clear set of measurable performance indicators, it is possible to create a work culture that is balanced and highly engaging.
