How to Measure Employee Productivity in the Knowledge Economy

Fixing employee productivity in the industrial age, when most workers were handling machinery and it’s parts, was a tedious but doable process. The managers had to fix the people who were making mistakes or were inefficient through systematic management.

Today, in the age of software and intellectual property, when half of the workforce is made up of knowledge workers, the old practices are of no use.

The basic productivity formula(productivity= output divided by input) worked well in the industrial age as the output and input were clearly defined and measurable.

Today’s leaders need innovative solutions to measure and improve productivity in a knowledge-based workplace, as the measurement of output and input is not what it was.

While assigning value to the output of knowledge workers, we cannot simply measure the output like before.

Coders and doctors cannot be measured by the hour, as their output is not uniform or consistent every hour.

Earlier input used to be the raw material. In the knowledge economy, the input is a mixture of a diverse set of tasks, like attending meetings, creating a campaign, giving a presentation, retraining the task force, and so on. They all look like work, but not everything is productive.

Employees also have other concerns that hamper productivity and efficiency. It may be personal problems, a lack of will to work, or any other factor not in a manager's control.

The modern workforce enables employees to be the means of production themselves, using their knowledge, expertise and experience. The output is the quality of the results and the creative decisions made in a day.

Apart from the performance measurement and appraisals, management now has to take care of employee satisfaction and building strong, bonded teams.

A single-minded focus on results and output isn’t the right strategy anymore and it is better to take the ‘happy workers’ approach.

Leaders now have to demonstrate positive and virtuous practices like:

• Showing compassion and empathy
• Providing support
• Being like friends
• Focusing on meaningful work
• Forgiving mistakes
• Not to blame or accuse the employees
• Treating all respectfully
• Showing gratitude and humility.

In the new economy, knowledge workers have to manage themselves and have autonomy. They are no longer cogs in a wheel, but nodes in a neural network and their individual productivity is now more important than ever.

• Ensure the team is working on the tasks that align with their core competency. Maximize the time for meaningful work, while minimizing other activities.
• Set up the measurement yardsticks in the team for the output that you would require, like shipping of the product on a set deadline, or client scores.
• Create a standardized yet flexible system of setting up the team goals. Take employees input so that they define what the team’s success would look like.

Human beings are complex creatures, and merely getting the best people together in a team does not make it successful or efficient. Optimization of a team requires it’s team members to work together by showing sensitivity and empathy towards everyone’s feelings and needs.

Demonstrating that the company cares and values its employees makes them feel respected and creates reciprocating behaviour.

Focusing on a single measurable outcome (a keystone habit) that benefits the employees makes them work with utmost efficiency and enthusiasm. Focusing on key habits that enforce a positive, collaborative team culture sets of a chain reaction and seeps into the other habits.