Measuring Minds at Work

Want to know if your employees are working hard? It all comes down to finding the right measurement for the job.

By Saheli S.R. Datta, Business 2.0 Magazine

(Business 2.0 Magazine) -- It's one of the most basic questions in management: How do you know how effective you are at squeezing labor out of office workers?

The standard economic measure of productivity - dividing company revenue by number of employees - won't help you make operational improvements. Nor can you simply count the widgets they ship per week, as factory managers do.

Experts are starting to believe bad measurement is worse than no measurement. Take law firms that only count billable hours - causing their associates to stay in the office so much that "eventually they burn out," says Thomas Klett, a consultant at Watson Wyatt.

But don't give up just yet. Office productivity can be measured, if you do it on an employee-by-employee basis.

"You really have to look at each and every job individually and take a little bit of time to figure out what's important," says Joanne Sujansky, founder and CEO of KeyGroup, who helps clients like Lockheed Martin (Charts), Mayo Clinic, and U.S. Bank (Charts) come up with custom measures of employee productivity.

Klett calls such employee metrics "the holy grail of management." Here are some rules for finding that chalice.

1. ASK YOUR EMPLOYEES. Who understands the convoluted job of your knowledge worker better than the worker himself? It's best that he knows about the whole measuring project too. Sujansky found that when employees know that their productivity is being measured, and they had a hand in creating the metric, their productivity rises over time. Pride of ownership can be a powerful motivator, as any Wikipedia contributor will tell you.

2. MAKE IT MULTIDIMENSIONAL. How much of your employee's job is repetitive? How much is creative? How do the two fit together? An engineer may be slow at churning out code but excellent at identifying bugs. Make sure each worker's metric reflects her full contribution, and then measure that metric over time to see how it responds to flashes of managerial genius.

3. INCLUDE AN OBJECTIVE MEASUREMENT. Part of your employee's job can be measured from the outside. How many sales calls has he made? How many reports did he file? How many software functions has he coded? Silicon Valley startup ODesk, for example, takes screenshots of contractors' computers every 10 minutes, measuring how often the native window belongs to the program they're supposed to be using.

4. INCLUDE A SUBJECTIVE MEASUREMENT. When the metric involves the employee's manager rating her, it should be numerical and consistent--say, on a scale of 1 to 10 every month. Having the employee rate her own satisfaction is a simple way to find out whether she's about to jump ship.

5. DON'T REINVENT THE WHEEL. "Too many companies try to implement data collection from scratch, when they're already actually collecting a lot of data and throwing it away," says David Nembhard, a professor at Penn State University. Get human resources to work with operations, so that how an employee is doing on a project can be measured against the rest of his career.

6. NO WORKER IS AN ISLAND. Give employees points for teamwork. An employee who seems like a straggler compared with his peers might fit in better in a different division, while a group of high performers might be collectively sliding. "Sometimes when a person is doing well on a team," says Sujansky, "you won't see her stand out"--because she's the one making everyone else look good.  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.