With post-COVID workplace environments amid an ongoing revolution shaped by work-from-home and distributed workforce trends, organizations should be rethinking the use of key performance indicators (KPIs) to measure employee productivity.
While KPIs have long been considered an essential good management practice as a way for employees and supervisors, a central indicator, measured by the employee's mere presence at work, is now in theory much less applicable.
"Remote work brought on by COVID really made transparent the companies who had been measuring more to presence than to productivity," explains Dr. Barbara Larson, executive professor of management and organizational development at the D’Amore-McKim School of Business at Northeastern University.
She points out you only achieve what you measure and developing KPIs—if done well—is illuminate for managers and for the employees themselves, the value that is added by each job.
"If you look at the activities somebody undertakes and then define the contributions those activities have on the overall company performance, even just understanding that link can be helpful and motivating and help people focus on the right things," she says.
Larson adds the extent to which organizations can better define what is required to make that link successful is how to generate KPIs that are much more effective.
Specific KPIs Depend on Industry, Job Description
Lindsay Peress, vice president of HR insights and advisory for Operations Inc, explains the most important KPIs for measuring employee productivity depend on the industry.
"Productivity is of course easier to track in manufacturing or retail where you can count how many widgets someone produces or how many customers they ring up," she says.
In more complex workplaces, one could look at something like billable hours (if tracked). But more often, it's something more difficult to measure such as client satisfaction, successful project completion, or meeting deadlines.
She adds the "new normal" for many workplaces has "definitely shifted" the focus more to work product as opposed to time spent working.
"When you cannot physically see your employees at their desks, you are more likely to measure outcomes as opposed to effort or times spent," Peress says. "To develop KPIs, managers should work with support from HR, and they should be reflective of and in service to the overall company goals."
She points out storing, organizing, and analyzing the data generated from the KPIs is a key aspect, which many organizations overlook, and they, in turn, fail to glean insights from this data.
"If you use an employee performance management system, there may be a way to track some information there," she says. "Alternatively, you could set up an Excel workbook."
Depending on the type of data being tracked, it could be used as a benchmark to measure average productivity or even to project productivity over some future time.
"As work evolves to be more dispersed and employees are more often not working in a traditional office environments five days a week, it's important for leaders and managers to have better ways to track productivity that represent outcomes and work product as opposed to just time spent at work," Peress says.
Using Employee Engagement as a Central KPI
Ganesh Raj Mohan Parimelazhagan, head of global technology, platforms, IT, and innovation at Altimetrik, says employee engagement is the best KPI to measure productivity.
Measuring employee engagement in fact includes multiple factors, including employee net promoter score (NPS), turnover rate, employee satisfaction index, and internal promotion rate, among others.
"Although each organization takes multiple channels and avenues to connect and collaborate with their employees, the reciprocation of engagement can be very poor without streamlined efforts," he adds.
Parimelazhagan notes remote working has made Altimetrik more creative and innovative in measuring its KPIs.
"In the pre-pandemic era, face-to-face interactions gave more freedom and ease of exchanging thoughts which can be challenging to replicate in today’s virtual connections but can be achieved with additional support," Parimelazhagan says.
He says it is counterproductive to follow the conventional KPIs in today’s working environment.
"It is more about measuring engagement with employee’s current projects and with the organization, which ultimately ties back to business goals," he says.
From Parimelazhagan’s perspective, engagement and talent management leadership should define productivity KPIs.
"A successful deliverable is no longer defined as the number of lines of code," he explains. "The industry has pivoted to delivering outcomes and values."
When the expectation from any engineer is to deliver outcomes of a high quality, KPIs are defined around the engineering rigor—something that meets both quality and software security expectations.
He adds democratizing and showcasing the KPI data in leader boards that are visible throughout the organization can allow for transparency among employees and will increase productivity.
"The conventional practice of restricting performance data to just the top management is no longer appreciated by employees," Parimelazhagan says.
Gamifying the experience through an employee engagement platform, for example, can also allow employees to celebrate their milestones and achievements with their fellow colleagues as well as with the larger organization.
Meanwhile, rewards and recognition in real-time will help employees feel recognized and celebrated, even in remote workspaces.
Rethinking KPIs for the Gen-Z Workforce
Parimelazhagan points out that in the next two years, a large portion of our workforce will be from the Gen Z generation, whose expectations of work have changed as their paychecks are not the biggest driver of motivation for achieving success.
"Employees will look for opportunities where they are able to contribute and learn in addition to working on projects that deliver real change and meet overall company goals," he says.
Today, the KPIs for measuring employee productivity and engagement are aligned with the work and not the value delivered.
Parimelazhagan notes the question that will be posed by the next generation of employees is, "Do you want to define me based on just the work delivered or by the value that I add?"
"Most organizations have already realized this and are redefining their KPIs," he says.