How To Measure And Increase Employee Productivity

Posted by Jeffrey Meyers on Fri, Aug 05, 2011 @ 04:08 PM

Frequently Asked Questions about America’s Most Productive Companies

ampc hold up resized 600For the third consecutive year, Profiles International has conducted a study of America’s Most Productive Companies. The research and findings provide the most comprehensive study of human productivity available.

To learn more about the America’s Most Productive Companies (AMPC) study process and findings, Jeff Meyers recently sat down with Profiles’ Chief Marketing Officer, Dario Priolo, for a revealing discussion on how to measure and increase employee productivity.

Q. Why study productivity?

A. With unemployment hovering near double digits and companies looking to maximize resources, the Profiles Research Institute wanted to understand the factors that drive employee productivity within an organization. For many companies profits are up but headcount is still down, which means that they’re able to produce as much or more with fewer people. The Profiles International America’s Most Productive Companies research project also uncovers key characteristics that make these businesses the nation’s most productive companies.

Q. How did you measure productivity?

A. In economics, “productivity” is a measure of output per unit of input. In our case, we defined labor productivity in terms of revenue produced per full time employee. Calculating this required us to analyze financial data from over 742 publically traded companies to determine a company’s revenue and number of employees. Once we had these two numbers, we could do the math and get to the number representing productivity. By answering how to measure employee productivity, we’re hoping that all companies can learn how to increase employee productivity in their own companies.

Q. What does America's Most Productive Companies report consist of?

A. When we identified the companies ranking highest in each category, we took a closer look at the practices that enabled them to out-produce their peers. This report presents our findings and is divided into two parts: 1. a synthesis and discussion of the top 10 factors that drive productivity; and 2. a comprehensive list of companies in over 153 sub-industry groups, rank ordered by labor productivity.

Q. Did you count all companies’ revenue the same?

A. As expected, we encountered some challenges that required us to make some corrections and assumptions along the way. For example, when necessary we adjusted revenue to minimize the impact of special events, such as the one-time sale of an asset. Additionally, the revenue reported in the financial statements is recognized revenue resulting from accrual accounting. Without launching into an accounting lesson, this is a bit different from sales in that fiscal year.

Q. So are you comparing apples-to-apples?

A. For a more meaningful analysis, we grouped companies into more than 150 sub-industry groups. Our assumption is that companies competing in the same industry generally go about their business and recognize revenue in a similar manner. Different industries have differing degrees of labor intensity. Since it is difficult to draw meaningful conclusions by comparing labor productivity across different industries (such as comparing a retailer to a financial services firm), we established a more meaningful and measureable output of the study with rank orderings and comparisons within a sub-industry group.

Q. How did you come up with the attributes, or findings?

A. Once we completed the data gathering and analysis to determine our rankings of America’s Most Productive Companies, we followed up with a number of the most productive companies and identified the best practices we believe explain their outstanding productivity. Our follow-up research identified 10 key attributes that can be further categorized into these five “People Attributes” and five “Strategic and Operational Attributes”:

People attributes

  1. Performance-driven culture
  2. Effective managers
  3. High employee utilization
  4. High employee effectiveness
  5. Encouraging innovation

Strategic and operational attributes

  1. Technology sophistication
  2. Financial sophistication
  3. Operations sophistication
  4. Effective distribution channels
  5. Marketing and brand sophistication

Q. Have these companies paid to be on the list?

A. Absolutely not. No, our report was created by pulling a list of and collecting data on over 742 publically traded companies. The data were compiled from a variety of publically available sources, such as annual reports, SEC filings, and investor presentations. These companies were not aware of our research activity until after the ranking process had been completed.

Q. Why would a winning company want to be affiliated with the America’s Most Productive Companies study? What’s the incentive for them?

A. We determined our rankings through consistent evaluation criteria. We believe being named one of “America’s Most Productive Companies” is a tribute to superior human capital management practices and the hard work and commitment of their employees.

If you are a winning organization, this is a great opportunity to let your employees know how much you appreciate their contribution by celebrating the moment. Let prospective hires as well as your customers and prospects know that yours is a well run organization and a leader in your industry.

Learn more

Want to know how to measure and increase employee productivity? Read more about employee productivity and performance, and America’s Most Productive Companies.

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Topics: Productivity