IMAGINE IF YOU COULD Manage Productivity with One, Universal Measurement?

Imagine if you could have ONE productivity measurement across your entire enterprise. One measurement that means the same thing to the call center, billing, claims, even complex areas like underwriting, Tier III technical support, and the rocket science department. OK, maybe not the rocket science department. I know that this sounds like the operational consulting twilight zone that we consultants live in, but you CAN develop an organization wide productivity measurement.

Start with the radical concept of moving your organization away from a traditional productivity mentality, described in the McKinsey Quarterly article, Why US productivity can grow without killing jobs, as “the balance between efficiency gains (reducing inputs for a given level of output) and an increase in the volume and value of outputs for any given level of inputs.” Today, an earned hours model (more on earned hours later) levels the playing field by factoring the complexity of the work item being completed. Adopting this model will not only allow you to measure employee productivity more effectively, but will increase proficiency in things like measuring capacity, forecasting staffing needs, and identifying coaching and training opportunities, just to name a few.

The first step in moving to an earned hours model is defining and measuring all of the work items. This process requires significant effort, but as the old saying goes, “If it was easy everyone would be doing it.” Typically I have used a DMAIC approach to accomplish this critical first step. This includes creating activity summaries that itemize all the work items, activity details that document the processes of each work item, and hours of effort on the floor observing and timing each activity so that the complexity of the work items can be quantified into minutes and seconds. This exercise is a lot like cleaning out the garage, not a lot of fun, but you’re amazed at what you discover. Things like old fishing poles and employees not doing things the way we thought they were doing things are the two things that come to mind.

Once your organization has completed the discovery phase and the complexity benchmark or average task time (ATT) for each work item have been established, we can turn this data into actionable intelligence by combining it with two other pieces of information to calculate earned hours and generate a productivity and utilization metric. Those two data points are the hours applied to complete the work items and the volume of work items completed. I know I said volume does not equal productivity, but stay with me and you will see why it’s important.  

Let’s start with calculating earned hours. Multiplying the number of occurrences by the ATT for each work type will calculate the earned hours. Take a look at Processors 1 and 2 in the diagram below. Note the differences in the activity occurrences and earned hours for each. Even though Processor 2 completed fewer items, the complexity of that work is greater than that of Processor 1. We have now leveled the playing field. That grey area of what is a reasonable expectation across all work types is gone. This can also be totaled, so that we can measure the entire team.

Now let’s turn this information into the utilization and productivity measurements that can be used across the enterprise. Remember that I mentioned two data points, one being volume the other being the hours of work applied to complete the activity occurrences. There are two things we’re quantifying:  total available hours and net available hours.

• Total available time is scheduled time minus things like break and PTO plus any overtime.
• Net available time is total available time minus items like special projects, meetings, training, etc. (We’re netting down to actual time spent on production activities.)

 Now for the two measurements:

• Utilization is calculated by dividing earned hours by total available time to provide you with a utilization percentage. The utilization percentage is your return on the total amount of time your resources are in the building.
• Productivity is calculated by dividing earned hours by net available time to provide you with a productivity percentage. The productivity percentage is your return on the net amount of time your resources spend on production activities.

As the diagram below illustrates, you can see that Processor 4 and Processor 8 have the lowest amounts of net available hours, but the two of the highest productivity scores. In other words, while they are scheduled to be performing work activities, they are very effective.

The value in using these metrics is that they mean the same thing across the organization. With Impact 360 Performance Management solution, enterprises can have a single dashboard for capturing these metrics across their organization, with drill down capabilities from the enterprise, to divisions, teams and even the individual.  Leadership can compare and contrast across business units without needing to understand how productivity is measured from one business unit to the next. Both measurements also provide incredible insight at the employee, team, business unit, and organizational level.

How do you measure productivity across your enterprise?  Do you think a model like this would work in your organization?  Share your thoughts with us below.