The Employee Productivity Equation: How Much Does It Impact Your Bottom Line?

by Elizabeth Dukes on April 15, 2019

It’s clear your organization needs to improve its revenue. For many corporate real estate leaders, the obvious answer is to reduce real estate costs. However, if your company is in aggressive growth mode, that might not be an option.

Fortunately, there’s another solution that will likely have an even greater impact: improving employee productivity.

You might be understandably skeptical. After all, there are obvious limits to how much one person can accomplish in any given day (no matter how amazing they are.)

But what you may not realize is that small improvements in employee productivity can have a huge impact on the bottom line.

The Employee Productivity Equation

In a recent Facility Management Journal article, Global Workplace Analytics President Kate Lister compares the impact of reducing office costs to the impact of improving employee productivity.

She uses the example of a hypothetical company and makes the following assumptions:

  • 500 employees
  • Office costs of $60 per square foot
  • Total annual office costs of $6.5 million
  • An average employee salary of $85,000
  • Total annual payroll of $43 million

Then she calculates the impact of improving employee productivity by 3.8 percent, or 18 minutes per day.

First, she calculates employee costs per minute:

$85,000 annual salary / 120,000 minutes per year = $.71

Then she multiples that by 18 to get $12.78 in improvement per employee, per day.

Then she multiples that by 500 employees to get $6,390 per day.

Finally, she multiples that by 250 working days per year for a total annual impact of $1.6 million.

To achieve the same financial impact through reductions in real estate, your company would have to reduce office space by 25 percent.

The Implications of The Employee Productivity Equation

Lister’s equation shows us that making incremental improvements in employee productivity can have a far greater impact than reductions in real estate. While it’s always smart to measure space utilization and strive for improvements, many organizations cannot afford to lose a quarter of their office space to achieve near-term savings.

It’s much more realistic to focus on adding a few extra minutes of productive working time. And a good way to start is by helping employees minimize disruptions.

Research by The University of California found the average employee is significantly interrupted every 12 minutes, and it takes them a total of 23 minutes to refocus on the task at hand after each interruption.

Using Lister’s employee productivity equation, you can see the impact of improving productivity by 23 minutes—eliminating just one disruption—can add more than $2 million to your bottom line each year.

Proven Strategies For Improving Employee Productivity

Of course, improving employee productivity isn’t a perfect science. Every employee is an individual with his or her own preferences, motivations and abilities. There are many factors that influence how productive an employee is in general or on any given day.

One employee might be highly motivated to achieve a promotion and therefore, accomplish twice as much as someone in a similar role.

Another could be preoccupied with personal circumstances that make it difficult to focus.

And there’s no guarantee that saving your employees a few extra minutes each day will lead them to use that time constructively. However, if you can eliminate some of the small hassles that make the workday more tedious, there’s a good chance your employees will have a more positive perception of the company and their role in it.

They’ll have more time to focus on deep work and make more strategic contributions, rather than spending so much time on manual tasks that could be automated.

They’ll feel more engaged—and research shows engaged employees are productive employees.

Here are just a few ways to boost employee productivity:

1. Embrace Activity-Based Working (ABW)

An activity-based working(ABW) environment is one where employees can choose from a variety spaces depending on the work they’re doing. They can reserve a meeting room or a quiet space, or they can collaborate with colleagues in more open spaces.

2. Implement A Remote Work Policy

Many employees find it easier to concentrate on deep work outside the office, where interruptions from colleagues are less frequent. If your organization is conducive to working remotely at least part of the time, consider implementing a remote work policy that encourages employees to work from home while clearly outlining expectations.

3. Help Employees Prioritize

Often employees can get bogged down with a lot of little tasks that seem urgent but aren’t all that important in the grand scheme of things. Managers can play an important role in improving productivity by regularly checking in to assess their team’s workloads and helping employees shift priorities as needed. Every employee should have a clear understanding of your organization’s strategic objectives and what individual goals they need to accomplish to support them.

4. Eliminate Unnecessary Meetings

Meetings can be a huge productivity-killer. Make sure every meeting has a clear goal and only includes essential participants. These foolproof hacks can help you make the most of every meeting.

5. Give Employees The Tools They Need to Be Productive

Employees waste a surprising amount of time on things that shouldn’t be so difficult—like tracking down colleagues, trying to find an available meeting room or resolving technology issues.

An employee experience app puts all these tools directly into their hands, giving them what they need to be productive.

To hear more of Kate Lister’s insights, including how to create an intelligent workplace and measure the impact of employee productivity improvements, download our whitepaper, In Search of Intelligent Space


Elizabeth Dukes

Elizabeth Dukes' pieces highlight the valuable role of the real estate and facility managers play in their organizations. Prior to iOFFICE, Elizabeth was in sales for large facility and office service outsourcing firm.

Capterra Ratings: ★★★★★ 4.5/5