4 minute read

Best of Both: Understanding Employee Productivity and Utilization

Rachael Bilan, Customer Program Manager

It is a busy day, and you ran to your local grocery store to grab a quick lunch. All register lines are about the same: four customers deep in each one. But the one you pick is taking twice as long to get your items scanned and paid. Why? What factors are contributing to your line going so much slower than the other line? Is it just the customers in front of you? Or could it be the team member’s skill or training? Could the store manager have scheduled differently to account for not only the volume of customers, but the skill of her employees? As your frustration builds, you fixate on what the store could have done differently. Finally stepping away from your completed transaction you turn around to see three empty register lanes, all with cashiers waiting idly. How frustrating!

As a retailer, understanding how to identify and proactively manage potential variations in your customers and workflow systematically is not only possible, but imperative. Employee productivity and employee utilization are two often conflated concepts that are used to identify these differences in your workforce. Each can be controlled managerially and systematically by having the proper configurations in place in your labor model and scheduling system.

What is employee productivity? What is employee utilization? The two phrases have totally different meanings. Productivity refers to the state or action of producing something, while utilization involves the process of making practical and effective use of something.
Let’s dig into productivity first.

Employee productivity

When we refer to employee productivity, we mean how effectively and efficiently your employees work. Some employees work faster than most and some work slower than most. Labor models, especially those using engineered labor standards, should assume that each employee is working at an average pace and using the defined best method. But what happens when employees do not meet those standards exactly? In particularly high-turnover departments, where overall employee productivity is low, failing to properly mitigate low productivity can mean poor customer service as employees struggle to keep up with the workload demanded of them.
So how do you mitigate low employee productivity? We believe it is two-fold:

1. Proper training and supervision:

Ensuring employees are knowledgeable on prescribed best methods, and providing manager feedback and appropriate coaching when they are not, means that more employees will rise to meet productivity expectations keeping the department’s overall productivity at an average pace.

2. Systematic assignment of productivity factors:

While this approach is less common and should be reserved for unusual situations when the first suggestion is ineffective, effective labor models allow for an adjustment to productivity as a percentage at a more granular level. By setting an adjusted productivity allowance at a store, department or even time of day, you can ensure that even in situations where productivity is known to be low, schedules can be written to compensate for the additional hours needed to provide proper customer service.

Employee utilization

Let’s contrast employee productivity with employee utilization. When we refer to employee utilization, we mean how effectively your workforce’s time is being used. Do you have employees who are idle waiting for work? Do you have employees with skillsets that are not being tapped into? We all have seen employees standing around socializing due to over-scheduling or an unanticipated low customer demand. Perhaps we overlooked team members with cross-utilization opportunities.

The amount of time unused might seem miniscule, but if you take the total amount of unproductive time from all your team members for one week and multiply it by the average hourly rate, you would be astonished how much labor is being missed and under-utilized. For example, 100 team members, one hour of unproductivity and a total average hourly rate of $15 equals a total of $1,500 per week and $78,000 per year of missed utilized labor. Again, we believe there is a two-fold approach to addressing employee utilization:

1. Cross-training:

Employees who have expanded skill sets are able to jump between tasks to fill in lulls in customer demand with more flexibility. Not only this, but cross-training employees may reveal a particular efficacy that one employee has for a new job, increasing their overall contribution to the business and their own job satisfaction.

2. Use of task-based automated schedules:

While employee cross-training may be useful in theory to mitigate utilization concerns, in practice it can be difficult for schedule writers to take advantage of the increased flexibility it creates. Trying to balance who can do what, with exactly what time of day the work is required can be a lot for one person to grapple with.

With these additional levels of complexity, most manual schedule writers will fall into a routine for who does what task each week and what time they should do it. Use of an automated schedule system breaks that habit and can factor in the added levels of complexity without bias, properly accounting for forecasted demand patterns and ensuring that employees with the proper skillsets are scheduled at the right time to meet those demand requirements.

In summary

No two employees perform the same. Accounting for these differences both managerially and systematically is possible if you understand both employee productivity and employee utilization and mitigate properly for each. Used in tandem, productivity and utilization management techniques applied to the right automated scheduling solution will produce an effective schedule that prioritizes customer service without sacrificing labor efficiency.

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