Stop Measuring Employee Value by Productivity Productivity is subjective. There's a better way.

It's a scary time for workers right now. Some are saying the recession will likely hit later this year and people are being laid off left, right and centre. Beyond Big Tech firms, Europe's startups and scaleups have suffered. Since March 2022, at least 42,000 staff have lost their jobs; shockingly, more than half of these cuts came in the first quarter of 2023.

For those who survive, making it through a round of layoffs often means being on a smaller team that's expected to keep the same output. Suddenly, the workload has increased alongside stress levels. The European Agency for Safety and Health at Work found that nearly half (44%) of workers claim that work-induced stress is on the up, as worries about work overload and time pressure increase. That's the backdrop leaders and entrepreneurs are up against when it comes to motivating teams.

What a cheery start to this piece – but it's not all doom and gloom. There's a simple fix to boosting your team's performance: Measure employees' value using metrics beyond productivity.

There's no 'I' in team.

When measuring value, you can't look at one employee's output without recognising the impact they have on the wider team. After all, a successful business is like the human body: you wouldn't embark on a marathon with a broken arm, no matter how fit you are. In an effective team, each part needs to work together.

Also, there are countless roles where the output isn't obvious. Software engineers are measured by their code and marketers by the number of leads they help generate. But disciplines like HR are less concrete. You'd never ask your Head of People to make the business 35% happier, so why boil any other roles down to a single metric?

Productivity is subjective. Unless you take the time to connect with staff on an individual level, human-to-human, you'll never get the most out of team members and their unique traits. You're not going to get an open and collegial atmosphere in the office if staff don't feel they can be themselves. That's why it's so important to assess employees individually.

When talking about people, a cookie-cutter approach makes no sense. While this is true for companies of all sizes, it's especially important for early-stage startups and scaleups. Put simply, with any small team, there's less room to hide but more opportunity for connection and collaboration.

The common pitfalls.

Everyone wants to motivate teams to be productive, but so often leaders fall into the same traps over and over again. First up: being too results-oriented, caring only about the numbers and doing anything to achieve them. That creates a toxic working environment.

The next dangerous area is not setting appropriate goals and metrics. For example, incentivising the manager of a sales team to achieve personal sales could mean they fail to focus on managing their team or pouring effort into nurturing them. It's a common mistake, but one that can be easily rectified by being clear and specific about what you expect. Then your team will achieve it without confusion.

Setting unrealistic targets can also be demoralising. Put in sensible deadlines and regular check-ins to track progress so that employees don't fall behind. Everyone's been in a situation where their boss sets crazy goals and deadlines and are then nowhere to be found. Don't let that be you.

Lastly, a culture of working long hours and weekends is a non-starter. It won't come as a shock to hear that being overworked kills productivity and leads to burnout – yet so many leaders don't invest in keeping their team fresh. You want your teams to be ready to deliver, rather than trying to squeeze every last drop of performance from them. You can't get a litre of juice from one orange, regardless of how strong your forearms might be.

What to measure instead.

Clearly, being flexible and transparent with metrics is needed to properly measure an employee's impact. Set feasible goals and communicate progress in the right way. There's so much value to be unlocked for those who know where to look.

Beyond productivity, reward things like cultural fit and emotional intelligence. Does this worker fit with the wider team? Are they aware of the emotional needs of those around them? You need to answer both questions because they're just as important as numbers.

Consistency and adaptability are also overlooked all the time. Consider whether your team members perform consistently or sporadically, and if they mastered one thing or excel at many. Look at effort, persistence, and mentorship. Pushing through obstacles to achieve success and passing knowledge onto others is a winning combination.

Once you've measured the right way, don't fall down by overlooking rewards. Sure, promotions and pay rises are the most obvious tactics, but it's not worth chasing people who just crave money. Plus, it's no secret that small businesses often can't compete with Big Tech salaries. This is where the power of equity can really pay off. It's a way of giving employees real skin in the game while thanking them for their efforts in a tangible and meaningful way.

You want to understand how your individuals work best to nurture talent in the right way. Be flexible in the metrics you use to measure productivity. That way, you'll stand the best chance of leading happy and successful teams further down the line.

Still, regardless of any metric you're using, you can throw it in the trash if you've not built a proper relationship with employees. Metrics should be used as a benchmark to measure success, but don't let them dictate your entire strategy and replace hard-earned human connections.

What's more, this should be a lesson for all entrepreneurs and business leaders. With big advances in artificial intelligence posing a threat to jobs and significant reductions to headcount, larger firms will likely have to embrace the more personalised management style favoured by smaller businesses. Getting the basics right now will benefit everyone.