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What is a Productivity Audit and How to Conduct One

Post Author - The Toggl Team The Toggl Team Last Updated:

Every business wants to make operations more efficient.

Doing so requires an understanding of the time your employees spend carrying out their daily tasks, the number of tasks they complete each day, their morale, and how they are allocated work.

A productivity audit can analyze the different parts of your business to highlight areas that need improvement and help you truly understand how to optimize your processes. 

In this article, we will examine the benefits of productivity audits, what they should include, and how to conduct one (with a step-by-step guide).

Let’s get started.

What is a productivity audit?

A productivity audit is a systematic evaluation of an organization’s resources, processes, tools, workflows, and practices that aims to assess and improve efficiency and productivity.

The objectives of a team productivity audit are increasing overall productivity by assessing workflows, employee performance, and resource utilization.

Conducting a productivity audit helps identify inefficiencies, reduce costs, improve quality, and support strategic planning.

The party responsible for conducting a productivity audit varies depending on the size of your organization.

If you use internal team members to conduct your audit, evaluate their knowledge and experience and ensure you choose employees who are highly familiar with business operations and processes.

Additionally, the frequency at which productivity audits should be conducted will vary greatly depending on the size and complexity of your business or organization and the industry you are in.

  • Some businesses will only require annual or quarterly audits
  • Others, like those that produce high-volume or perishable goods, will need more regular audits

Regardless, productivity audits are not a one-time event.

They play a key role in increasing efficiency and continually improving processes and must be treated as a continuous process. 

What are the benefits of a productivity audit?

A productivity audit provides insights into hidden inefficiencies. Identifying them can contribute to company-wide performance improvements.

There are several other benefits to performing an audit, like: 

  • Improving resource utilization: Identify projects where resources are over- or underworked, maximize available resources, and make better hiring decisions.
  • Optimizing processes and workflows: Pinpoint bottlenecks or workflow gaps and allow teams to restructure processes accordingly.
  • Cultivating self-accountability: To hold themselves accountable and see which departments and teams excel or lag in productivity and resource utilization.
  • Improving team morale: Find the employees that excel and reward them. A study by Great Place To Work found recognition drives productivity, as employees are 2.2 times more likely to go above and beyond their regular duties.
  • Identifying training needs: Gain a better understanding of the tasks or areas that hold your teams up and establish where they can benefit from training.

Now, let’s look at what to cover in a productivity audit.

How to conduct a productivity audit in 7 steps

A successful productivity audit takes various steps to ensure you gather all the information you need. Without the right data, it will be difficult to truly assess productivity levels and identify areas for improvement.

How to conduct a productivity audit in 7 steps

We’ve put together a step-by-step guide to keep you on the right track.

Step 1: Define objectives, scope, and KPIs

The first step is identifying what business areas need to be audited. 

Start small and decide what audit you will conduct. This may be a personal productivity audit (sometimes called an employee productivity audit), or a team productivity audit focused on a specific department or process before tackling the entire organization.

Then, set SMART (specific, measurable, achievable, realistic, and time-bound) goals for each fix you decide to implement to establish a clear foundation for successfully improving business productivity.

For example, you can set a goal to reduce employee burnout rate by 75% in three months after implementing time blocks for focus work.

Ensure you define the project metrics and key performance indicators (KPIs) that you will use to measure productivity and gauge improvements after new strategies are introduced. These could include employee utilization, workload, billable tasks delivered, etc.

Step 2: Collect data

Next, it’s time to conduct the audit. This is where you will gather accurate, up-to-date information about daily activities, workflows, and completed tasks regularly.

First, you need quantitative data. Start with a time audit and establish the specific time to complete tasks and processes. You can find information about resource utilization and availability data in your resource management and capacity planning tools. 

The second area you need quantitative data on is task management, such as how many tasks are overdue and how many tasks each team member has completed in the audit period.

You can get task completion data from your project management tool.

Lastly, it’s vital to gather qualitative data as well. We’re talking about employee satisfaction and well-being, processes, decision-making, and other aspects of day-to-day operations that don’t have numbers tied to them.

You can gather this information through employee interviews, company-wide pulse surveys, process documentation and review, and workflow analysis. 

Step 3: Compare against benchmarks

Once you’ve gathered all this information, analyze it to establish what areas need improvement.

An important part of your analysis should be comparing your data against competitor or industry benchmarks. This can help you set reasonable targets for your improvement efforts and understand best practices to implement to increase your productivity.

You can find the latest industry benchmarks in the productivity benchmark reports by ActivTrak. They include productive hours, the percentage of over- or underutilized employees, and focus time.

Productivity benchmarks example
Source: ActivTrak

Step 4: Evaluate resource utilization

Look at the projects your team is working on and how their resources are being used.

To assess resource utilization, you can compare planned versus actual usage, look for bottlenecks and inefficiencies, measure outcomes against goals or objectives, and conduct a cost-benefit analysis.

Taking these steps helps you see how resources are used, whether they’re used efficiently and whether they align with your goals.

You can also request stakeholder feedback for insights into how effective resources are.

Step 5: Analyze workflows

Assess your workflows and look for areas for bottlenecks or processes that could be eliminated or made more efficient.

Are there many manual, repetitive tasks in the workflows? Are handovers often missed by the next responsible party? Are there any errors introduced at a certain point? 

These can be avoided by implementing automation to handle repetitive tasks. For example, many project management tools come with “if-then-else” automation features to handle project requests and task updates.

Plus, it’ll free up time for some of your team members too to focus on productive work.

Step 6: Identify bottlenecks and opportunities for improvement

Look for discrepancies, patterns, and issues like:

  • Tasks that consistently take longer than anticipated
  • Employees who are stretched thin or report feeling burnt out
  • Missed or delayed deadlines
  • High employee turnover rate
  • Lots of quality issues

Next, you must figure out why these issues happen. 

  • Is a project manager too ambitious with their deadlines? Do all their projects consistently overshoot the estimated time? 
  • Is a team member overworked? What does their capacity look like?
  • Does a team need better tools? Are they spending too much time learning or updating existing tools? 

When you’ve found the sources, you can work on how to fix them.

Let’s take the first issue as an example.  If you suspect a project manager is setting overly ambitious deadlines, you can take the following steps to dig deeper and see if it is contributing to productivity issues:

  1. Speak directly with their team and ask them for feedback about the processes and deadlines they’re given.  Have they expressed concerns about deadlines?
  2. Review the team’s past performance and compare completion times with proposed deadlines for past projects.  Look for any history of project crashing or delays.
  3. Compare task complexity and project scope with the proposed deadlines.  Does the deadline seem reasonable?
  4. Check the amount of buffer time included in projects.
  5. Compare the projects with similar ones from your or other organizations to see if the deadlines are realistic.

Setting impossible deadlines or goals that are unrealistic is a surefire way to demotivate your team, so check

Step 7: Create an action plan

Before you can start improving employee productivity, you must determine what fixes are the highest priority.

To do this, you can categorize your issues by:

  • Type: Workflow, training, resource allocation, management practices, technology, or processes.
  • Time taken to fix: Tweaking a workflow or upgrading to a premium tool is much quicker than sending an employee for further training or hiring new employees for an overstretched team.  Split the issues into quick wins and longer-term fixes.
  • Impact: Some fixes will have a big impact on productivity, while some will have a more minor effect.
  • Urgency: Look for critical fixes, like an employee struggling with burnout because they are overloaded.

Once each issue is categorized by urgency, create an action plan by outlining specific tasks, responsible parties, timelines, and the resources you and your team will require.

Start with quick wins that can be implemented as soon as possible to boost productivity and build momentum. For example, sign up for automation software, automate repetitive tasks, and free up time to focus on productive work.

Then, consider the long-term, resource-intensive fixes, like hiring new staff or sending team members for training, and start systematically addressing these more complex changes.

How to use employee time-tracking data to conduct a productivity audit

Employee time-tracking data is exceptionally valuable for conducting a productivity audit as it gives insight into project costs, profitability, and the time spent on each task.

Toggl Track lets you quickly assess all of these elements of your business and more.

Let’s have a look at them in more detail.

Project size

Understanding the size of the projects your teams are working on helps you accurately assess the allocation of resources.  It also ensures that projects of different sizes receive appropriate staffing, budget, and tools.

Comparing projects of similar sizes also helps identify productivity benchmarks and best practices within your organization to provide context for evaluating performance metrics.

Additionally, you can tailor your recommendations to the size and scope of specific projects to ensure they are practical and scalable — small projects will probably need different solutions compared to larger, complex projects, so a one-size-fits-all approach likely won’t work.

Toggl Plan gives you an overview of all the projects your team is working on, including past projects, so you can see their scope at a glance.

Timeline view in Toggl Plan

The Project Timeline shows the tasks laid out according to when they were or will be completed, and the Project Board shows the tasks according to their status.

Project labor costs

Having insight into how much the labor costs on each project will help you identify areas where resources can be better utilized. If a project has an unusually high labor cost, it could be a sign that something is slowing down productivity.

For example, imagine you are a project manager at a software development agency, and you discover that a certain project is accruing much higher labor costs than expected.

After some digging, you find that the development team is spending a lot of extra time debugging and fixing issues because they did not properly plan and gather requirements before the project started.

So, you implement a more thorough project planning phase that includes stakeholder meetings and a deep dive into requirements. This ensures that future projects are fully planned out and everyone is on the same page regarding requirements.

Implementing this change will result in fewer issues during development and an increase in project efficiency, effectively reducing labor costs and boosting productivity for future projects.

In Toggl Track, you can add labor costs directly to the team members in your workspace or private projects, so their tracked time has a monetary value.

Adding labor costs in Toggl Track

Then, you can analyze the Insights view to see how much each project costs or view Employee Profitability, which compares each employee’s labor costs to the revenue they’ve brought in. 

Project profitability

This data is crucial for identifying projects that aren’t bringing in enough profit and need to be overhauled.

Once labor costs are added to team members in Toggl Track, you can view the Project Profitability filter in Insights to see exactly how much revenue and profit your projects generate.

Project profitability overview as part of the Insights feature in Toggl Track

Understanding profitability clearly is helpful when creating your post-audit action plan, as it allows you to prioritize the projects that need the most help.

Estimated vs. actual time

This is an important metric for insight into projects or tasks that consistently take longer than expected.

In Toggl Track, you can log Time Estimates for individual tasks or projects and compare them with actual time logged to gain a deeper understanding of productivity.

Time estimates feature in Toggl Track

Billable vs. non-billable time

Lastly, monitoring billable vs. non-billable time is an excellent way to see when too much time is spent on non-billable tasks, like internal meetings or proposals.

Toggl Track’s Summary Report shows the total time spent on a project broken down into billable and non-billable time.

Summary report in Toggl Track

Understanding this can help you put systems in place to reduce non-billable time.

Now it’s your turn

Productivity audits are a vital part of continuous improvement strategies and apply to every business and industry.

But gathering all the relevant information can be time-consuming and require hundreds of hours of spreadsheets and emails — if you don’t have the right tools.

That’s why implementing the best productivity tracker apps — Toggl Plan and Toggl Track — will help your employees plan their work and keep on track and give you all the information you need for an audit in just a few clicks.Sign up for Toggl Track for free and gather accurate project time data today.

The Toggl Team

Work tools to elevate your productivity – apps for incredibly simple time tracking and effective project planning.

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