How can you measure the productivity of your service operations team?

1 What is service productivity?

Service productivity is the ratio of service output to service input. Service output refers to the value or benefits that customers receive from the service, while service input refers to the resources or costs that the service provider incurs to deliver the service. For example, if a technical support team resolves 100 customer issues in a day using 10 staff members, the service output is 100 and the service input is 10. The service productivity is then 100/10 = 10.

However, service productivity is not a simple or straightforward measure, as service output and service input can be difficult to quantify and compare. Service output can vary in quality, timeliness, and customer satisfaction, while service input can include different types of resources, such as labor, materials, equipment, and technology. Therefore, service productivity requires a comprehensive and balanced approach that considers both the efficiency and effectiveness of service operations.

3 How to measure service input?

Service input can be measured by using different indicators that reflect the resources or costs that the service provider uses to deliver the service. For example, service labor can be assessed by metrics such as number of staff, hours worked, wages, turnover, or training; service materials can be measured by inventory, usage, waste, or cost; service equipment can be evaluated by capacity, utilization, maintenance, or depreciation; and service technology can be gauged by metrics such as functionality, reliability, security, or innovation. All of these indicators provide valuable insights into the resources used to deliver a service.

4 How to calculate service productivity?

Service productivity can be calculated by using different formulas or models that compare service output and service input. The most common formulas are single-factor productivity, which divides a single measure of service output by a single measure of service input; multi-factor productivity, which divides a composite measure of service output by a composite measure of service input; and total factor productivity, which divides the value added by the service by the total cost of the service. For example, if a customer service team handles 200 calls in a day using 8 staff members, the single-factor productivity is 200/8 = 25 calls per staff member. If a professional service team generates $10,000 in revenue in a month using 4 staff members, $2,000 in materials, and $1,000 in technology, the multi-factor productivity is 10,000/(4*2,000+2,000+1,000) = 1.43 revenue per unit of input. And if a technical support team generates $15,000 in revenue in a quarter using $5,000 in purchased inputs and $10,000 in owned inputs, the total factor productivity is (15,000-5,000)/(5,000+10,000) = 0.33 value added per unit of cost.

5 How to improve service productivity?

Service productivity can be improved by utilizing various strategies or practices which increase service output, reduce service input, or optimize the balance between them. For instance, service standardization involves creating and following consistent and uniform procedures, rules, or specifications for service delivery, which can improve service productivity by enhancing quality, reducing variability, and increasing efficiency. Additionally, service automation involves using technology to perform or support routine, repetitive, or low-value tasks, which can improve service productivity by increasing speed, accuracy, and scalability. Service innovation involves developing and implementing new or improved ways of delivering service that create or increase customer value, while service integration involves coordinating and aligning processes, resources, and systems across different functions. Finally, service empowerment gives employees more authority to make decisions and take actions that affect service delivery which can boost motivation, engagement, and satisfaction.

6 How to monitor and evaluate service productivity?

Service productivity can be monitored and evaluated by using different tools or methods that collect, analyze, and report service performance data. Service dashboards are visual displays that provide key service performance indicators in real-time, such as service quality, quantity, value, labor, materials, equipment, and technology. Service benchmarking is a process of comparing service performance against internal or external standards to identify strengths, weaknesses, opportunities, and threats. Additionally, service feedback is a process of gathering opinions from stakeholders to measure customer satisfaction, employee engagement, and partner collaboration. All of these tools and methods can help monitor and evaluate service productivity.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?