It is simple, employee effectiveness is whatever you consider it to be. You could decide to measure how many of a certain product an employee can produce verses the amount they make. If you aren’t in a manufacturing industry, you may choose to measure effectiveness against another point of output that the client produces such as how many dollars in sales an employee brings in verses the amount of time it takes to get each client to agree to the sale. Here are a few ways you may want to measure employee effectiveness and what it means for your company.
If it takes fifty employees on average one hour to make one hundred widgets then the average speed of making widgets would be two per hour per person. If one person is making four an hour however, you probably have at least two people who are taking the whole hour to make a single widget. If you are paying them ten dollars per hour, which is five dollars per average widget, some of the employees are obviously costing you a lot more money than others. The ones who cost you more money are the least effective.
This is completely different when you get into the service industry. You can either bring it back down to simple math by thinking about how much they made the company verses how much the person costs in salary and benefits, or you can measure it in some way such as the number of customers served, by the amount of time that passed, or the number of tasks that were accomplished by the amount of time passed. What matters in the effectivity measurement is what matters most to you.
The most effective way to measure it with sales is the total amount of money that came in verses the total amount of money spent. You could measure the number of calls made in an hour but this does not determine if the sales person is making any money for the company of if they are just making a lot of phone calls, being told no thanks, and hanging up the phone, so it may not be the most efficient way to measure effectiveness. You could measure the number of new accounts opened in an hour, which if all accounts are even would be a better measurement.
There are a number of easy ways to increase effectiveness if you are not wanting to lose the less effective employees such as employee training seminars, sales training, and in house job training programs that you can do.