Productivity in Leadtime
🟦 How productivity is measured in Leadtime; via value groups and capacity.
This text provides background information. What types of text are there?
How can a service company recognize how productive it is? The question is not so easy to answer. The challenge is to find a metric that is both meaningful and practical.
At first glance, profit or turnover , for example, seem to be good indicators of productivity. After all, they reflect the financial outcome of the company's efforts. However, these indicators are a little too abstract: it is not only the productivity of the employees that determines how much turnover the company achieves. Turnover and profit are influenced by factors that are beyond the direct control of the individual - for example, market conditions, pricing strategies or cost structures.
As this approach is too imprecise and can only be measured retrospectively, in Leadtime we use a productivity concept that is based on the proportion of working time that employees spend on value-adding activities.
Value groups
More about value groups here
For this purpose, all the work available in the company is divided into four categories ("value groups"):
Value group | Description | Examples |
A) Value-adding activities | Activities that contribute directly to the generation of sales and are directly visible to the customer. | Development projects for customers, customer orders, services within the scope of customer projects. |
B) Indirect value-adding activities | Tasks that do not directly generate sales, but support and optimize the provision of services. | Quality management, internal project planning, documentation, resource management. |
C) Administrative activities | Tasks that are necessary for the administration and maintenance of the company but do not bring any direct customer benefit. | Bookkeeping, accounting, personnel administration, internal meetings. |
D) Waste | Time wasting or activities that do not generate added value for the company or the customer and should be avoided or reduced. | Unproductive waiting times, technical faults, inefficient processes, unnecessary meetings. |
Which value group a project falls into can be defined in the project settings ("Projects" menu / Select project / "Settings" tab)
High productivity therefore means that employees spend a large part of their working time in value group A, i.e. value-adding activities.
This makes it possible to monitor in real time how productively the company is working and to make corrections quickly.
The company's own time recording data provides a meaningful indicator of the quality of work. This can be easily and quickly influenced and improved by employees. The focus is on the actual use of available working time, which enables a realistic assessment of productivity.
Dividing working time into value groups can help to identify areas where time is wasted and thus provides a basis for continuous improvement processes. It also promotes an awareness of time management and prioritization among employees.
Capacity
In this context, we need to introduce the term "capacity". It refers to how many hours an employee has to work for the company per week on the basis of their contract; for a full-time position, this is usually 40 hours.
The "total capacity" of the company is therefore the sum of the capacities of all employees. A company with ten employees who each work 40 hours a week therefore has a total capacity of 400 hours a week.
When planning capacity in Leadtime, we work in weekly periods because the company's available capacity fluctuates from week to week: employees take vacation or are suddenly absent due to illness. Productivity measurement must take these fluctuations into account.
Ultimately, the decisive factor for productivity, and therefore the success of the company, is how the available capacity is used. For example, if a developer spends all of his 40 working hours working on customer projects, we consider this to be 100% productivity.
Time tracking in Leadtime
To achieve such an accurate measurement of productivity, we measure time on three levels in Leadtime:
Attendance time
This refers to the time an employee spends at the workplace. The employee checks into the system in the morning and checks out in the evening. This attendance time is compared with the employee's contractually agreed working time stored in the system. For example, if an employee is contractually obliged to be present for 8 hours, but is only present for 7.5 hours, this results in 0.5 minus hours.
Documented working time
Employees should document their entire attendance time by booking time on tickets and tasks. Leadtime compares the contractually agreed working time with the ticket bookings made during the day. An employee with 8 hours of attendance who has booked a total of 6.5 hours on five different tickets has therefore not documented 1 hour of office time.
Billable working time
Daily targets can be set here for the proportion of working time employees should spend on value-adding, i.e. directly revenue-generating work. For developers, for example, it can make sense to set a high value such as 6 hours. This means that the employee should book at least 6 hours of billable time per day within their documented working time.
Advantages
This detailed form of time recording makes it possible to analyse how capacities are currently being used for individual employees, teams or the entire organization. This allows management to continuously control where the company's performance should be directed - i.e. towards achieving sales or carrying out other strategically important but not directly revenue-generating projects. Self-financed companies in particular must always find a sustainable balance between these two poles.