The 5 Best Ways of Measuring Team Effectiveness

Heather Harper

Written by Heather Harper

Jun 15, 2018  - Last updated: Feb 8, 2023

How to measure team effectiveness

With the increasingly more competitive market, it is crucial for all business teams to be more effective - but you may often wonder, what is team effectiveness, and how measure team effectiveness?

Team effectiveness can be defined as the 'team’s capacity to accomplish goals or objectives administered by themselves or authority'. In order to be effective, a team often needs its employees to be engaged, productive and driven. Having an effective team is so important and crucial in any business because it, in essence, gives you more value for your money and drives overall business success.

So, how do you know if your team is effective?

Firstly, a sense of team engagement and cohesion will greatly influence team performance. Secondly, profit will also show the effectiveness of your entire team.

As for the rest? Well, we’ve outlined 5 simple, affordable and accessible methods in which you can measure your team’s effectiveness.

Measure employee satisfaction

Following on from the previous point, more satisfied employees will increase a team's effectiveness because they will have a lower turnover rate. Similarly, satisfied employees will be more effective as they will be more committed, motivated, and driven to reach the teams goals.

The best way to measure employee satisfaction is to use a regular pulse survey or employee engagement survey such as PulseMate. PulseMate helps you schedule a regular automated survey with a well-researched mix of questions designed to help you measure overall employee satisfaction.

Set key performance indicators for what you want those ratings to look like and measure them regularly. One of the most common metrics is your employee happiness score, a five-point scale that looks at your employee happiness levels. Most of the time, 5 is the highest score and 1 the lowest. You can measure this score and make continuous quality improvements in your employee engagement programs to improve engagement, and consequently job satisfaction and employee performance.

Here are a few method of measuring employee effectiveness:

  • Employee Net Promoter Score: on a scale of 1-10  (10 being very likely, 1 being not likely at all) ask your employee’s ‘how likely are you to recommend a family member or friend to do business with us?’. If the answer is closer to 10, this indicates that the employees are satisfied within the business and with how they are treated.

  • Informal chats: team leaders should take time to ask their team questions such as ‘what are we doing well?’, ‘what are we not doing well?’, ‘how do you feel as part of the team?’, ‘how successful do you think the team is in working together?’. This feedback will be an in depth insight into your team's performance and how satisfied the employees feel.

  • Use employee engagement and satisfaction questionnaires: These are easy to make, administer and analyse. Tools such as Survey Monkey or Google Form allow you to make these for free, so they have the added bonus of being cheap and not particularly time-consuming!

Employee satisfaction

Employee attendance

If your employees are not turning up to work for no good reason, then people are unnecessarily being paid to do jobs that aren't being done. This will dramatically affect the effectiveness of your team goals won't be met quickly, and more money will be needed to reach these goals.

Unexplained or unnecessary employee absence could be a sign of something far more problematic - if your employees aren't genuinely sick and don't want to come to work, this could be a sign of them not feeling engaged, committed, or satisfied in the job, or as part of a team.

Unexplained absence could also suggest poor team dynamics or even forms of workplace bullying that are preventing employees from turning up to work and decreasing the effectiveness of your team. Of course, this would be unacceptable in any team, so if an employee does show excessive absence, it is crucial to understand why they don’t turn up to work and to solve this problem.

Here are some ways to measure employee attendance:

  • Measure the opposite, their absenteeism rate: To do this, divide the total number of absent days per employee by the total number of working days, and multiply it by 100. High performing teams normally have lower absenteeism rates.

  • Also, measure how often employees are late, as this is another important metric to measure team effectiveness. Although this won’t always mean that employees are unengaged or ineffective, it could potentially decrease the effectiveness of your team as employees turning up late for work or team meetings can delay the time in which employees start their tasks, and therefore decrease the time they have to spend on tasks. Also, late employees can cause annoyance or frustration to other employees, which will reduce team cohesion and further reduce the teams effectiveness.

Client satisfaction

Every team's number one aim should be to please their clients. So, measuring your client's satisfaction is a key way to measure your team's effectiveness. In short, if your clients are satisfied with your products and service, then it typically means you have an effective team that meets the goal of providing good service to valued customers.

There are a few ways to measure client satisfaction, here are some of the best:

  • Gathering customer feedback through surveys. Indeed, you could ring your clients, or ask to meet them to gather more detailed information on their experiences but, like most people, your clients are probably very busy and do not have time to spend discussing your team's effectiveness. Therefore, a survey, which would ideally take less than a minute to complete and is easily accessible through an email link, is the best way to gather their feedback.

  • In the survey, as suggested above, there are multiple types of questions that you could include; such as ‘do you think are products are of high quality?’, ‘do you feel satisfied with the customer service you have received?’, this would give an overall customer satisfaction score (CSAT) which will demonstrate how the employees have found your products and your team.

  • You can also measure customer loyalty as a way of measuring their satisfaction, and thus your team's effectiveness. Customer loyalty includes things such as their intention to repurchase your product or use your company again. One popular way to measure customer loyalty is by gathering a Net Promoter Score (NPS), where you ask them ‘how likely would you be to recommend us to a family member or friend?’. This score will give an indication of their satisfaction if they are very satisfied they would recommend your company to a friend - indicating that your team is effective.

  • Finally, you could gather a Customer Effort Score (CES). This measures the effort it took for each customer to have their issue, if they had any, solved (1 = very low effort, 7= very high effort). This method was introduced by the Harvard business review and is great for showing team effectiveness by showing how the client feels their issues are dealt with.

Client satisfaction

Measure employee turnover

Measuring employee turnover is a great way to measure effectiveness. There are involuntary turnover rates, which is when you are forced to make an employee redundant or you fire someone; this doesn’t necessarily indicate poor team effectiveness, as sometimes circumstances do, unfortunately, increase the turnover rate of a company

Then, there is voluntary turnover rate, which is when team members leave of their own accord. If your company has a high voluntary employee turnover, it potentially indicates that an individual team member or several employees are unsatisfied with the company or their team.

If employees are dissatisfied and leave, then new employees will need to be hired and this can come at a great cost to the business as hiring new employees is often very expensive.

Here are a few ways to measure turnover rates within your organisation:

  • Overall retention rate: to calculate this you will need a measurement period, this could be as short as a month or as long as a year. You then must divide the total number of employees at the end of this month period by the total number there was at the start of the measurement period and multiply it by 100.

  • Overall turnover rate: again, to calculate this, you will need a measurement period. You then divide the total number of employees who have left in the time period by the average number of employees during that time period and multiply by 100.

  • Calculate the average length of employment: to do this, add the length each employee has been in the company for, and then divide by the total number of employees. Look for trends, the longer the average contract length, the better.

  • Calculate number of new hires compared to total number of employees: to do this, divide the number of new hires currently by the total number of employees in the company. The less number of new hires, the better your turnover rate (Unless, of course, you do this after a company expansion!)

  • Calculate the retention rate of ‘stars’: ‘stars’ are the employees that have excellent drive, are motivated, are productive, are organised and passionate. You, ideally, want to keep these employees because they will be more likely to make a team more effective due to their work ethic. Similarly, you need to measure the retention rate of low performers, if these people are staying this will decrease the effectiveness of your team.

  • Calculate the total cost of employee turnover: this cost per new hire also includes the cost of advertising the position, performing background checks, costs spent reviewing resumes, making calls, conducting interviews and training. If this is high, your team isn’t that effective as a lot of money will be spent on new hires, and not on meeting goals.

More in-depth ways to prevent employee turnover and to, in return, increase your teams effectiveness are outlined in this blog post

Low turnover rate

Measure productivity  

Measuring the productivity of a team is a key way to ensure the team is effective; if they are productive (making profit, meeting goals and working together) then they will be effective.

When measuring productivity, it is important to first define what it means to you and your team. Ask ‘what is our ultimate goal?’, ‘when do we want this achieved by?' and ‘how do we want to achieve this?’. Also, ask yourself what you are measuring, normally it’ll be something like ‘are all the jobs completed on time?’ or ‘are we making sufficient profit?’.

The best way to measure productivity is consistently and constantly. Here are some ways to measure productivity:

  • Revenue per employee: to calculate this, divide the revenue by total no of employees. This helps evaluate what your team contributes to the organisation, what each employee contributes to the individual team and will help calculate costs of losing a particular employee.

  • Total cost of workforce: this is the sum of all the compensation, benefits, contractors and other expensive in the team.

  • Effectiveness ratio: to do this, calculate the profit for every pound spent on the organisation.

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Heather Harper

About the author

Heather Harper is a psychology student from the University of Lincoln. She currently works as an intern for WorkStyle and is studying a Masters in Occupational Psychology at the University of Manchester.