You've Been Tracking Employee Productivity All Wrong When it comes to remote work, do you know which metrics really matter?

Using software to track and monitor employees has never sat right with me. Maybe it's because I played a role in developing some of the first programs intended for that purpose.

In the late "90s, companies were faced with a problem. For the first time, they were outsourcing their IT and software development at scale to India. But with their workforce on the other side of the world, how could they know what their employees were doing?

Back then, we came up with all kinds of ideas — from reviewing and analyzing program code that employees created, to actually monitoring their desktop activity.

Fast-forward to the present, and companies have taken that tech to the next level, measuring keystrokes, mouse movements and even going so far as taking screenshots of employees' monitors at random intervals.

Related: What Companies Can Change in the Office Space to Increase Productivity

The fundamental question remains the same: When managing workers by sight is no longer an option, what's the best way to measure productivity? Which metrics matter? And at what point does the quest for productivity measurement prove counterproductive?

While a return to the office is on the horizon for many of us, hybrid work options will only grow more important in the years ahead. For companies and their employees, getting a handle on remote analytics is becoming trickier and more mission critical.

I'm in people analytics. I love data. But there are right and wrong applications of measurement. Here's an insider look at what works and what doesn't.

Focus on measuring outcome, not input

Employee monitoring was pervasive before the crisis. In 2018, research found that 50% of large corporations were using email monitoring and location analysis. But in the early months of lockdown, use of monitoring software skyrocketed, with industry leaders like Teramind and ActivTrak reporting record increases in sales requests.

For employers, monitoring tools might seem a useful stopgap at a time when teams aren't in the office. Just one problem: Time spent at a keyboard or in front of a webcam is hardly indicative of performance or productivity. Indeed, this kind of monitoring can actually work against getting the results you want. When workers know their keystrokes are being measured, for instance, they're incentivized to produce busy work, which might have little commercial value to the business.

The deeper issue is that, in many ways, we've been measuring productivity all wrong — confusing inputs for outcomes. Even tracking "hours," the oldest of workplace metrics, is fundamentally misleading. Just knowing someone has worked a 40-hour week gives little insight into what they actually accomplished.

A far better approach is to measure and reward business outcomes. These will differ from business to business and employee to employee — and that's precisely the point. Taking the time to first define what success looks like, and then finding ways to measure it, is the surest way to boost output. Handy schema like KPIs, OKRs, and KRAs all circle around this central premise.

For the engineers on our team, for example, success might mean well-tested, quality coding prior to code check-ins. For salespeople, success might mean qualified leads added to the sales funnel. For content creators, success can be quantified as blog posts written or — better still — web traffic generated.

The point is that these definitions are highly customized and focus on results, not process. They reflect actual productivity, not busy work or "butts in seats."

Interestingly, through the lens of these output-oriented metrics, my company saw a marked uptick in performance during the crisis. For instance, while working remotely, our engineers completed more software check-ins than ever before. This isn't unique to us: Over half of executives surveyed by PwC in January 2021 said that average employee productivity had improved. Overall, lockdown was found to be positive for knowledge worker productivity.

Related: 4 Tips for Maintaining Productivity When Working From Home

The trust X-factor

Yet, there's a caveat here. Even with a focus on measuring output, results can be gamed, and metrics can hide as much they reveal. Indeed, the most important factor is something that even the most sophisticated tracking schemes can't quantify: trust.

In its simplest form, trust means knowing someone is acting with the team's best interests at heart, whether or not they're being watched. Trust means giving employees the autonomy to ask, "What's the highest use of my time," and encouraging them to use that North Star to guide their days and decisions.

The benefits of this kind of trust are tangible. Employees in high-trust organizations are more productive, have more energy at work, collaborate better and stay with their employers longer. They also report lower stress and higher satisfaction with their lives. One study found that 63% of employees defined great employee experience as being empowered and trusted to do their job with little supervision.

And here's where monitoring can backfire. Invasive software risks eroding the covenant between employer and employee, breaking down the sense of trust that motivates people to do their best work. Just look at Barclays. The global bank installed software to track time employees spent at their desks and send popup warnings to those whose breaks were too long. Far from boosting productivity, the measures led to a swift and resounding backlash. These results aren't unusual. One survey found that 49% of employees under stringent monitoring reported severe anxiety.

So how do you foster this sense of trust in a remote-work setting? Suffice it to say that there are no hacks or quick fixes. To me, it starts with understanding and aligning expectations. Employers must establish what's expected, and employees must express what's possible. This isn't a one-time thing; it's a continuous dialogue that requires added attention in a remote context, where it's so easy for misunderstanding and miscommunication to happen.

Company-wide check-ins are critical: We've moved our all-hands meetings from monthly to bi-weekly, for instance. But less formal channels can be equally important. Every month, I host a "CEO Happy Hour." Ten to 12 people from different departments meet on video for a casual, unstructured conversation. Sometimes conversation flows, sometimes it doesn't, but regardless, we've got an opportunity to align our understandings of what's working and what isn't.

When it comes to tracking productivity, measuring minutes spent on a task or keystrokes isn't effective. Having a shared understanding of success — and ensuring employees are motivated to get there — is far more valuable. Importantly, these lessons apply as much in an in-office context as they do in a remote one. The single greatest productivity tool may well be one of the oldest: trust.

Related: 7 Ways to Enter the Productivity Zone Faster and Focus Better