When a company measures the productivity and performance of employees, the gross & effective hours play a very crucial role. Gross and effective hours are two different time estimations for calculating productive work. Most companies calculate the attendance of their employees based on the number of hours spent in the office. Some measure actual time worked, while others count only gross hours. In some companies, the take-home salary mentioned in Cost to company (CTC) also fluctuates due to gross & effective hours.
Gross hours: It is the total time an employee spends from logging in the morning to leaving the premises, including lunchtime and breaks. It includes all listed items.
Effective hours: It is the time an employee spends to complete the work, excluding lunchtime and breaks. It includes only the tasks related to the projects.
Some companies estimate that less than 30% of the time their employees work is spent on a given project—the rest is spent on tasks such as checking email, making phone calls, and performing other administrative duties. This value may differ among companies; however, to ensure an accurate completion date for a project, it is important to calculate what percentage of a company’s employees’ time is spent on actual work versus administrative duties. Considering the availability of each resource for your project is essential, especially if you need to juggle multiple projects, administrative duties, and vacation time. If a resource is assigned to too many projects at once, it may not have enough time to achieve all of the projects’ objectives.
Some important points for estimation of hours: