Last updated 30 April 2022 ·
Productivity measures how much output is produced in a certain amount of time. It can be calculated by dividing the total number of units produced by the number of hours worked. This gives you an idea of how efficient employees are and how much they produce.
The number of hours worked.
Production implies the quantity of output produced. A high productivity rate is most desirable. Labour productivity also refers to the amount of effort, skill, or time necessary to make a specific output.
Productivity can also be judged by dividing the total number of units produced by the number of employees. This gives you the output per worker. The higher the output per worker (and fewer people employed), the more efficient and effective the business is.
The productivity rate can be calculated for a specific individual, a group of employees, or the entire company.
An increase in productivity means producing more output units with the same amount of input. Each of the following situations signifies an increase in productivity:
- Increasing the overall job output
- Decrease in occurrences of mistakes
- Reduction in circumstances of absenteeism
- A decline in cases of accidents
- Reduction in occurrences of overtime
- Reduction in occurrences of illnesses
Productivity is affected by the number of workers and the amount of time and money spent on equipment and wages. It can also be affected by the quality of raw materials and the workers’ skills.
Productivity, efficiency and effectiveness are often used interchangeably, but there is a difference between them. Efficiency is a measure of the quality of output relative to input. If the input increases but the output is the same, efficiency will decrease. Effectiveness refers to how successful something is in producing the desired result.
The Productivity Puzzle
Since the financial crisis first struck in 2008, the UK’s workforce is simply not improving its level of productivity as quickly as it was beforehand. In 2010, productivity levels began flat-lining, leaving experts puzzled about what was happening. This slowdown in productivity levels has become known as The Productivity Puzzle.
Find out how much the Productivity Puzzle could be costing your UK business every year in inefficient staffing costs, low performance and flatlining productivity. Complete three short questions in our Productivity Puzzle Cost Calculator™ and your personalised cost will be revealed as well as actionable insight as to how you can start reducing this cost today.
If you want to increase productivity levels within your business, the first thing to do is work out an effective way to measure and monitor your productivity. OKRs, objectives and key results provide an effective way to set clear-cut objectives and measurable results to track progress. If you’re new to OKRs, check out our guide: OKRs, objectives and key results: Everything you need to know.
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