The modern business world is increasingly dynamic and competitive. Therefore, understanding how to calculate productivity is important to improve workforce performance and enhance operational efficiency. Productivity is a measure through which a company can ascertain its efficiency and effectiveness. It is a process of dividing the production of total output (i.e., Sales, goods, and services) by the total input usage in the production process (i.e., raw materials, resources, labour, or capital). Efficiency plays a vital role in the success and growth of any organization. It indicates how well the company is producing, manufacturing, and selling the goods and services that generate revenue and profits.
Though productivity is a long and complex process, it can be made easy, enjoyable, and understandable by various productivity tools, productivity formulas, productivity equations, and methods, and also through step-by-step guidance. It is a standard process that every other organization applies, follows, and practices to ensure the smooth functioning of the firm. To measure, calculate productivity, find deviations, and take further steps to fill the gap is necessary.
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Why Is It Important To Calculate Productivity?
Calculating production is one of the basic steps in achieving organizational goals. It is as vital as the other aspects of business. The following are the reasons for the importance of productivity:
1. Higher Efficiency
Productivity indicates how well the organisation uses its raw materials and useful resources efficiently and effectively, to cut down on operating costs and enhance productivity. Therefore, it is necessary to calculate productivity.
2. Greater Competitive Advantage
Businesses that have more productive employees can perform much better and have an advantage over their competitors. Greater productivity indicates a stronger competitive advantage.
3. Growth Of The Economy
Consistent improvements in productivity contribute directly to economic growth. They enable organizations to produce more goods and services with the same or fewer resources, leading to increased efficiency, higher profitability, and greater capacity to meet market demand.
4. Improving Profitability
To improve profitability, businesses need to focus on increasing productivity while reducing production/operational costs. This can be achieved through proper resource utilization and boosting profit margins. Hence, it is important to calculate productivity for business organisations.
5. Innovation And Growth
Productivity provides the necessary resources and information to the organization. When the employees are productive, they explore new ideas, find better opportunities, develop innovative solutions, and help the company to grow and progress faster or sooner. In this way, productivity is essential to promote innovation and the growth of the organization. While there are tracking tools that allows you to track employee working hours, you should invest in a software that can provide you with better work engagement and productivity insights as EmpMonitor.
What Are The Factors Affecting Productivity?
Numerous factors that affect productivity, like inefficient work, poor time management, and unavailable resources, etc. These are the main contributors that affect productivity.
Factor Related To Humans
1. Skills and training
A skilled and efficiently trained employee is necessary for the production. A workforce with zero skills and not trained is not good for organizations that are aiming for higher productivity goals. In such a case, it will become difficult to calculate productivity.
2. Management of time and workload
Time management is a very crucial part of every organisation. Employees should be aware of a balanced workload, which will help in maintaining productivity. Failure in either can result in low productivity. Time to time, checking, tracking, and updating about work is necessary to calculate productivity.
3. Work environment
A positive work environment is necessary to increase productivity. It will encourage the employee to work more efficiently and complete tasks faster.
Factors Related To Technology
1. Advancement of technology
Advanced technologies help organizations to complete their work more efficiently with less time. It is of great help to the employees as well. Poor or traditional technologies will lead to more time consumption, which will adversely affect productivity.
2. Automation
Automation is of great help as it speeds up the process of production and helps to achieve the goal.
External Factors
1. Government policies
Changes in government rules, regulations, and policies can also affect the productivity of an organization.
2. Global trends
Global trends refer to changing technologies and changing consumer preferences. Changing trends can affect productivity.
How To Calculate Productivity?
There are several ways through which you can calculate productivity. Here’s a breakdown:
1. The Basic Productivity Equation
Production = total output / total input
This is the basic formula to calculate productivity.
For example, if an organization produces 50,000 shuttlecocks with the help of 5,000 laborers, the total productivity will be 10 shuttlecocks per hour (50,000/5,000).
2. Labour Productivity
The formula by which we will be able to calculate the productivity of labour = Total output / Total labour hours
It highlights the productivity achieved for each hour an employee works.
For example, if a company manufactures 100,000 t-shirts with the help of 2,000 laborers, then the labour productivity is 50% in sales per hour (1,00,000/2000).
3. Revenue Per Employee
To calculate productivity, we take the total revenue and divide it by the employee count. For example, if 500,000 in revenue is generated during the period with a team of 500 laborers, then the revenue per employee will be 1,000. It mainly focuses on the overall performance of an organization rather than the performance of individuals.
4. Calculating Goals And Objectives
By calculating the goals and objectives of your organization, you can determine productivity. Calculation of goals and objectives means determining whether the goals and objectives were met. It helps you to understand where your workforce stands in terms of efficiency and effectiveness.
5. 360-Degree Feedback
It is a process of gathering feedback from an employee’s managers and colleagues to evaluate their performance. It is a completely confidential process. It is an employee’s assessment regarding their personal and professional growth. It is one of the aspects to calculate productivity.
6. Calculate Workplace Productivity
It measures how efficiently the team or workforce transforms inputs into outputs. It can help in making better decisions. It covers all aspects like employee management, laborers’ efficiency, project management, etc. It automatically improves the productivity and overall development of an organization. In this way, we can calculate productivity in the workplace.
7. Engagement Of Employee
An employee needs to be engaged in productive work that will contribute to the process of goal completion and the development of the organisation. Employee engagement is different for every employee; it depends on the skills and capabilities of an employee. Furthermore, it is important to give the right nature of work to the right person who is capable as well as skilled to do so. It will help to calculate productivity.
8.Feedback Of Employee
Taking feedback is the most common, convenient, and effective way to check an employee’s productivity. Getting feedback directly from the employees can help the organization more effectively as compared to other sources. This is better than the 360-degree feedback.
9. Project Management
It is all about measuring the efficiency and effectiveness of your team’s efforts and the utmost utilization of resources to achieve project outputs. This helps to assess how successfully a team or a project shows results like completion of tasks, generating revenue, production of goods, etc.
10. Multifactor Productivity
MFP is the abbreviation of multi-factor productivity. It is a process of dividing the total output by the combined inputs used to prepare those outputs. It includes a combination of inputs such as workforce, financial resources, materials, and energy sources. Just like the productivity equation, it is also one of the widely used methods to calculate productivity.
11. Productivity Management Software
Productivity management software is any application, program, or tool that allows one to produce, form, or create things like graphs, documents, projects, etc. It is very useful for companies that need a high degree of accuracy. It also allows us to monitor performance, identify bottlenecks, optimize operations, etc.
12.Activity Monitoring
Activity monitoring involves tracking an employee’s actions and the time they spend on the tasks assigned. It is necessary for calculating productivity by providing accurate data on the right time, optimized workflow, completion of tasks, and boosting efficiency. It gathers data, which helps in tracking the activities of the employees. In this way, we can calculate productivity.
13. Product Monitoring Software
Productive monitoring software helps to track and analyse various aspects of a product‘s performance. It identifies the issues and allows us to solve them. The issues can be related to the application, infrastructure, or experience of the user. It helps to make better decisions and improve the performance of the product.
Also read –
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A Comprehensive Guide to Increase Employee Engagement – 2023 : EmpMonitor
How To Calculate Productivity Percentage?
By calculating the productivity percentage, you will be able to track the performance of the employees over time. Here, you can also compare productivity between individuals, teams, or departments.
Productivity Percentage Formula –
The formula for productivity percentage = (actual output/ expected output ) * 100
For example,
If you are expected to complete 200 tasks in a month, but you have done 180 tasks, then:
The productivity rate is calculated as (180 ÷ 200) × 100, which equals 90%.
This means that you are operating at 90% of productivity during the given period.
How To Calculate Productivity In Different Contexts?
There is no one way to calculate productivity. There are various methods and formulas to calculate productivity in different contexts as well. Some are as follows-
1. OEE Formula
OEE is the abbreviation of overall equipment effectiveness, which is basically for manufacturing industries. It is a higher standard, also known as the gold standard, to measure productivity on the factory floor.
OEE = Availability* Performance* Quality
Formula of each unit –
1. Availability = The formula for availability is Actual Run Time/Planned Production Time
2. Performance = The formula for performance is Ideal Cycle Time* Total Pieces/ Run time
3. Quality = The formula for calculating quality: Good pieces/ Total pieces
For instance,
a. Availability – 80%
b. Performance – 70%
c. Quality – 98%
OEE = 0.80* 0.70 * 0.98 = 0.5488 = 54.88%
OEE with 100% means perfect production, which means manufacturing of good parts, and as quickly as possible, with no breaks.
2. Employee Productivity Formula
It is one of the most straightforward ways to calculate the productivity of an individual or team.
Employee productivity formula:
Employee productivity = total output/ total input ( total working hours)
For example,
A content writer produces 20 blog posts over 160 working hours in a month.. Then the productivity will be,
Productivity = 20/160 = 0.125 blogs/hour
3. Employee Efficiency Formula
Employee efficiency emphasizes optimal resource utilization and the quality of output. The formula for calculating efficiency is:
Efficiency% = (standard time/ actual time)* 100
This formula is exclusively for the tasks that have great importance of time.
Example –
If you are given a task that should ideally require 2 hours, but you took 1.5 hours. Then, your Efficiency Will Be –
Efficiency = ( 2/1.5)*100 = 133.33%
Again, if the completion of the task gets 100% efficiency, then that means the completion of the task was faster than expected.
Calculating Productivity Through EmpMonitor–
EmpMonitor offers a smart, modern solution for tracking and analysing productivity across individual employees, teams, or entire departments. It accurately monitors working hours, helping organizations gain clear insights into how time is being spent. The platform is easy to use; just follow the step-by-step instructions, and you’ll be up and running in no time. When implemented correctly, EmpMonitor can become an incredibly valuable asset, simplifying data access with just a click. Not only is it time-saving and cost-effective, but it also helps businesses make informed decisions that boost performance and efficiency. Tools like this are essential for staying ahead.
1. Employee Monitoring Software
Driving team performance and improving productivity are essential for any high-functioning team. With the help of Employee Monitoring Software, you can keep track of your remote or distributed teams more effectively, helping you stay on top of progress and guide your team toward bigger achievements.
2 . Time Tracking
Understand how your team works throughout the day with clear, real-time insights into their daily routines. Spot productivity trends, recognize high performers, and uncover areas that may need support, all through automated, easy-to-read reports. With intuitive time-tracking tools, managing efficiency becomes simpler and more transparent.
3. User Activity Monitoring
Keeping a team productive isn’t always easy; it often means staying on top of countless small tasks and behaviours. With EmpMonitor’s user activity tracking and in-depth, context-rich reports, you can gain a clear picture of how your team spends their time, whether you’re checking in daily or hour by hour.
4. Attendance Monitoring
Kickstart your workday with our user-friendly attendance tracking solution designed to simplify manual attendance and leave tracking. Boost team productivity with a streamlined attendance and leave management system accessible right from your dashboard. You can also manage HR tasks seamlessly, including the distribution of digital payslips based on real-time attendance records.
5. Workforce Productivity & Engagement
EmpMonitor suite of tools not only allows you to track Workforce productivity and engagement details while you can also keep track of their work records. It helps you monitor- employee working hours, active hours and idle hours to provide you with visible productivity insights. Also it provide you with other advanced HR solutions, project management features, and detailed time-tracking reports—all built to streamline administration and drive performance across your organization.
Also read-
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What Are The Common Mistakes While Calculating Productivity?
1. Ignoring Quality
Quality should always be preferred over quantity, as quantity without quality is of no use. It should always be kept in mind to calculate productivity.
2. Using A One-Size-Fits-All Metric
You need to customize the formulas according to your needs and requirements.
3. Not Updating Benchmark
You have to keep your expectations practical and applicable to calculate productivity.
Conclusion-
The idea of productivity is very simple and easy to understand: at a given level of input, there is a given level of output. This is the standard and most straightforward way to calculate productivity. A more productive organisation, workforce, team, etc., will yield higher output at the same level of input.
In all aspects of tracking, calculating, and measuring productivity, it is crucial for the long-term success of the organization. Productivity improves well-being, reduces stress, and also gives purpose. It gives direction to do the work correctly. Calculating productivity is crucial for a business and for an individual as well. It leads to better performance and achieving goals within the specified time.
FAQs ( Frequently Asked Questions )
1. What are the challenges being faced while calculating productivity?
Ans: The common challenges being faced while calculating productivity are identifying the qualitative variations in output and making certain adjustments regarding the external factors and effects of various inputs on the production process.
2. How does technology help to calculate productivity?
Ans: Technology plays a crucial part in calculating productivity. It helps in managing the time, as it facilitates the user to complete their work as fast as possible. It helps in the completion of tasks assigned. It also helps in monitoring the activities.
3. Is productivity measured in service industries?
Ans: Yes, productivity can also be measured in service industries. Although it is more complex and complicated than the manufacturing industries. It includes the number of services provided per labour hour or revenue generated per employee. Also, quality adjustment is necessary.
4. How can an organization improve its productivity based on the measurement results?
Ans: After the results, an organization needs to identify the bottlenecks or deviations and take necessary steps to prevent them. It also works on the areas that need more observation.
5. State the difference between efficiency and productivity.
Ans: Productivity means the amount of output produced in comparison to the amount of input used in the process of production. Whereas efficiency means the utmost utilization of resources in the process of production. Both are important factors in the process of production.
