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How to calculate labor productivity?

Updated: 6 days ago

Knowing how to measure labor productivity in a company can largely determine its success. And to explain the concept of productivity in a simple way, it can be said that it is the relationship between the product obtained and the resources used to achieve it.

For example, working time, raw materials, or energy are some of those resources used. And, specifically, the concept of labor productivity refers to the productivity of the employee himself. This can be defined as the volume of tasks that a worker can carry out each time (in an hour or a day, for example).

Keys to follow

Productivity refers to the amount of production that a company can generate with a given amount of information.

Labor productivity, or how productive a company's workers are, is essential for continued profitability.

Productivity measurement can be done in several ways, with newer methods relying on software tracking and monitoring.

Calculation of labor productivity

The formula to measure productivity used by those who know how to calculate productivity is to take the total production achieved by all workers in the company and divide it by the hours worked:

  • productivity = production / hours worked

The overall labor productivity of employees is calculated by dividing the goods and services produced by the total hours that the employees of a company during a specific period. For example, suppose a manager wants to calculate the productivity of all the employees in his company. The manager estimates that the company had 10,000 units last month, while its contribution was 1,000 hours of work. The productivity of the company is 10 (10,000 divided by 1,000).

This means that employees produced 10 units per hour in the previous month.

What influences the productivity of a company?

Among the most critical factors that affect productivity, the following stand out.

Technical factors: productivity is highly dependent on technology. Technical aspects are the most important. These include the proper location, design, and size of plant and machinery, the correct design of machines and equipment, research and development, automation, and computerization, etc.

Production factors: productivity is related to production factors. The production of all departments must be adequately planned, coordinated, and controlled.

Organizational factor: productivity is directly proportional to organizational factors. A simple type of organization should be used. The authority and responsibility of each individual and department must be adequately defined.

Personnel factors: the productivity of the organization is directly related to personnel factors. The right individual must be selected for the correct positions.

Management factors: the productivity of the organization is based on management factors. The management of the organization must be scientific, professional, future-oriented, honest, and competent.

Doing these calculations manually is an overhead for any company and, if any employee wants to know about their productivity, they can use any online labor productivity calculators. Here we introduced the labor productivity calculator on the Livethetimes website.

How to increase productivity?

1. Avoid putting all the blame on your workers

Have you just discovered that your employees have low overall work productivity? Your first instinct might be to blame them.

Up to a point, you might be right. Indeed, you have at least some workers who take too many breaks. They also show up too late each morning and show laziness. The truth is most of the problems are probably hardworking people who want to do great work every day. They may not put themselves in the correct position to be successful.

So instead of putting all the blame on your lower-level employees, look at your management team. In them, you will see if they are performing in the low labor productivity of your company.

2. Find out why your employees are wasting time

In a perfect world, all your employees would be working the entire time stipulated for it. That kind of productivity would get you the most bang for your buck and earn you the most profit.

If you can limit the wait and encourage your leaders to keep their teams actively involved in tasks, you will improve work productivity in no time. But before you can do it, you need to take some time to find out: Why is so much time being wasted? What can be done about it?

3. Set goals for workers: provide incentives based on performance

Do you suspect that the low productivity of your company could be directly linked to a lack of motivation? If so, setting goals for your workers and offering performance-based incentives if they reach those goals is a great idea.

Goals make people work harder. Please make sure the goals are realistic enough for the workers to achieve them. Otherwise, they could end up having a negative impact on your work productivity rather than a positive one.