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Productivity: The Basics

Productivity is an indication of efficiency and can be measured at different levels, namely:

  • Personal Productivity: This is often used to describe the accomplishments of individuals in their lives (not necessarily restricted to the workplace) every day.

  • Workforce Productivity: It is the productivity of all individuals combined at a company’s workplace.

  • Sector Productivity: This is the combined productivity of all companies in a sector/industry.

  • Team/Department Productivity: This measures the collective output of all individuals working for a common goal.

  • National/Global Productivity: This is the aggregate productivity of all industries in an economy.

In business, productivity is measured by calculating the ratio of output produced to the input resources utilized in the process. The inputs can be any resource that aid in the production or services being provided (capital, manufacturing equipment, labour, technology, etc.).

The skill to measure productivity help have an edge in the market and constantly keep growing.

A few of the fields that need/have a measure for productivity in business and manufacturing are:

  1. Labour Productivity: It measures the output of labour per hour.

  2. Capital productivity is the ratio of the money invested in assets used to the company’s output.

  3. Material Productivity: This considers the number of raw materials being efficiently utilized and not being wasted.

  4. Employee turnover rate: This is the percentage of employees who leave the company/organization during a certain period. Ahigh turnover rate is usually associated with low productivity.

  5. Downtime: It is the percentage of time that certain important systems are unavailable. If not planned vigorously, it can result in lower productivity.

  6. CSAT or Customer Satisfaction Score: It is the average ratings customers give to a company/organization based on the products and services it can provide. They usually range from 1 to 10, and lower scores can indicate defection of customers from the brand and its services.

Productivity not only helps stay in the competition but also:

a. It helps achieve more attractive wages Higher productivity can help pay higher wages to more qualified employees, thus even creating job opportunities.

b. Get better terms from suppliers Increased production results from improved productivity, requiring raw materials and components in more significant amounts. These bulk purchases usually come at a lower price.

c. Provide higher customer satisfaction Higher productivity, more often than not, ensures better services and price quotations. This increases the customer’s satisfaction with the company.

d. Easier access to capital/funding Improved productivity translates to higher profits which helps obtain funding (either by borrowing or issuing equity) more easily.

e. It can help employees feel more in control and enforce healthy work/life boundaries.

To know more about ways to improve productivity in a workplace, stay tuned!


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