Understanding Productivity

Productivity 101: What Is It & How To Improve It

Productivity is totally a good thing, and we all want it, be it an organization, national, personal, or even a business. Productivity growth results in greater output from the same amount of input. We can simply say it is our opportunity to create more from less.


There will be economic growth, thanks to increased productivity, indicating that an economy can increase the production and consumption of goods and services without increasing the amount of work required. We’ll get into more details about productivity, covering the following aspects:

  • What is Productivity?
  • How Is Productivity Measured?
  • Factors Affecting Employee Productivity
  • How To Improve Productivity


What is Productivity?

Productivity is a measure of the efficiency of a person, system, machine, factory, and so on, in converting inputs into outputs. In other words, it is a measure of economic performance that compares the quantity of goods and services produced (output) with the number of inputs used to produce those goods and services.

Now, let’s talk about productivity in the workplace. This is the efficiency and effectiveness of the efforts put in by each team member to generate successful outcomes for the overall benefit of the business. Each individual or team’s output is measured to determine how to optimize the organisation’s workflow.

How Is Productivity Measured?

A measure of inputs is divided by a measure of output to calculate productivity.

Let me explain better!


Output is the total amount or quantity of goods and services produced in a specific amount of time. Gross value added, or GVA (the entire value of goods and services produced minus those products and services required in the manufacturing process), is typically used to measure output for an industry or sector (known as intermediate consumption). The total GVA of all industries can be used to calculate the output of the entire economy.


The two basic categories of inputs are:

  • Labor
  • Capital

Labor input is calculated using the number of people employed or number of paid hours employees puts in. And the thing is, hours worked metrics are often preferred, due to the fact that they account for variations in conventional working hours, leave, overtime, and flexible work arrangements. The ABS (Australian Bureau of Statistics) provides quality-adjusted information on hours worked to reflect changes in the education and experience of the labor force.

Capital input, known as a measure of capital services, explains the advantages brought about by the productive resources possessed by a company, an industry, or an economy. These assets may include physical capital, like machinery, buildings, and vehicles, and intangible capital, such as intellectual property.

Measurement Difficulties

Measuring output in non-market businesses is difficult.

The ABS (Australian Bureau of Statistics) only calculates MFP for 16 market industries, where prices accurately represent underlying output demand and supply. They do not offer MFP estimates for non-market businesses, including public administration and safety, education and training, and health care and social assistance.

Estimates change over time.

The company may find it difficult, in the short term, to adjust the quantity of inputs it uses in response to variations in demand. As a result, productivity decreases during economic downturns when output decreases more than input costs, while productivity rises during economic increases when output grows more than costs.

Not all inputs and outputs are tracked.

It can be very challenging to assess certain natural resources and intangible capital inputs accurately, and some may not even be measured. MFP estimates will be skewed when actual input changes but has not been measured.

How to Measure Productivity in the Workplace

To calculate employee productivity, use the labor productivity equation:

Total output/total input

To calculate Partial Factor Productivity (ratio of total output to a partial or single input):

Total output/single input

To calculate Multifactor Productivity (ratio of total output to total input):

Total Output/Subset of Inputs:

The combined effect of all input resources (labor, capital, material, etc.) is divided into the output.

With the help of charts, graphs, and some other methods like formulas based on several quantity indexes,  workplace team productivity is measurable. A team’s level of productivity and efficiency is calculated when weekly or monthly reports, statistical data, and balance figures are gathered, processed, compared, and analysed.

Levels Where Productivity Can Be Measured

  • Individual worker’s productivity
  • Company’s productivity
  • Industry or sector productivity
  • Business sector productivity
  • National productivity

Factors Affecting Productivity

Let’s go over certain things that affect workplace efficiency and overall productivity:

  • Wellness
  • Increased responsibility
  • Work environment
  • Training
  • Management quality
  • Compensation (salary/wage)
  • Diversity
  • Career development opportunities

How To Improve Productivity

Understanding Productivity

Now that we’ve got a deeper overview of productivity, let’s talk about how we can improve it.

Set Clear Goals: Goals give us a sense of meaning and purpose. Having a clearer look at the bigger picture can help motivate each and every individual involved. So, it makes sense to share the company’s goal with the team, which will help them manage their time and focus on necessary things.

Break down Larger Projects into Smaller, Actionable Tasks: Getting to deal with a larger project can often be unbearable, especially when it has a tight deadline. Now, breaking down this project into small milestones can give a sense of ‘easy to accomplish’ task and boost productivity as a result.

Prioritize: Another great aspect that helps improve productivity is prioritization. This is arranging your to-dos based on their importance and urgency. By doing so, you’ll be able to focus your energy on things that matter and deal with less relevant stuff when you’re less energized.

Regular Feedback: Providing feedback to the team on a regular basis will keep them informed on how things are going. It will also boost their motivation and encourage them to put more effort into their work.

Encourage Collaboration and Positivity: The truth is that when the work environment is full of teamwork and positivity, everyone will always be engaged and remain happy when they are working.

Provide the Right Equipment: It is impossible for employees to complete a project without the right equipment. And do you know what that means—less productivity? Having the right tools and equipment handy will definitely boost efficiency.

Final Thoughts

Greater productivity will result in higher profits for businesses, reduced prices of goods and services, increased wages for workers, overall prosperity and growth, reduced costs of production, higher per capita income, lower overhead costs, and effective utilization of resources.

Now that we’ve covered the necessary things you need to know, from what productivity is, how it is measured, to factors affecting employee’s productivity, and how you can improve productivity, it’s time for you to unleash your inner power for productivity.

I hope this article was helpful. Thanks for reading, see you in the next one!


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