Understanding the Types of Productivity Measures & How to Use Them

Source: blog.kenjo.io

Want to improve your company’s productivity? The answer to that is obviously ‘yes’ – but the answer to the next question isn’t as easy: How?

While it’s true that there are many ways to increase productivity, how do you know which is best? More importantly, if you try implementing them – how do you know they’re working?

That is the reason why before you go any further, you first need to understand the different types of productivity measures that are out there, and how they can be used.

Source: simplilearn.com

Types of Productivity Measures

At its core, productivity is measured by calculating the output per unit of input. However in practice that isn’t as easy as it sounds seeing as both the ‘output’ and ‘input’ of a company are relative and can take on different forms.

That is the main reason why there are several types of productivity measures that companies use – each of which designed to compare the resources that are used to the work completed with them:

  • Labor productivity is the amount of yield a company can generate from the work hours put in by employees. It is easy enough to calculate – just divide the value of the goods or services that your company provides by the time that is spent creating them.

In this way labor productivity can act as a good way to gauge the efficiency of your company’s workflow and the capabilities of its employees.

  • Capital productivity is the ratio of output to the physical capital used in creating it – including office equipment, labor materials, various types of equipment, and general supplies. To calculate it you’ll need to divide sales by the difference between the total physical capital and liabilities.

If the number is high it indicates that physical capital is being used effectively.

  • Material productivity measures the output that is generated based on the input materials that are used. Input materials in this case include but direct and indirect raw materials and the productivity is calculated by dividing the output by the cost of said materials.

By using this productivity measure, you’ll be able to see how efficient your company’s usage of raw materials is when producing goods or services.

  • Total factor productivity requires you to measure the ratio of output to all the factors involved in creating it. Typically it uses a weighted average value for each factor and includes not only labor, capital, and material but also knowledge, management style, organization structure, innovation, supply chain logistics, and more.

If this seems complicated, the truth is that it is. However there are some popular equations that can help simplify it somewhat and guide you through it – such as the Cobb-Douglas function.

To sum it up, these productivity measures will give you a metric that you can use to track the productivity of your employees. With them, you’ll have actual data that you can use to figure out which way of increasing productivity works best and whether or not it is effective.

Source: hrcloud.com

How to Utilize Productivity Measures

Now that you know what productivity measures are and the types that are out there – the next step is to learn how to utilize them. Some of the best options on that front are by:

  • Implementing time tracking and monitoring

If you want to calculate productivity measures, you’ll need an employee monitoring tool or time tracker. By using a tool like WE Controlio, you can track the amount of time employees spend on various activities which will facilitate productivity measure calculations.

The features will let you track apps that are used, websites that are visited, file transfers, active/idle time, emails and other communications, and so much more.

That data is particularly essential to measure labor productivity, but can also be applied to capital, material or total factor productivity too.

  • Calculate a simple productivity output for individual employees

This method is aimed at enhancing the performance of individual employees. By calculating their productivity, you can identify and reward employees that are productive and at the same time find solutions for the ones that aren’t.

In most cases, a labor productivity measure can be used to assess employee performance and identify productivity issues. If you want, you can set up continuous video recording and screen capturing to understand why some employees are less productive.

The reports generated will help compare individual productivity scores and identify outliers. Activity monitoring will reveal distractions affecting productivity.

  • Be open and ask your employees for feedback

Feedback can help make it easier to calculate productivity measures – especially total factor productivity. As such you should try to get feedback from employees regarding various factors such as time management, project management, task prioritization, workflows, training, and so on.

Soliciting in-depth feedback will let your employees express their opinion regarding various factors that influence productivity. Make it a point to be open about the feedback, and assure employees they won’t be penalized for their opinions.

Taking these steps should put you on the right track and enable you to utilize productivity measures as effectively as possible.

Source: aihr.com


At this point, you should be about ready to start moving forward and plan out how you intend to improve your company’s productivity. Seeing as you understand the types of productivity measures and how to utilize them, all that remains is coming up with a strategy that fits your company best.

Make no mistake, it is likely to take time and no small amount of effort to pull this off.  However in the long term your company will definitely benefit from building a solid foundation grounded in reliable productivity measures.