Paul Krugman, The Age of Diminishing Expectations (1994)
Productivity is a measure of success. In the business world, productivity means increased profit.
It isn't just a matter of concern for your business. In fact, your company’s productivity is reflected in your native country’s overall productivity.
When businesses in a country are productive, the country’s gross domestic product (GDP) increases, which indicates economic growth. The higher the economic growth, the higher the standard of living, which benefits the whole country.
In this article, we'll explore the definition of productivity, how to measure it, its benefits, and how to increase workplace productivity.
What is productivity?
The definition of productivity is hard to pin down. It can be different according to the context.
In business, productivity is a measure of how efficiently a company converts inputs into outputs. In such a context, inputs are labor and capital, and outputs are products and services. This is called workplace productivity, which is the focus of this article.
Other definitions of productivity based on context include the following.
Personal productivity: how much individuals can accomplish every day in their personal lives.
Sector productivity: the collective productivity of all companies in an industry or sector.
Team or department productivity: the collective productivity of one or more individuals sharing a common goal.
National or global productivity: the collective productivity of all industries in an economy.
Besides the mathematical definition, productivity can also be verbally defined.
The European Productivity Agency (EPA) defined productivity as follows. “Productivity is an attitude of mind. It is the mentality of progress, of the constant improvements of that which exists. It is the certainty of being able to do better today than yesterday and continuously. It is the constant adaptation of economic and social life to changing conditions. It is the continual effort to apply new techniques and methods. It is the faith in progress.”
How is productivity measured?
Workplace productivity is calculated by dividing output by inputs: productivity = outputs/inputs.
Outputs are the monetary value or the units of products and services that your company provides.
Inputs include what you give to your company to be able to function, which is capital (investments in assets used for production, such as manufacturing equipment and computers, energy, technology, materials, and purchased services) and labor.
The previously mentioned is the basic formula. However, you can also measure productivity based on labor, capital, or multiple factors.
Labor productivity measures the growth in output in terms of the number of worked hours.
Capital productivity is the productivity related to the money invested in assets used to produce your company’s output.
Multifactor productivity considers multiple inputs. The Office of Productivity and Technology (OPT) measures how efficiently the U.S. converts inputs into the outputs of goods and services using multifactor productivity, which compares the growth in output to the growth in several inputs, such as labor, capital, energy, materials, and purchased services.
However, you need to know that measuring productivity in such a tangible manner isn't always the case. Measuring productivity depends on the industry that you operate in.
Why is workplace productivity important?
Here are the many ways increased workplace productivity impacts an organization.
Producing more products (providing more services) while paying less for the resources needed to produce and sell them is the very concept of profitability. It's what you earn after paying all expenses and taxes.
Maximizing the use of your existing resources will improve your company's profitability.
For example, when employees are more productive, companies won't need to hire more people to produce the same amount of goods or services.
Lower operational costs
When looking for ways to increase productivity, you'll unintentionally reduce operational costs. For example, to increase productivity, you'll think about investing in technology that will over time improve the work process and reduce labor costs.
You may think about introducing flexible hours and three-day weeks to increase productivity. Flexible time makes employees feel more empowered, valued, motivated, and less stressed. This in turn will reduce property and other related costs.
Increased customer satisfaction
Productivity improvements mean you'll have happier customers. When systems run better, the customer feels the benefits, including reduced turnaround times and increased efficiency.
This will lead to motivated managers, satisfied shareholders, and a flourishing business that sells goods or services with reduced prices and better quality.
Increased employee engagement
By implementing plans for increasing productivity, your employees will naturally become more engaged. When employees see the efforts, the organization makes to ease processes and increase profit, which will reflect on their pay and career advancements, they'll become more engaged and eager to help you achieve your strategic goals.
Enhanced work processes will result in increased focus and commitment. Employees will feel more empowered and in control of their workload, and companies will easily retain talent.
Enhanced employees' wellbeing
With improved productivity come many personal benefits for your employees, which will positively impact on your organization.
Improved productivity can be seen in work done more efficiently, be it reduced time spent on daily processes or a reallocation of responsibilities.
Productive employees are healthy, comfortable, and happy, are more in control of their lives, have the time to look after their families, exercise, cook healthy food, and rest, and experience reduced burnout.
How to increase workplace productivity
Hold effective meetings
Holding effective and actionable meetings should be on the top of your list if you're aiming to enhance workplace productivity.
Atlassian performed a study on time wasted at work. It concluded that $37 billion is the cost of unnecessary meetings for U.S. businesses.
Check out what the study found out about average meeting goers:
- 96% missed meetings.
- 39% slept during a meeting.
- 45% felt overwhelmed by the number of meetings they attended.
- 73% did other work during meetings.
- 47% complained that meetings were the number one reason time is wasted at the office.
Having said that, meetings are an indispensable part of successful businesses. Every great idea starts with a meeting, from the idea behind your business to executing the tiniest strategic business goals. Managing meetings is one of the first blocks you need when building productive businesses that are here for the long haul.
So, what makes meetings ineffective or unactionable?
- The meeting is directionless because you didn't prepare a meeting agenda.
- Participants come unprepared for the meeting. They don't have access to information including a meeting agenda, the scope of the meeting, the required goals, and relevant materials.
- Important ideas and decisions are lost or misremembered because there is no one tasked with taking notes or each meeting participant is taking notes according to their understanding.
- You vote on important decisions in a complicated and unorganized manner.
- You use many tools to run the meeting and present the required materials.
- Meeting content is scattered between different channels.
- You didn't send out detailed meeting minutes to the meeting participants after the meeting.
- You failed to follow up on the meeting results, leading to inactivity and lack of progress. You didn't assign actions to relevant people and decided on a deadline.
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Here is how adam.ai can help you manage meetings and skyrocket your organization's productivity.
Now that you handled the difficult part of managing meetings using adam.ai. It's time to shake up your meetings a little. Read this article to introduce fun ideas for your meetings.
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Don't postpone using workplace productivity tools
Automating and streamlining routine tasks is essential to improving workplace productivity. By putting the right tools in place, businesses can avoid wasted time and easily achieve strategic goals.
Today, we are presented with many industry-specific software solutions that serve many functions, from finance and HR to recruitment and project management.
One of the major pitfalls that hinder productivity is the choice to postpone technology upgrades.
When repetitive chores are off your employees' shoulders, they'll be happier and ready to deliver outstanding performance.
It improves customers' experience: Digitizing some of the company's processes enhances the customers' experience. Whether you are providing a product or service, digital channels allow you to be in touch with your customers easily and promptly.
Eventually, the above benefits lead to new business opportunities due to reduced wasted time and making the best use of existing resources. Just aim for productivity tools that are easy to use, are ready for the future of technological developments), and allow for mobility and flexibility.
Here are thirty-two productivity tools you can choose from to boost your organization's productivity.
Use goal-setting methodologies
Goal setting in an organization is so critical that you'll find many methodologies focusing on the sole purpose of defining and measuring goals.
An organization where employees know their roles and the overall strategic goals and work on achieving them should expect skyrocketing growth.
Great goals help small organizations scale up to large enterprises and maintain the success of large businesses.
They keep everyone engaged because they know what is expected of them and allow you to know what resources are needed and how to efficiently use them, which leads to reduced costs.
Adopt a healthy company culture
A company culture outlines how an organization functions and can provide important performance metrics, such as profitability, quality, and customer satisfaction.
Companies adopting a healthy culture have 72 percent higher employee engagement ratings than organizations with weak cultures, which in turn will increase productivity.
Healthy company culture includes fair payment, open lines of communication, a safe physiological environment, ownership, and an increased sense of accountability and responsibility towards their work.
Work on effective communication
One of the most important requirements for an organization to thrive is effective communication.
When information is communicated within an organization in a smooth and right manner within an appropriate time, productivity increases. In contrast, hindered communication negatively impacts employee retention, morale, and overall productivity.
According to Expert Market, effective communication can increase your organization's productivity by 25%. When employees are offered better communication technology and skills, productivity can increase by up to 30%.
Besides taking advantage of technology and numerous communication tools, as we earlier discussed, as a business owner/manager, you can implement several other strategies.
Create a safe place for your employees where they can express their opinions without fear of negative consequences regarding self-image, status, or career.
When giving an employee a task, explain why it’s important or how it fits into the bigger picture. Working. Be honest with your people when assigning tedious tasks. Admitting that something just needs to be done helps build trust.
People are different, and each employee won’t communicate in the same way. Get to know your team better and study different communication styles, so you can easily deal with various kinds of characters.
The bottom line
Productivity is likely to be one of your most demanding priorities. It's a priority most companies struggle with.
Gallup in their engagement survey identified twelve needs managers can meet to improve employees' productivity.
- I know what is expected of me at work.
- I have the materials and equipment I need to do my work right.
- At work, I have the opportunity to do what I do best every day.
- In the last seven days, I have received recognition or praise for doing good work.
- My supervisor, or someone at work, seems to care about me as a person.
- There is someone at work who encourages my development.
- At work, my opinions seem to count.
- The mission or purpose of my company makes me feel my job is important.
- My associates or fellow employees are committed to doing quality work.
- I have a best friend at work.
- In the last six months, someone at work has talked to me about my progress.
- This last year, I have had opportunities at work to learn and grow.
In this article, we've explored practical examples of how to satisfy the previously mentioned needs, the most important of which is using technology and the right productivity tools to automate and speed up processes.