How to calculate the productivity of a company? Method and examples:
Productivity is an aspect that allows you to know how a company is doing. Using this indicator, it is possible to know if the organization is progressing according to plan and if there is an adequate distribution of tasks among the members of the company.
From the psychology of work, it is known that to increase productivity the organization must provide a set of elements.
Not only the material aspects allow us to achieve the production of goods and services more efficiently but also influence the well-being of the workers and the environment in which they carry out their work.
Today we are going to see what influences the productivity of a company according to organizational psychology, in addition to explaining how to calculate this indicator through an example.
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What influences the productivity of a company?
The psychology of work has shown and helped to understand that companies, their offices, factories, and other workplaces, are more than spaces in which the worker carries out his employment.
How these places are physically organized, the relationships with other workers, the facilities available when carrying out their function in the company, among many other aspects, are key to understanding how efficient a company is and how productive it is…
The social factor
One aspect that many employers routinely overlook is relationships between workers. The human being is a social animal, therefore, he needs to interact with other people. The workplace is no exception. A correct relational dynamic may imply that workers are motivated to go to work, since going to the office or the factory will not only be to go to work, but also to see their colleagues with whom they can share pleasant moments.
In a workplace where there is a purely working relationship between employees, without their names even being known or even hostilities, it can be very damaging to the organization. This negatively influences the productivity of the company, since the employees will not offer their best and will even feel fatigued as soon as they enter the office.
Psychological / motivational factors
Another factor to take into account is the mood of the employees. A person who is going through a bad situation will not come to work at ease. This will influence not only the degree of individual productivity, but it may also affect other people, spreading general discouragement and pessimism.
The ideal of companies, when discovering this type of situation, is to offer the person who is going through a bad time to go to the psychologist or take a few days off in case the problem is very serious. Thus, you will be able to return with more energy and with a more motivating attitude.
Organization and leadership
The productivity of a company depends in large part on how the different types of workers are organized. Some employees act as leaders, others as facilitators in the company, others facilitate communication and many more types. A good distribution of this type of employee, taking into account their degrees of training and what they have specialized in, will allow obtaining the maximum degree of productivity in the organization.
For example, you can hire a person who knows a lot about accounting, but if this person lacks leadership skills, it would not be appropriate to place him as a manager in the company. Thus, personality is another aspect that influences good production dynamics in the organization.
Work environment to calculate the productivity of a company
The work environment is often looked down upon, but it turns out to be fundamental to the well-being of employees. Work climate is understood as the relationship between the physical and emotional environment of the workers. Simple aspects such as the color of the walls, the temperature of the room, the degree of lighting, among others, can make the difference between a pleasant and pleasant workplace and one in which you are uncomfortable, wishing that the working day as soon as possible.
How to calculate the productivity of a company?
Every company is managed through processes, in which there are inputs and outputs.
By inputs, we refer to the labor of the company, the money spent, the resources and machinery used, the energy required, the time used, and, basically, everything that has been invested in the process. Instead, the outputs or outputs are the results of the process, that is, the goods obtained, the services offered and the sales.
Productivity, mathematically speaking, is responsible for measuring the relationship between outputs and inputs. The result is the division between the outputs obtained from the process and the inputs inverted to generate those outputs.
Formula to calculate productivity
Labor productivity is the relationship between outputs and human resources, that is, the personnel involved in the development of products or the offer of services.
This would be the formula:
- Outputs / inputs = productivity
- Inputs: units of work factor used.
- Outputs: Production obtained.
To better understand this concept we present the following example.
A dry cleaner has washed 100 suits in a week, paying its employees € 10 an hour, working 56:
To find out labor productivity in terms of labor and labor cost, two calculations would be made.
Labor productivity in hours would be:
- Productivity = 100 suits / 56 hours = 1.78 suit / hour
The value 1.78 refers to the number of suits cleaned per hour in this company, this value is the productivity of labor.
Productivity taking into account the cost of labor would be:
- 56 hours x € 10 / hour = € 560
- Productivity = 100 suits / € 560 = 0.178 suit / €
This means that for every euro invested in labor, 0.178 suits have been cleaned.
Example with more factors
The previous example only took into account the money invested per worker. Now let’s see one in which more factors are taken into account, which allows us to know more accurately the degree of productivity of the company.
We have a dairy company, in which 10 workers work 8 hours every day. Each of them produces about 20,000 yogurts a day that they sell at 1.25 each.
The machines used to make the yogurts are 40 and about 10,000 liters of milk are needed as raw material. Workers charge € 10 an hour, machines cost around € 20 a day to maintain as a whole and milk costs € 1.50 a liter.
To calculate the productivity index in this case, we would do the following formula:
- Productivity = 20,000 yogurts x € 1.25 / yogurt / (10 workers x (€ 10 / hour x 8 hours / day) + € 20 maintenance + (10,000x € 1.50 / liter of milk)) = 1.6
The value obtained indicates productivity. Values higher than 1 mean that there is positive productivity, and lower than this number, it is negative.