Productivity 101: Defining, Measuring and Improving Your Performance

Employee productivity is an essential factor in supporting a business’s success. If employees are not productive, the company’s operational activities will not run smoothly, aka hampered. Therefore, increasing work productivity is essential for every employee.

Productivity is a fundamental factor affecting the company’s ability to compete. Broadly speaking, productivity is the ability of every person, system, or company to produce goods or services.

In increasing productivity, human resources are the most critical element that must be recognized and accepted. So, what is the meaning of productivity itself? How to calculate productivity using the right productivity formula?

Then, what is meant by the value of productivity? It’s time to know and understand the whole meaning of productivity and things related to productivity through this article.

Intro to Productivity: Definition and Meaning

Productivity comes from the English word productivity, a combination of two words, product and activity. When viewed based on the word’s origin, productivity means a form of exercise carried out to produce goods or services.

In general, productivity is the ability of every person, system, or company to deliver goods or services by utilizing resources effectively and efficiently.

The meaning of the word productivity itself still has the same value as productivity and productivity. The word is often used to assess the efficiency level of a machine, factory, company, system or person in turning an input into the desired output.

Thus, based on the existing explanations, it can be understood that productivity has three essential elements.

1. First, effectiveness is the value of accuracy in choosing a way to get something or achieve a goal.

2. Second, efficiency is the value of accuracy in carrying out something by saving available resources.

3. Third, quality states the level of fulfilment of various requirements, specifications or customer expectations.

Productivity Factors

Not just one. In fact, eight factors can affect productivity within the scope of the organization, namely technical factors, production factors, organizational factors, personnel factors, financial factors, management factors, location factors, and government factors.

A more detailed explanation of the various factors that affect productivity can be seen below:

1. Technical Factors

Several points that need to be considered in terms of technical factors are the determination of factory location, factory size, layout in the factory, production machines, how to use devices and various other equipment, and development and implementation of digital systems.

Do not let your guard down. Technical factors significantly affect company productivity because company productivity will increase if employees can adapt and use the latest technology.

2. Production Factors

Some of the points included in the factors of production are planning, coordination, raw material quality, production process standardization, and production control.

3. Organizational Factors

There are five points included in organizational factors: the type of organization that is applied, how to define the organization, authority and responsibility of individuals and groups (departments/teams), job expertise, and distribution or allocation of work.

4. Personal Factors

There are six points included in personal factors: the quality of human resources, human resource training and development, position placement, career opportunities, opportunities to express opinions, and working environment conditions.

5. Financial Factors

As we already know, all businesses can run well with good financial conditions. Thus, financial management, control, and working capital must be done with total calculation.

A company or organisation’s productivity level will be better if financial management can be carried out correctly.

6. Management Factors

Company management must maximize available resources to produce something at an efficient cost.

Using the latest technology in production, a good work environment, and high motivation of employees can also significantly increase the company’s productivity.

7. Location Factor

A company’s productivity level can also be influenced by location factors.

Some of the points included in the location factor are the distance from the location to the source of raw materials, distance to the market, infrastructure facilities, human resource expertise, and so on.

8. Government Factors

Various government regulations and policies can also affect an organisation’s productivity, such as labour regulations, fiscal policies, etc.

Calculating Productivity

Productivity related to productive power and productivity has the following calculation formula.

The productivity formula is = Output/Input.

An example of productivity using the above formula is a company that produces 100 kg of finished goods using 150 kg of plastic as raw material in the first month.

The company used the same amount of raw materials in the second month but produced 145 kg of finished products.

So, the company’s productivity in the first month:

Productivity = 100/150 = 0.67 or 67%

While the company’s productivity in the second month:

Productivity = 145/150 = 0.97 = 97%

From the example above, it can be seen that the company’s productivity increased from 67% to 97%. With the same resources, they can produce more products.

Productivity Measurement

Generally, measurements related to employee productivity are carried out by management. It aims to monitor the performance and achievements that employees can achieve in the company.

The existence of productivity measurement helps help the company’s management to determine the next step. Suppose the appraisal process can be carried out objectively and honestly.

In that case, this will increase employee motivation to work harder and show their best abilities.

So that this allows opportunities for employees to receive training, compensation, promotion, or even be demoted.

Benefits of Measuring Productivity

Why is productivity measurement important? The answer is that measuring productivity is to see how a company can operate, survive and generate profits.

In addition, this activity is also helpful in determining which type of ratio to use among the many kinds of productivity values.

Meanwhile, Vincent Gaspersz, in his book entitled Total Productivity Management, reveals that the benefits of measuring productivity are as follows.

1. The company obtains information and can assess the efficiency of its resources.

2. The resource planning process becomes more effective and efficient

3. The company can align its economic and non-economic goals

4. The company can change the planning of future productivity level targets by reflecting on the current productivity level

5. Companies can determine strategies to improve productivity conditions

6. Companies obtain information related to the value of their productivity compared to competitors

Improving Company’s Productivity

The way to increase company productivity is to increase the work productivity of its employees. The following are ways companies can do to optimize employee performance.

1. Customize employee work with their talents and interests

2.Conduct training and cross-training

3.Provide facilities that support it

4.Increase employee productivity with incentives

5. Appreciate every employee’s success, no matter how small it is

6. Evaluate updates periodically

That’s a complete explanation of what productivity is. Productivity is a term that is not only used in the business world but also in everyday life.

From the explanation above, it can be understood that the level of productivity is influenced by many things. However, there are ways to increase productivity companies can do, such as providing adequate facilities, providing incentives, and so on.

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