Most of us understand how personal productivity makes our lives better, but what about corporate or national productivity?
When you’re productive, it takes less time, effort, and mental demand to achieve what you want or create a high-quality finished product.
When the output is the same (achieving what you want), but it takes less input to accomplish it (time, effort, and resources), you are more productive.
It’s the same for businesses.
When businesses produce a larger amount of a given output (goods and services) with less input (labor, capital, and materials), they’re more productive.
Of course, in today’s business, the output for our efforts can be harder to quantify. (That’s why so many people default to a checklist — “done” or “not done” is easy to measure, even if it has no connection to value.) It is hard for individuals or businesses to compare output as value is less and less often delivered as a standard unit of product. However, at the business level, in aggregate, you can compare the level of effort, time, and resources used to produce an equivalent output of sales or revenue.
Businesses measure productivity by taking total revenue (or net sales) in a particular period (the output) and dividing that by the total number of employee labor hours worked in the same period (the input). This is called the labor productivity formula.
Traditionally, higher workforce productivity meant employees are working more efficiently and creating more goods in less time. This leads to increased profits since companies are spending less on employee payroll expenses to generate a number of units of goods or an amount of sales revenue.
Meanwhile, low productivity or partial productivity can indicate issues in the processes used to produce the goods or generate and fulfill the sales.
Even when employee engagement is high, if the production process slows due to a lack of materials or capital, productivity levels will drop. This is because labor cost (or workforce productivity) is only one input that goes into the labor productivity formula.
Governments measure multiple productivity factors to understand the overall economic productivity and recognize productivity trends.
For example, one 2020 productivity trend was working from home, and the economic data shows that GDP could increase if employees continued to work remotely 1-2X a week.
While one productive person makes a difference, national GDP and corporate productivity rely on extensive employee engagement to deliver results.
What factors affect employee productivity?
A lot goes into creating a work environment that fosters productivity. Here are some of the most common factors we’ve seen companies enhance to engage and motivate their employees to embrace a productive work culture.
An employee’s work environment has a huge impact on their well-being and performance. It includes many elements, such as management styles, company values, company culture, communication styles, leadership, and trust in the workplace. Investing in improving each of these areas helps avoid a toxic work environment and boosts productivity.
Many individuals are motivated by career growth and professional development opportunities. They like to be challenged, work on interesting projects, feel like their work is valued, and be rewarded for their impact. To build momentum among teams and increase productivity, try building out your career growth paths.
Opportunities to socialize
Not everyone wants to work in an office every day. And there are individuals who would rather not participate in group events. But creating opportunities for employees to meet, either in person or virtually, is important. Socialization helps build trust, increase creativity, boost collaboration, and bolster communication across teams. These events can be social or work-related team-building activities.
Manager and peer feedback
Employees thrive in organizations with healthy feedback cultures. In fact, a recent survey showed that 72% of employees consider recognition the most impactful element of employee engagement. This is not to say that all feedback has to be praise. But ensuring that there are regular check-ins with employees and offering opportunities for them to give feedback can help increase productivity.
Psychological safety directly correlates to productivity in the workplace. Higher belonging is also positively correlated with increased focus, strategic planning, and goal attainment. These benefits make a strong case for developing a psychologically safe workplace by leveraging communication, vulnerability, and empathy.
Access to tools and systems
Another important factor in developing a more productive team is improving their digital employee experience. This involves offering the tools individuals need to do their work most efficiently. They can be transactional such as sales enablement tools, or focused on maximizing soft skills such as project management and collaboration tools.
Additionally, many teams function more effectively within some form of structure. So having systems and processes in place for employees to do their best work is essential.
Setting and clearly communicating expectations before starting a project can save teams an immense amount of time. Investing this time upfront often cuts down on the time needed for revisions or even redos of certain tasks.