Improving Productivity & Measuring Productivity

At the heart of any small business is productivity. Whether your business sells products or offers a service, how productive you are directly determines the difference between operating at a profit or loss.

Productivity and Your Small Business

What Does Productivity Mean?

Productivity can be simply defined as a measure of output over input. In other words, if you can get more output from the same, or less, input, your productivity is said to be good.

Various factors such as manpower, machinery, materials and money contribute to producing a business’ output.

Measuring Productivity

The number of units produced, the amount of work done, or the amount of income earned can measure the quantity of output. The quality of output can be measured by workmanship, quality standards, and customer satisfaction (number of complaints). The number of employees (cost of labor), apart from the expenses incurred on materials and other items can measure the input.

Thus, simply dividing the total output (sales in dollars) by the total input (employee costs) can give us a broad measure of labor productivity.

Improving Productivity

Since human behavior is unpredictable, productivity cannot be looked at only from an objective angle; it is also subjective. As a result, it is invariably the labor force that can make or break a business in most cases. Disgruntled employees tend to give low output, adversely affecting a company’s productivity.

It has been observed that employee motivation and job satisfaction can increase output significantly. Also, satisfied employees are much less likely to change jobs. This translates into lower employee turnover costs, which is important from a business standpoint. It can be extremely expensive to hire and train new workers.

Generally, employees regard the money that they receive as wages to be a basic need as well as a reward. In addition to money, employees need to be motivated by other means. There are several methods, commonly overlooked, that can be used to improve employee productivity. One way is to improve the quality of work life and the work environment.

An enlightened business owner, skilled at handling people, can turn their existing workforce into a valuable asset, producing more output at little additional cost.

However, evaluating employee performance and productivity can be a formidable job for most busy small business owners. A Productivity Scorecard can make the job simpler by breaking up various activities into smaller tasks and then assessing how each employee performs the task.

Improving Work Life

The most important task for a manager is to recognize and assess issues that concern employees, and then to address them accordingly. Some issues may be as follows:

(1) Letting employees know what methods are used to evaluate their performance.

(2) Helping their individual development with educational and training programs.

(3) Trusting them and relying upon their knowledge and experience.

(4) Involving them in making plans, decisions and work procedures.

(5) Communicating with them directly instead of sending instructions down a hierarchy.

(6) Allowing them to speak and express their opinions.

(7) Allowing them flexibility in doing their work, and to learn other specialized work.

(8) Providing them a hygienic, healthy and safe work environment.

Flexible Benefits

Flexible benefits are designed to fulfill the employee’s specific requirements, even as they express the employer’s personal concern for the employee. Today’s employees are focused on carrying out their job duties; but they are equally concerned with matters concerning their families as well.

Productivity is as much about behavior as it is about efficiency. In order to get superior performance, employees must be given opportunities to grow personally and to fulfill their ambitions. They must be given suitable responsibilities, and their achievements must be recognized and rewarded.

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