Productivity Calculator

Our simple labor productivity calculator allows you to measure your company's or individual employees' economic performance. 

This article will explain why this productivity metric is so important, how to measure it, and finally, how you could improve the productivity of your business.

How can you measure labor productivity?

Labor productivity is a metric of revenue generated by a single employee or per hour of work. 

By regularly tracking this indicator, you can assess if your company's performance is improving or if the investments in better infrastructure paid off.

Productivity can be measured as an economic output of a single person or per hour of work. 

How to calculate productivity?

As mentioned above, you can analyze productivity from different angles. Therefore there are several productivity equations.

Labor productivity per person:

productivity = revenue / employees

Where:

• Revenue - total revenue of the company in the given period.
• Employees - number of people employed.

Productivity calculation per hour:

productivity = revenue / hours

Where:

• Revenue - total revenue of the company in the given period.
• Hours - number of working hours.

The previous productivity ratio formula can be used to calculate the productivity of a single worker. In order to do so, you should substitute the revenue generated by this person and the number of his working hours.

Productivity calculation of a single employee:

productivity = revenue / hours

Where:

• Revenue - revenue generated by a single employee
• Hours - number of working hours.

The importance of tracking productivity?

Regularly measuring the productivity of your company gives you several benefits.

First, it allows you to evaluate if the previous investments in better equipment, software, and automation paid off.

Second, it lets you identify and reward the most productive workers.

Third, it allows you to compare your metrics with the competitors or industry averages.

The productivity analysis will help you manage the wages and incentive bonuses that reflect the productivity of your employees.

How can I improve labor productivity?

If you are not satisfied with the current productivity of your company, you can improve it by targeting the following areas.

Increase the prices. 

Increasing the prices of your products and services is the simplest thing you can do that could make an immediate result. 

Analyze your pricing policy and compare it with the competitors to check if there is room for a price increase.

Our Sales Revenue Calculator may help you calculate your revenue once you modify the pricing policy.

If the price increase is not an option, try to reduce the discounts. Our discount calculator may be helpful.

Invest in automation

Automation can reduce radically increase the average output per employee. It can take many forms. 

You can either automate entire processes by introducing new software or machinery or automate certain parts of the process. Either way, it will increase the total output of your staff.

Optimize your procedures

Another action you can take is to review your company's procedures and try to find bottlenecks.

Established companies may have accumulated many procedures that may become obsolete over time. Try to identify and fix them.

Similar metrics

Growing a business requires constant improvements to be one step ahead of the competition. With the help of Calcopolis, you can find many areas where you can apply optimizations.

For more tools, visit our business calculators category page.

Authors

Created by Lucas Krysiak on 2022-09-30 13:21:30 | Last review by Mike Kozminsky on 2022-10-03 14:12:45