A country's economic health is most oftentimes decided by their labor productivity. It's is a per-hour measurement of output that is generated on a per-employee basis. In plain terms, it is how much work an employee finishes within an average hour. As more work is produced within an hour, the total level of productivity is going to increase, and that is an indication of an expanding, as well as healthy economy. This post is going to show you how to properly calculate productivity.

1. Decide upon an output measurement. Prior to having the ability to measure the average output of employees, you are going to have to choose a unit of measurement. A handful of companies will opt to base their calculations upon financial output, whereas other ones would instead opt to use the amount of goods produced. Whatever unit you select, you have to utilize that same unit for the whole calculation.

2. Decide upon a time measurement. Prior to having the ability to calculate productivity, you have to initially determine a length of time for use within the calculations. You might select decades, months, weeks, or any length of time in between. The briefer the length of time, the simpler it is going to be to calculate, yet the results are going to be less accurate.

3. Decide how much output was produced within the period of time you decided upon. For instance, if you opt to use a financial unit of measurement, maybe your employees produced $100,000 over the time span of one month. If you opt to utilize amount of goods, maybe your employees produced 5,000 items over the time span of three months.

4. Decide how many hours were spent working within the period of time you decided upon. For instance, over the time span of one month, maybe all your employees worked a total of 5,000 hours. As you are attempting to decide man hours spent, you shouldn't just include the amount of hours spent actually manufacturing and producing the products, yet additionally the amount of hours spent by the supervisors and managers in the supervision and management of the project.

5. Decide the estimated employee productivity. The calculation is accomplished by taking the quantity of output produced within your decided time frame and dividing the amount by the number of hours spent working upon the project in that exact same time frame. The resulting number is going to be a description of labor productivity within the units you select. In the instance of $100,000 produced over one month with a total hours of 5,000, the calculation is going to be: $100,000 / 5,000 is $20/hour productivity.

Here are 3 productivity calculators to check out:

Importance of Measuring Productivity and Performance

Building up an enterprise of top performers includes the objective of every company. But, you cannot promote and create your 'star players' if you do not possess a reliable method of identifying them or comparing star players to the workforce in its entirety.

As it will come to the workforce, ignorance absolutely isn't bliss--and it may in fact be extremely costly. It is critical that you know exactly how well your workers are performing. The majority of companies have a variety of worker performance metrics and strategies in place.

Why measuring performance is so important

There will include a multitude of reasons why an employment assessment system is crucial to any business. For one thing, collecting insight concerning performance of the workforce is going to offer company leadership with data which has the ability to play an important part in making strategic decisions. In addition, without an efficient performance assessment system in place, the organization might be faced with a workforce which isn't as productive as they have the potential to be, which is going to result in wasted business resources. From a competitive and financial point of view, the long-range effects of ineffective human resources management additionally involve compromised market position, not reaching target earnings, as well as stifled growth.

Published on: Dec 12, 2014
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