How to Calculate Productivity

There’s no doubt that being productive is key to a successful business. But how can you be sure you’re really getting the most out of your employees? It can be tough to track exactly where the time goes, especially when there are always so many distractions pulling your workers in different directions.

That’s why learning how to calculate productivity can help your business identify areas for improvement. Let’s dig in.


Key Points

  • Why Calculate Productivity in Employees
  • How to Calculate Productivity
    • Partial Factor Productivity
    • Multifactor Productivity
  • What Are the Metrics for Measuring Productivity?
    • Productive Hours a Day
    • Productivity Efficiency Percentage
    • Productive Session
    • Average Daily Productivity
  • How Do You Calculate Productivity in Excel?
  • How to Improve Productivity
    • Automate Repetitive Tasks
    • Employee Engagement
    • Define Productivity for Each Role
  • Key Takeaways

Why Calculate Productivity in Employees

Productivity is essential for any business—it’s a measure that identifies how much output an employee generates in a given amount of time. In fact, the more output workers generate, the higher the business’s profit. Keep in mind that the main purpose of a productive company is to get more work done in less time.

Other than internal distractions, external factors like the national economy, inflation, and competition can negatively affect your employee’s performance. Although you can’t control everything, measuring employee productivity per individual, team, or department can help your business understand which areas can be improved.

How to Calculate Productivity

There are a number of different ways to calculate productivity, and the method you use will depend on your specific goals.

Partial Factor Productivity

First, consider the productivity formula in all operations management is total input/total output.

Partial factor productivity (PFP) is defined as an increase in output caused by a rise in only one specific input factor. For example, if an employee generated $100 worth of output in a day and used $20 of resources, their partial factor productivity would be 5.

Because they only take into consideration one single input and data is easily accessible, businesses usually find this method the easiest to use.

Multifactor Productivity

While partial factor productivity focuses on a single input, the multifactor productivity formula is the ratio between total outputs and a set of inputs, including labor, materials, and other resources.

Although multifactor productivity is more difficult to calculate than PFP, it gives more comprehensive data.

The standard formula for multifactor productivity is: “Y+ A x Kα x Lβ.”

  • Y= total output
  • A= total-factor productivity
  • K= capital input
  • L= labor input
  • α and β= inputs’ respective shares of output

What Are the Metrics for Measuring Productivity?

There are a number of different metrics that can be used as an equation for productivity. So, we’ve narrowed them down to the most popular ones.

Productive Hours a Day

This is used to calculate the average time a worker spends productively, including both active and passive time. It’s determined by dividing productive time by the number of workers.

Productivity Efficiency Percentage

This measure represents the ratio of productive time to total time. It’s determined by dividing the productive hours per day by the total hours per day.

Productive Session

The productive session indicates the average amount of time employees spend working without unnecessary interruptions, specifically in minutes.

Average Daily Productivity

How many productive hours per day can your team work on average? Is there a significant difference in productivity across your team? When looking at the daily productivity rate, you can compare it to the previous weeks to see if your employees’ performance is above or below average.

How Do You Calculate Productivity in Excel?

Calculating productivity in Excel is not as difficult as it may appear. Here are a few steps you should follow.

  • Locate a blank cell (A2, for example), and insert the output value.
  • Select another blank cell (B2) and enter the input value.
  • In another blank cell (C2), type in the formula =A2/B2 and select the “Enter” button to obtain the productivity value.

How to Improve Productivity

Automate Repetitive Tasks

If you find that your employees are spending a lot of time on tasks that could be automated, then you should consider investing in technology that does that. Automation can free up your employees’ time and allow them to focus on more important tasks.

Employee Engagement

It’s not a secret that engaged employees are more productive. So, if you want to improve productivity, you should focus on employee engagement. You can provide them with training and development opportunities, offer competitive salaries and benefits, and create a positive work environment.

Define Productivity for Each Role

Each role in a company has different productivity requirements. For example, a salesperson may need to make a certain number of sales per week to be considered productive, while an accountant may need to complete a certain number of tasks per day.

So, it’s critical to define what’s expected from each role and individual in your company. This will help you set realistic expectations for your employees and measure their performance accurately.

How to Calculate Productivity: Key Takeaways

  • Generally, productivity is calculated by using the following formula: total output/total input.
  • You can choose to measure productivity in two ways: partial factor productivity and multifactor productivity.
  • The most popular productivity metrics include productive hours a day, productivity efficiency percentage, productive sessions, and average daily productivity.
  • There are many ways to improve productivity, such as automating repetitive tasks and focusing on employee engagement.