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How the Productivity Formula Can Motivate Employees to Work Efficiently

How the Productivity Formula Can Motivate Employees to Work Efficiently

In 1911 Frederick Taylor, an American engineer turned management consultant, published a book, The Principles of Scientific Management, which revolutionized practices for workplace efficiency.[1]

In the book, Taylor proposed the idea that employee productivity and motivation could be altered by changing specific variables. By optimizing these variables, companies could maximize workplace efficiencies and profits, whilst minimizing costs and eliminating inefficiencies.

Since Taylor’s ideas were published several decades ago, these important variables have been integrated into a simple equation that managers and leaders use to measure and improve employee motivation and productivity.

The simple equation is called the productivity formula and here’s how it works.

What is the Productivity Formula

The productivity formula is a measure of the productivity of an economy, organization, team or employee. In the context of a company it provides a useful indication of how efficiently a company converts raw materials, machines and groups of employees, into useful goods or services.

And this can be represented in the surprisingly simple productivity formula:

    The productivity formula is a basic relationship between physical input and output variables. The most common inputs are labor hours, capital and materials and the most common output units are sales and amount of goods produced.

    A company that produces more with a given variable of inputs (capital, labor, and materials) or uses fewer inputs to produce the same level of output has greater productivity and a competitive advantage over a company that produces a lower amount.

    The productivity formula illustrates how a company can produce more units of output per employee hour, machine or material used.

    How to Use the Productivity Formula

    As an example, a manager may want to calculate the productivity of the employees of his company or team.

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    In order to do this, employee productivity can be calculated by dividing the goods and services produced or sales revenue generated by the total hours the company’s employees worked in a given period of time.

    For example, if an employee called Tom, made sales worth $2,000 in one week of 50 hours worth of work and another employee called James works 20 hours a week and made $1000 worth of sales, then using the productivity formula:

    Tom’s productivity: $2000/50hrs = $40/hour

    James’ productivity: $1000/20hrs =$50/hour

    In this hypothetical scenario, James is more productive than Tom even though James generated less sales than Tom.

    Here’s another example:

    Imagine a retail company looking to measure its productivity. If the output of last month’s production was 20,000 units and the total employees hours worked was 2,000 hours, then based on the productivity formula:

    Company productivity: 20,000 units/ 2,000 hours= 10 units/hour

    As a final example, consider a heavily automated production line with a small number of staff. If say in a month the production line produces $1 million dollars worth of goods with 1000 total hours worked, then the company productivity is:

    Company productivity: $1,000,000/1000 = $1000/hour

    Even though the labor cost is much smaller than the cost of equipment, a company that invests in the efficient use of technology will gain a competitive advantage and improve company productivity than otherwise.

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    Managers can use this formula to determine which employees are the most and least productive, or the efficiency of a company in using its resources and materials.

    Nevertheless, this version of the productivity formula is limited due to its simplicity and restriction in variables.

    As per the examples above, this productivity formula only uses single units for input and output to calculate productivity and that’s why it’s described as a partial factor productivity.

    For a more accurate measurement, a company will need more inputs and outputs to calculate its overall productivity.

    This is where the multi-factor productivity formula could be useful.

    The Multi-factor Productivity Formula

    As previously noted, the partial or single-factor productivity formula is limited as a wholesome measure of productivity.[2]

    The multi-factor productivity formula helps managers to measure the productivity of various departments across a company.

    With this formula, productivity is measured by comparing output to a various inputs necessary for production. This includes ratios of units produced to materials, labor and capital.

    For example, switching one variable for another i.e. labour for capital, could produce a significantly different productivity figure. A more efficient measure of productivity should take into account the different substitutes for input and output and accurately represent how they affect company productivity.

    Whereas the partial factor productivity formula uses one single input, the multi-factor productivity formula is the ratio of total outputs to a subset of inputs. For example, an equation could measure the ratio of output to labor, materials, and capital. This method is a more comprehensive measure than partial factor productivity, but it’s also harder to calculate.

    For example, imagine a car manufacturing company which purchases advanced machine equipment to increase its production. Assuming this equipment enables the company to reduce the number of employees and costs 40% more than a standard machine cost, output will remain the same.

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    But since the number of employees has reduced, the labor and capital productivity of the company will increase. And there will be a decline by 40% in material productivity since output is constant and purchased material has increased.

    As a further consideration, a ‘Total Factor Productivity’ formula will take into account all inputs used in a production process and provide a more accurate assessment of company productivity and performance.

    How to Improve Employee Productivity with the Formula

    Here are 3 strategies based on the productivity formula to improve employee productivity:

    1. Measure and Improve the Efficient Use of Time

    Time, though not purchased, is often mistakenly ignored as a cost.[3]

    For example, if two companies have identical equipment, staff, products and material, but one business takes two weeks longer than the other to ship order purchases, their productivity is not the same.

    Managers who work with employees to maximize their time spent on tasks that align with their strengths and minimize time spent on everything else, will improve employee productivity.

    2. Promote Employee Autonomy

    In his book, Management Challenges for the 21st Century, legendary management expert, Peter Drucker writes that:

    “The demands that we impose the responsibility for their productivity on the individual knowledge workers themselves. Knowledge Workers have to manage themselves. They have to have autonomy.”

    Various studies have shown that human beings derive the greatest levels of motivation and satisfaction from achieving goals that are chosen by themselves or ‘self determined.

    Self-determined goals increase intrinsic motivation–i.e. the desire to do something for its own sake–rather than extrinsic motivation.[4]

    Intrinsically motivated people take more action on a given task, persist in the face of adversity, explore more creative ideas, enjoy their work and perform better.

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    The more autonomy and ownership employees have over their work role, the more productive they will be.

    Managers who include employees in setting goals and give them the autonomy to execute on them can significantly improve their productivity.

    3. Encourage Team Empathy

    In Smarter Faster Better : The Secrets of Productivity in Life and Business, author Charles Duhigg describes the story of how Google improved their team performance through “Project Aristotle,”[5] an extensive research into team productivity.

    At the end of their research period, Google discovered that the best teams weren’t necessarily a collective of individual top performers, rather a collective of individuals who shared empathy with one other.

    Teams that encouraged members to listen to one another and show sensitivity to each others needs performed the best.

    That is why people with high emotional intelligence tend to be the best leaders in a group setting.

    They tap into the emotional component of human motivation to get the most out of the people around them.

    The People’s Productivity Formula

    The productivity formula is a simple, useful tool to quantify, measure and manage employee productivity.

    As a standalone benchmark of productivity, it may not be sufficient as a measure of productivity that takes into account the complexities of a company.

    The best way for managers to use the productivity formula to motivate employees is to incorporate the people element.

    By maximizing time efficiencies, promoting employee autonomy and team empathy, managers can build a workplace culture that encourages long term productivity and satisfaction.

    Featured photo credit: Stanley Dai via unsplash.com

    Reference

    [1] New York Times. March 22, 1915.: F. W. Taylor, Expert in Efficiency, Dies
    [2] Bureau of Labor Statistics. U.S. De partment of Labor. Retrieved 11 March 2017: Multifactor Productivity – Overview
    [3] Paul Krugman, The Age of Diminishing Expectations (1994): “Defining and Measuring Productivity”
    [4] American Psychologist, 55, 68-78. Ryan, R. M. & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being.
    [5] New York Times: Project Aristotle

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    Last Updated on September 28, 2020

    How to Create an Action Plan and Achieve Your Personal Goals

    How to Create an Action Plan and Achieve Your Personal Goals

    There’s no denying that goals are necessary. After all, they give life meaning and purpose. However, goals don’t simply achieve themselves—you need to write an action plan to help you reach your goals.

    With an action plan, you’ll have a clear idea of how to get where you want to go, what it will take to get there, and how you’ll find the motivation to keep driving forward. Without creating a plan, things have a way of not working out as you waver and get distracted.

    With that in mind, here’s how you can set goals and action plans that will help you achieve any personal goal you’ve set.

    1. Determine Your “Why”

    Here’s a quick experiment for you to try right now: Reflect on the goals you’ve set before. Now, think about the goals you reached and those you didn’t. Hopefully, you’ll notice a common theme here.

    The goals you were successful in achieving had a purpose. Those goals you failed to accomplish did not. In other words, you knew why you put these goals in place, which motivated you to follow through.

    Simon Sinek, author of Find Your Why: A Practical Guide for Finding Purpose for You and Your Team, explains:

    “Once you understand your WHY, you’ll be able to clearly articulate what makes you feel fulfilled and to better understand what drives your behavior when you’re at your natural best. When you can do that, you’ll have a point of reference for everything you do going forward.”

    That, in turn, enables better decision-making and clearer choices.

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    I’ll share with you a recent example of this in my life. Earlier this year, I decided to make my health a bigger priority, specifically losing weight. I set this goal because it gave me more energy at work, improved my sleep, and helped me be a better father—I really didn’t care for all that wheezing every time I played with my kids.

    Those factors all gave me a long-term purpose, not a superficial short-term goal like wanting to look good for an event.

    Before you start creating an action plan, think about why you’re setting a new goal. Doing so will guide you forward on this journey and give you a North Star to point to when things get hard (and they inevitably will).

    2. Write Down Your Goal

    If you really want to know how to create an action plan for goals, it’s time to get your goals out of your head and onto a piece of paper. While you can also do this electronically through an app, research has found that you’re 42% more likely to achieve your goal if it’s written down[1].

    This is especially true for business owners. If they don’t schedule their time, it’ll be scheduled for them.[2]

    When you physically write down a goal, you’re accessing the left side of the brain, which is the literal, logical side. As a result, this communicates to your brain that this is something you seriously want to do.

    3. Set a SMART Goal

    A SMART goal pulls on a popular system in business management[3]. That’s because it ensures the goal you’ve set is both realistic and achievable. It can also be used as a reference to guide you through your action plan.

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    Use SMART goals to create a goal action plan.

       

      By establishing a SMART goal, you can begin to brainstorm the steps, tasks, and tools you’ll need to make your actions effective.

      • Specific: You need to have specific ideas about what you want to accomplish. To get started, answer the “W” questions: who, what, where, when, and why.
      • Measurable: To make sure you’re meeting the goal, establish tangible metrics to measure your progress. Identify how you’ll collect the data.
      • Attainable: Think about the tools or skills needed to reach your goal. If you don’t possess them, figure out how you can attain them.
      • Relevant: Why does the goal matter to you? Does it align with other goals? These types of questions can help you determine the goal’s true objective — and whether it’s worth pursuing.
      • Time-bound: Whether it’s a daily, weekly, or monthly target, deadlines can motivate us to take action sooner than later.

      Learn more about setting a SMRT goal here: How to Set SMART Goal to Make Lasting Changes in Life

      4. Take One Step at a Time

      Have you ever taken a road trip? You most likely had to use a map to navigate from Point A to Point B. The same idea can be applied to an action plan.

      Like a map, your action plan needs to include step-by-step instructions on how you’ll reach your goal. In other words, these are mini goals that help you get where you need to go.

      For example, if you wanted to lose weight, you’d consider smaller factors like calories consumed and burned, minutes exercised, number of steps walked, and quality of sleep. Each plays a role in weight loss.

      This may seem like a lot of work upfront, but it makes your action plan seem less overwhelming and more manageable. Most importantly, it helps you determine the specific actions you need to take at each stage.

      5. Order Your Tasks by Priority

      With your action steps figured out, you’ll next want to review your list and place your tasks in the order that makes the most sense. This way, you’re kicking things off with the most important step to make the biggest impact, which will ultimately save time.

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      For example, if you have a sedentary job and want to lose weight, the first step should be becoming even a little more active. From there, you can add more time to your workout plan.

      The next step could be changing your diet, like having a salad before dinner to avoid overeating, or replacing soda with sparkling water.

      Learn these tips to prioritize better: How to Prioritize Right in 10 Minutes and Work 10X Faster

      6. Schedule Your Tasks

      Setting a deadline for your goal is a must; it prevents you from delaying the start of your action plan. The key, however, is to be realistic. It’s highly unlikely, for example, that you’ll lose 20 pounds within two weeks. It’s even less likely that you’ll keep it off.

      What’s more, you should also assign tasks a start and end date for each action step you’ve created, as well as a timeline for when you’ll complete specific tasks. Adding them to your schedule ensures that you stay focused on these tasks when they need to happen, not letting anything else distract you.

      For example, if you schedule gym time, you won’t plan anything else during that time frame.

      Beware the temptation to double-book yourself—some activities truly can be combined, like a run while talking to a friend, but some can’t. Don’t trick yourself into thinking you can both write and catch up on Netflix simultaneously.

      While you can use a paper calendar or planner, an online calendar may be a better option. You can use it to set deadlines or reminders for when each step needs to be taken, and it can be shared with other people who need to be in the know (like your running buddy or your mentor).

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      7. Stay on Track With Healthy Habits

      Without healthy habits, it’s going to be even more challenging to reach your goal. You could hit the gym five days a week, but if you’re grabbing burgers for lunch every day, you’re undoing all your hard work.

      Let’s say your goal is more career-oriented, like becoming a better public speaker. If you practice your speeches at Toastmasters meetings but avoid situations where you’ll need to be unrehearsed—like networking gatherings or community meetings—you’re not helping yourself.

      You have to think about what will help transform you into the person you want to be, not just what’s easiest or most comfortable.

      8. Check off Items as You Go

      You may think you’ve spent a lot of time creating lists. Not only do they help make your goals a reality, but lists also keep your action plan organized, create urgency, and help track your progress. Because lists provide structure, they reduce anxiety.

      There’s something else special about lists of tasks completed. When you cross off a task in your action plan, your brain releases dopamine[4]. This reward makes you feel good, and you’ll want to repeat this feeling.

      If you crossed out on your calendar the days you went to the gym, you’d want to keep experiencing the satisfaction of each bold “X.” That means more motivation to go the gym consistently.

      9. Review and Reset as Necessary

      Achieving any personal goal is a process. Although it would be great if you could reach a goal overnight, it takes time. Along the way, you may experience setbacks. Instead of getting frustrated and giving up, schedule frequent reviews—daily, weekly, or monthly—to see how you’re progressing.

      If you aren’t where you’d hoped to be, you may need to alter your action plan. Rework it so you’re able to reach the goal you’ve set.

      The Bottom Line

      When you want to learn how to set goals and action plans—whether you want to lose weight, learn a new skill, or make more money—you need to create a realistic plan to get you there. It will guide you in establishing realistic steps and time frames to achieve your goal. Best of all, it will keep you on track when you stumble, and we all do.

      More on Goal Action Plans

      Featured photo credit: Estée Janssens via unsplash.com

      Reference

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