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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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    Mayo Oshin

    Entrepreneur and write on building habits that stick and improving productivity

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    Last Updated on July 10, 2020

    The Power of Ritual: Conquer Procrastination, Time Wasters and Laziness

    The Power of Ritual: Conquer Procrastination, Time Wasters and Laziness

    Life is wasted in the in-between times. The time between when your alarm first rings and when you finally decide to get out of bed. The time between when you sit at your desk and when productive work begins. The time between making a decision and doing something about it.

    Slowly, your day is whittled away from all the unused in-between moments. Eventually, time wasters, laziness, and procrastination get the better of you.

    The solution to reclaim these lost middle moments is by creating rituals. Every culture on earth uses rituals to transfer information and encode behaviors that are deemed important. Personal rituals can help you build a better pattern for handling everything from how you wake up to how you work.

    Unfortunately, when most people see rituals, they see pointless superstitions. Indeed, many rituals are based on a primitive understanding of the world. But by building personal rituals, you get to encode the behaviors you feel are important and cut out the wasted middle moments.

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    Program Your Own Algorithms

    Another way of viewing rituals is by seeing them as computer algorithms. An algorithm is a set of instructions that is repeated to get a result.

    Some algorithms are highly efficient, sorting or searching millions of pieces of data in a few seconds. Other algorithms are bulky and awkward, taking hours to do the same task.

    By forming rituals, you are building algorithms for your behavior. Take the delayed and painful pattern of waking up, debating whether to sleep in for another two minutes, hitting the snooze button, repeat until almost late for work. This could be reprogrammed to get out of bed immediately, without debating your decision.

    How to Form a Ritual

    I’ve set up personal rituals for myself for handling e-mail, waking up each morning, writing articles, and reading books. Far from making me inflexible, these rituals give me a useful default pattern that works best 99% of the time. Whenever my current ritual won’t work, I’m always free to stop using it.

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    Forming a ritual isn’t too difficult, and the same principles for changing habits apply:

    1. Write out your sequence of behavior. I suggest starting with a simple ritual of only 3-4 steps maximum. Wait until you’ve established a ritual before you try to add new steps.
    2. Commit to following your ritual for thirty days. This step will take the idea and condition it into your nervous system as a habit.
    3. Define a clear trigger. When does your ritual start? A ritual to wake up is easy—the sound of your alarm clock will work. As for what triggers you to go to the gym, read a book or answer e-mail—you’ll have to decide.
    4. Tweak the Pattern. Your algorithm probably won’t be perfectly efficient the first time. Making a few tweaks after the first 30-day trial can make your ritual more useful.

    Ways to Use a Ritual

    Based on the above ideas, here are some ways you could implement your own rituals:

    1. Waking Up

    Set up a morning ritual for when you wake up and the next few things you do immediately afterward. To combat the grogginess after immediately waking up, my solution is to do a few pushups right after getting out of bed. After that, I sneak in ninety minutes of reading before getting ready for morning classes.

    2. Web Usage

    How often do you answer e-mail, look at Google Reader, or check Facebook each day? I found by taking all my daily internet needs and compressing them into one, highly-efficient ritual, I was able to cut off 75% of my web time without losing any communication.

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    3. Reading

    How much time do you get to read books? If your library isn’t as large as you’d like, you might want to consider the rituals you use for reading. Programming a few steps to trigger yourself to read instead of watching television or during a break in your day can chew through dozens of books each year.

    4. Friendliness

    Rituals can also help with communication. Set up a ritual of starting a conversation when you have opportunities to meet people.

    5. Working

    One of the hardest barriers when overcoming procrastination is building up a concentrated flow. Building those steps into a ritual can allow you to quickly start working or continue working after an interruption.

    6. Going to the gym

    If exercising is a struggle, encoding a ritual can remove a lot of the difficulty. Set up a quick ritual for going to exercise right after work or when you wake up.

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    7. Exercise

    Even within your workouts, you can have rituals. Spacing the time between runs or reps with a certain number of breaths can remove the guesswork. Forming a ritual of doing certain exercises in a particular order can save time.

    8. Sleeping

    Form a calming ritual in the last 30-60 minutes of your day before you go to bed. This will help slow yourself down and make falling asleep much easier. Especially if you plan to get up full of energy in the morning, it will help if you remove insomnia.

    8. Weekly Reviews

    The weekly review is a big part of the GTD system. By making a simple ritual checklist for my weekly review, I can get the most out of this exercise in less time. Originally, I did holistic reviews where I wrote my thoughts on the week and progress as a whole. Now, I narrow my focus toward specific plans, ideas, and measurements.

    Final Thoughts

    We all want to be productive. But time wasters, procrastination, and laziness sometimes get the better of us. If you’re facing such difficulties, don’t be afraid to make use of these rituals to help you conquer them.

    More Tips to Conquer Time Wasters and Procrastination

     

    Featured photo credit: RODOLFO BARRETO via unsplash.com

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