Labour productivity, or just productivity, is the calculation of output per employee. It is incredibly important for any business, especially for a factory. You can calculate productivity by dividing output per period (units) by number of employees at work. So, for example, if a factory makes 5,000 units per month, and they have a labour force of 500 employees, their productivity is 5,000 divided by 500, which equals 10 units per worker. Depending of the industry, this could be either good or bad.
So, what influences labour productivity? Well, there are four main factors. The first is the quality and quantity of your fixed assets. By fixed assets, I mean things like machinery, equipment, IT systems,… If you don’t have enough, or it is of bad quality, your productivity will be low. Also, the skills, ability and level of motivation of your workforces if a major contributing factor. If your employees can’t or won’t do their job, then productivity will decrease. Next, what method of production organisation do you use and is it most effective for your business? And finally, external factors, such as reliability of your suppliers, influence labour productivity. If you use a Just-in-Time method of production, then if your suppliers are delays for a few days, production comes to a halt.
So, with that in mind, what can you do to improve labour productivity? There are many ways you can do this, but not all of them will be right for your particular business. But, for nearly all businesses, your workforce is the most important asset. If they can’t do their job, you don’t really have much of a business. So, train your staff. You can either do that on the job or off the job. On the job training includes shadowing of other employees and personal support within your organisation. Off the job training includes courses and seminars outside of your organisation. Training will not only teach your staff new skills to more efficiently do their job, it will also give them a feeling of being valued, which leads me to my next point which is motivate your staff. This can be done in many ways, but a a couple are improving the workplace (e.g. redesigning, get in more light, create an open plan feel so employees are able to chat instead of getting bored) and setting targets and rewarding based on them, either financially, such as bonuses, or non-financially, such as more paid holidays or simply praise. Lastly, try and improve your production processes. This can be done by using a different method of production, such as inventoring stocks of raw materials instead of using the just-in-time technique, and/or investing in newer, more efficient equipment, such as computer-based automation.
So, there we are. I hope you are able to find value in this article and have a few ideas to apply to your business to improve productivity. Good luck and take care.