What are the Types of Productivity and How to Use Them?

Businesses today are no longer the same; they aim to thrive in an extremely volatile environment where variability and change are only constant. Amidst all of this, businesses need to be smart to grow at a steady pace, while battling intense competition, low purchasing power, stricter regulations, and a rise in the unknown unknowns. In such a capricious situation, to keep the lights on and aim for profitability, businesses constantly need to keep an eye on productivity which becomes the cornerstone of success and efficiency of execution. 

In this article today let us deep dive into understanding what productivity is and why it is crucial in today's business scenarios, various types of productivity, how to measure it, and various factors affecting productivity.  

What is Productivity?   

By definition, productivity means how much output is generated per unit of input. It is a gauge of how efficiently efforts and resources are utilized or applied to achieve the desired outcomes. Productivity can be applied situationally to individuals or resources. In the case of individuals, productivity means doing more i.e. completing more tasks/activities in less time while for businesses it may mean the production of more goods or delivery of better services with fewer resources - clearly indicating how effectively labor, time, and material are applied to the project and what value they deliver once onboarded. 

Whether it is traditional execution/development or modern ways of working, this key metric is of paramount importance in any organization setup.   

Types of Productivity  

There are various types of productivity tools on which the business is bound to keep a keen eye to maintain balance and profitability. These include: 

1. Labor Productivity - This is a measure of the output per unit of labor burnt i.e. the amount of work completed by an individual within the given time. It is an important measure that guides the efficiency of efforts spent and is a key performance improvement indicator for the teams. 

Formula = Total Output/Total Labor hours (efforts) 

2. Material Productivity - This is a measure of how efficiently raw materials are converted into finished goods in the manufacturing processes. It is a critical measure of cost optimization and waste reduction aimed at bringing efficiencies and economies. 

Formula = Output/material input*   

3. Capital Productivity - This is a measure of how effectively capital i.e. physical assets, infrastructure, machinery, etc are applied to produce goods or services that bring revenue to the organization.  

Formula = Output/capital input* 

4. Total Factory productivity - This is an all-around metric that considers the multiple inputs of labor, material, capital to assess and improvise efficiencies. 

Formula = Output (labor + material + capital) /multiple inputs (labor + material + capital)* 

*Here, both output and input are evaluated in monetary terms for measuring productivity. 

For any business, considering all the above types of productivity measures is important to take the first step in improvising processes to improve outcomes. Categorizing productivity into various types just gives businesses the added advantage of managing it in smaller portions and constantly looking for avenues to overcome challenges. Not all of these productivity types may be relevant to all teams/businesses, leadership must constantly evaluate the situation and measures required. It is also important to remember that productivity never remains static and is subject to organization, industry, and technology dynamics.  

Factors Affecting Productivity  

As seen earlier, productivity never remains static although businesses remain in a constant endeavor to maintain the same pace and improvise it over time. In general, productivity is impacted by a combination of individual attributes, organizational policies, and external circumstances as these shape up the way individuals respond or react given a situation. Identifying and addressing factors that affect employee productivity can help individuals and businesses optimize their performance and achieve better results. 

Individual factors - Individual skills, training, motivation levels, engagement in the organization, work-life balance, time management, and health/well-being directly impact individual productivity and performance. 

Organizational factors - Organizational leadership, work environment, recognition, technology, processes, organization policies, etc all have a direct or indirect impact on the productivity of employees. 

External circumstances - Finally, external circumstances like government policies, funding, industry competition, and social and global events have a direct or indirect effect on the ways of working thereby impacting the productivity of the workforce. 

Based on the above factors and productivity types, teams progress in the cycle of productivity which includes four key phases: 

• Forming (Initiation or starting point where foundations are established) 
• Storming (Adjustment where teams face challenges/conflicts in task execution) 
• Norming (Stabilization where teams start adopting tools to maintain a constant pace) 
• Performing (Optimum productivity where efficiency and effectiveness are maximized)