What Is Productivity In Business

What Is Productivity In Business

Productivity is a popular word in the business and professional landscape. But what exactly does this word mean? What is productivity in business? Well, if you would like to get the answer to that question, then you need to read this article.

Here, everything you need to know about productivity in business will be discussed.

From what it means to its benefits, how to measure productivity, and of course how to improve productivity.

A company’s productivity level goes a long way in determining its success.

When the productivity level is high, the company will be able to generate more profits.

Conversely, if the productivity level is high, the company may not be able to generate enough profits.

Having a high level of productivity in the workplace will help a company stay above the competition.

And put it on the path to success; this is especially true for businesses in very competitive markets.

This is why every business owner must understand what productivity is all about and how to work towards improving it in the workplace.

Thankfully, at the end of this article, you should have everything to make sure productivity becomes a priority in your company.

So, make sure you read this article to the end.

Meaning of Productivity in Business – What is Productivity in Business

Productivity refers to the output a person, team, or business as a whole can generate in contrast with the input they have put into a task.

It is how a business, team, or individual performs efficiently to generate its goods and/or services after putting in its resources such as capital and labour.

If the company, person, or team can generate more output when compared with the input, then it would mean that their productivity is high.

Let’s use a phone manufacturing company for illustration.

Assuming this company produces about 100 phones in one week but the next week, they were able to produce 150 phones.

This would mean that the company was more productive the following week.

Productivity is all about doing more; getting more output.

In business, you can measure productivity at different levels.

There’s personal productivity which refers to the amount of work an individual can achieve within a given period.

This may also cover their personal life outside the workplace.

There is team productivity, which is the collective productivity of the different individuals that make up a team.

And then there is workforce productivity.

This is the productivity level of everyone within the workplace.

Personal and team productivity typically sums up to make up the level of productivity in the workplace.

If the majority of the individuals that make up the workplace are very productive, then the company will have a high level of productivity.

Likewise, if the individuals are not as productive, this will affect the overall productivity in the workplace.

Productivity Vs Efficiency – What is Productivity in Business

Efficiency is another word that you would hear a lot when people are discussing the amount of work being done in the workplace.

A lot of people even tend to use productivity and efficiency to refer to the same thing.

But these two words are not the same.

Where productivity is all about the quantity of work done, efficiency refers to the resources and effort that your employees put in to complete their tasks.

If a company is efficient, then it would mean that they know how to properly use its resources (including labor) to increase productivity.

At the same time, the company would have to maintain the quality of its products.

For example, let’s say a company decides to automate some of its processes.

As such, they would not need human labour to carry out these processes.

This move will help the company carry out some of its processes faster while also reducing the number of resources it needs to carry out the processes.

Importance of Productivity – What is Productivity in Business

Productivity is a vital factor that can influence the profitability of a business.

If a business is very productive, it would be getting more work done and producing more output.

This would help the business generate more profits.

Productivity is very important for all types of businesses but it may be especially important for businesses in a very competitive market.

A company can get a competitive edge over other competitors just by being highly productive.

Because the company will be getting more work done while using the same quantity of input, it can offer great deals that the target market won’t be able to resist.

It will also boost the company’s reputation and people will come to see it as a brand they can rely on.

From a personal standpoint, a productive individual will enjoy a healthy work-life balance.

They would complete their jobs faster and more efficiently and this would give them more free time.

There are so many benefits of high productivity levels in a workplace and why companies should take increasing their productivity a priority.

Let’s look at some of these benefits below.

How Increased Productivity Can Benefit a Business

A company would enjoy the following benefits from increasing its productivity:

Lower Production Expenses

When a company is highly productive, it would be able to cut certain production costs.

For example, a manufacturing company can reduce how much it spends on raw materials if the workers are very productive.

They would be able to buy the raw materials in larger quantities and this would give them more bargaining power.

They would be able to get good deals and discounts from their suppliers.

This would have a ripple effect on other expenses; for instance, transportation.

The company won’t have to buy its raw materials in small quantities, which means that it can transport all the raw materials they need at the same time.

Increased Profits

Because the company will be using the same input to do more, it would be getting more value for the resources spent.

This will go a long way in increasing the company’s profit margin.

Also, they would be able to cut down certain production costs.

This will also help increase the company’s profits.

Effective Utilization and Allocation of Resources

Efficiency and productivity go hand-in-hand.

For a company to be productive, they also have to be efficient.

This means that they would use their resources in the best way possible to get the best result out of them.

They would not spend their resources carelessly but would allocate and use them more effectively.

Makes it Possible for them to Reduce the Prices of their Goods/Services

Because of all the above benefits that a productive company will enjoy, they would be able to reduce the costs of their goods and/or services.

This will give them a better competitive edge in the market and attract more customers to the business.

Increased Customer Satisfaction

An increase in productivity means that a company would be able to attend to its customer’s needs better and faster.

Customers would typically have a better experience with a highly productive company than they would with a less productive company.

Also, a productive company most likely will offer a better deal for its customers.

All of these will make most customers who interact with the business.

Customer satisfaction often results in more sales as these customers will come back to patronize the business again.

Thereby, creating loyal customers.

Another good thing about loyal customers is that they generate free publicity for brands.

A satisfied customer won’t hesitate to recommend the company to those around them.

All of these will lead to more sales for the company.

Attractive Wages

Increased productivity in the workplace can lead to higher wages.

How is this an advantage for the company?

It is simple when a company has attractive wages, two things would be certain.

One, their employee turnover rate will be low.

And two, the attractive wages will attract the best talents in the industry.

So, an increase in workplace productivity can help a company have the best employees.

Overall Business Growth and Success

All of these benefits collectively would bring overall growth and success to the business.

You can make your findings; you’d see that the most successful businesses are usually very productive.

When a company is highly productive, it would enjoy all of these benefits and more.

This would increase the company’s scalability and growth level.

How To Measure Workplace Productivity – What is Productivity in Business

A company looking to increase its productivity must know how to measure it.

This means that you must know the metrics to gauge the productivity levels in your workplace.

It is only by measuring productivity that you would be able to ascertain whether or not your efforts toward improving it are working.

The equation for measuring workplace productivity is total output divided by total input.

So, to measure your company’s productivity, you will have to calculate your entire input, from labour to material to capital, and so on.

Then, you would calculate your output.

For instance, if you are running a manufacturing business, you would calculate how many products you have manufactured.

You would then divide the output by the total input to get your productivity level.

Metrics For Measuring Productivity

The metrics you use in measuring your workplace productivity would typically be based on your business type.

However, below we’ll look at some common metrics businesses measure productivity.

Perhaps, you may find the right fit for your business model among them.

Revenue Per Employee

Revenue per employee is a common metric that a lot of companies use to gauge their productivity.

It calculates the company’s revenue (often within a year) and then divides this by the number of employees the company has.

For instance, let’s say a company makes 50,000 dollars by year and has 1000 employees.

The revenue per employee would be 50,000/1000; which is 50.

Quantity of Parts or Units Produced

This metric is mostly used by manufacturing companies.

It measures the number of units or parts that an employee can produce per hour.


Downtime refers to the period when an important system isn’t working.

This can be unplanned in some situations.

For instance, if important machinery breaks down during operation.

Unplanned downtime often negatively affects productivity.

If a company is experiencing a lot of downtimes, then it most likely would also experience low productivity.

Turnover Rate

Turnover rate refers to the rate at which employees leave a company.

High turnover often leads to low productivity levels.

This is because the company would lose valuable time looking for and then training replacements for the employees that left.

Visit here to learn how to reduce employee turnover.

Customer Satisfaction Score

Customer satisfaction score or CSAT is a company’s customer rating.

It is how the customers see the company.

Companies typically gather CSAT from surveys.

This score is on a scale of 1 to 5 or 1 to 10.

A low CSAT may be an indication of low productivity.  

How to Improve Workplace Productivity – What is Productivity in Business

A high productivity level in the workplace generates so many benefits for businesses.

If you want to enjoy these benefits, you need to improve your workplace productivity.

But how do you do this?

The truth is, that there are so many strategies businesses employ to improve their workplace productivity.

And most of these strategies often work out for them.

This means that you can take the approach you feel is the best fit for your company and still, arrive at the same result as someone who took a different approach.

The key to success is doing the strategy you have chosen effectively.

With that said, the following are some sure tips that will help you boost output in your workplace.

Set Clear Objectives and Goals

It would be difficult for your employees to perform well if they do not know what you are expecting from them.

Therefore, you need to set clear and specific goals for your employees.

Tell them in clear terms what they are meant to achieve.

Clear and specific goals will motivate your employees to work.

It will be the guidance they need to focus on the tasks at hand and get more work done to meet the goals.


Doing several tasks simultaneously can affect productivity.

This is why you need to teach your employees how to prioritize.

If they have several tasks at hand, they should learn to concentrate on the most important ones and then work their way down.

Improve Your Business Processes and Operations Using New Techniques and Technology

Technology has to a very large extent influenced the way certain business processes are handled.

It won’t be fair to your business and workers if you continue to use old and outdated methods to run your business when there are better and faster ways of getting things done.

You should explore new techniques and technologies that will make your business processes easier.

Look for the best techniques within your industry and implement them in your business.

There are several software programs that you can use to manage certain business processes in today’s world.

Some of these programs are even industry-specific.

Which means you can use them to run processes that are peculiar to your industry.

Give Feedback

Feedback is very important in the workplace.

It can be a great source of motivation among employees.

So, learn to give feedback from time to time.

When giving feedback, you should focus on what the employee has done and not the employees.

Learn to appreciate employees who do well.

This will achieve two things; the employee will want to keep up the good work and the other employees will be more inclined to work harder.

Build a Positive Workplace Culture  

Nobody will be happy working in a negative work environment.

Conversely, employees would be very happy working in a workplace filled with mutual respect and positivity.

This is why you need to build positivity in your company.

When employees are happy in the workplace, they would be more enthusiastic about any task they do.

They would give it their all and become more productive.

A positive work environment will also encourage workplace collaboration which is another necessary ingredient for high productivity levels in the workplace.

They would enjoy sharing ideas between themselves and working together as a team.

When employees collaborate, they will work more effectively and get more work done in record time.

Give Your Employees the Right Tools and Equipment

Employees cannot work optimally if they do not have the right tools and equipment for the job.

This is why your duty as a business owner is to ensure your employees have the right tool and equipment to carry out their tasks effectively at all times.

Compromising tools and equipment is also compromising productivity.

And this will have a significant adverse effect on your company.

Discourage Overtime

Employees can sometimes become too invested in the task they are working on and work overtime.

Some business owners would think that their employees working overtime would lead to better productivity.

But the ironic truth is that it does the opposite.

When employees work for a long stretch, they end up becoming stressed and exhausted.

They may not achieve what they set out to achieve by working overtime.

And they also won’t have the energy to work during regular work hours.

So, you need to discourage your employees from working overtime.

Rather, encourage them to have a healthy work-life balance.

Prioritize their health and wellness.  

Give them paid days off work, observe holidays in the workplace, ensure they have manageable workloads, and if possible, offer remote work opportunities.

With all these incentives in place, you would notice a spike in productivity.

This is because your employees will feel appreciated.

They would know that you value their contribution to the company and they’d work harder.

Conclusion on What is Productivity in Business

Productivity refers to the amount of work done by a business, individual, or team in the workplace.

When a company has a high productivity level, it is bound to enjoy several benefits that would contribute to the overall success and growth of the company.

This is why you should be particular about the productivity level in your workplace.

The article has discussed this business concept in detail and has even shared tips that will help you improve productivity in your company.

Now, all you have to do is put these tips to work.