Labor productivity : What is labor productivity and how to calculate it?

What is labor productivity?

labor productivity is measurement for the amount of quality and quantity of producing something by specific time scale of labor. Specifically, in manufacturing unit its calculates as part of overall productivity. The outcomes from labor productivity is considers for identify percentage growth of productivity.

Labor productivity is particularly important in the financial and statistical analysis of the organization. This is key indicator of overall financial growth, competitiveness, and existing standards.

How to calculate labor productivity?

Labor productivity is calculation of two major values, which are production output quantity and resources used for the producing materials. The ratio used to calculate labor productivity provides a measure of the efficiency, which are inputs and outputs of the manufacturing processes.

Labor productivity = Production output quantity (volume measure of output) / resources used (measure of input use)

Production output quantity (Volume Measure of output)

Production quantity is measure of output of the goods produced in particular time scale. Production output quantity can be calculating by percentage or numeric. But remember that, if you take the volume in percentage, you have to make as base of calculation as percentage. Otherwise volume in number is recommended for all calculations.

Resources used for production (Measure of input use)

Resources used for production is inputs, such as time, effort and skills of manpower, etc. The inputs are very important part can impact on productivity, respective use of resources will help to increase labor productivity. Labor input is measured either by the total number of hours worked of all persons employed or total employment.

Factors affecting Labor Productivity – increase labor productivity.

Education and Training: On job training, Operational training, standard operating procedure training, etc. training will help to increase labor productivity.
Rewards and Benefits: Motivate your employee by incentive, rewards of target achieved.
Working environment: Provide sufficient working environment to each employee for improve individual productivity.
Health of workers: OSHA, Health and safety systems etc., will help to manage health related requirements to stable manpower.
Mechanization: You can use mechanization for tasks which are very hard and where more manpower used to complete tasks.
Division of labor: Correct person at correct place. Mean organize manpower to consider its expertise and skills.
Management: Manage manpower in quantity on after analyze the real requirement of process.

Document: See Example might helpful to your regular tasks.

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