How to Improve Business Productivity

Key takeaways

Maximizing productivity is a crucial component of any business’s profitability. 

• You can measure business productivity using the equation: Productivity = (Average output) ÷(Total inputs).

• Key performance indicators for productivity include customer satisfaction score, employee turnover rate, revenue per employee, and labor utilization rate.

• You can improve business productivity by utilizing technology, communicating effectively, and providing employees with learning and development opportunities.  

Learn more about how having a productive workplace helps you succeed in today’s competitive marketplace, and can help your organization get ahead of the competition. Then, given that one way to boost productivity is to provide learning and development opportunities for your employees, explore the courses and certificates offered on Coursera for Business, which supports your team with a wide range of skills development opportunities.

What is business productivity, and how is it measured?

Business productivity is the efficiency with which an organization converts inputs into outputs. Inputs are any resources used, while output refers to the number of goods or services produced or economic performance over a given period. However, this number is calculated differently depending on the business.

For example, a business that sells only one product can easily quantify the number of products sold to determine output. In cases where a business offers services, such as a beauty salon, mechanic, or medical care center, measuring the cumulative dollar amount of sales is more useful for determining output than assigning an exact number to output.

To calculate productivity over a specific time period, divide the average output by the total inputs that your business used to produce those outputs. 

Productivity = (Average output) ÷ (Total inputs)

Inputs may include production costs, such as materials and total employee labor hours. Another simple way to calculate productivity is by measuring profit, as an increase in profitability can often mean an increase in productivity. 

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Other key performance indicators leaders can use to track productivity include: 

• Customer satisfaction score: A customer satisfaction score (CSAT) comes from responses to survey questions such as, “How satisfied were you with our service today?” on a predetermined scale. 

• Employee turnover rate: Employee turnover rate measures the number of employees leaving a company over time. This gives insights into employee retention and satisfaction, which affects long-term productivity.

• Revenue per employee: Revenue per employee determines the value added by each employee on average by measuring how much revenue is generated per person on the staff.

• Labor utilization rate: Labor utilization rate measures the amount of billable time employees have available and how much they use for productive tasks.

Benefits of business productivity

An increase in output is only possible with an increase in input or efficiency. Along with greater output, businesses can experience several other benefits by improving productivity in the workplace. These include:

• Gaining easier access to capital and funding due to higher profits brings more business opportunities to scale and grow. 

• Your ability to pay employees higher wages increases, thus increasing employee satisfaction. Productivity also helps employees establish better work-life balance and minimize stress levels since they complete their work on time.

• Efficient business practices contribute to higher customer satisfaction through faster delivery or the ability to lower prices. 

• Purchasing materials for production may become less expensive when improved productivity increases overall production, allowing you to obtain a greater quantity of materials at a lower price. 

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What can a business do to improve its productivity?

One of the most critical aspects of business productivity is having employees who engage in their work. Creating a positive work environment can help keep people motivated and focused on their efforts. Several ways to increase engagement and productivity within your business include the following.

Use technology to your advantage.

Employees should have the tools they need to do their jobs and be productive. Utilizing cloud computing is one way to minimize the costs of otherwise expensive technology. You can also obtain workflow automation software to save time spent documenting information. This means employees can focus on more important responsibilities rather than repetitive tasks. Generative AI is already helping businesses automate tasks, freeing up time for employees to focus on strategic initiatives and deeper work. 

Business productivity tools and software

Some popular business productivity tools and software you can implement include:

• Project management: Asana, monday.com, and Trello

• Communication: Microsoft Teams, Slack, and Zoom 

• File sharing: Dropbox and Google Drive

• GenAI tools: ChatGPT and Microsoft Copilot

Communicate effectively.

When you communicate your plans clearly and effectively, everyone involved will know the priorities. This means managers must be accessible to employees, hold productive meetings, and properly communicate objectives and responsibilities.

By discussing achievable goals, you will not only prepare your employees to collaborate better with each other, but you’ll also help promote motivation.

Encourage employee wellness.

Healthy employees tend to be more productive. Workers in good health use fewer sick days, and organizations implementing wellness initiatives often have staff attending work more often.

Wellness programs should effectively mitigate the negative effects of poor health on productivity. These programs can include strategies such as offering health screenings, educating employees on healthy lifestyle choices, stocking healthier food options in vending machines, and offering no-cost options such as encouraging the use of stairs.

Provide opportunities for learning and development.

Providing opportunities to learn new skills helps with employee satisfaction and productivity. This could be through conferences, cross-training to explore different responsibilities, access to professional courses, or tuition assistance for employees to further their education. 

Offer flexibility.

Flexibility is a great way to support work-life balance and promote productivity. Although it’s easy to assume that flexibility solely benefits the employee, this isn’t the case, as satisfied employees who are happy with their jobs are often more productive overall. Leaders can promote flexibility in the workplace with telecommuting, remote work options, and more flexible work hours.

Hallmarks of a productive workplace

Some workplace activities and habits can have an improved effect on productivity. A few common practices that may enhance your team’s productivity include:

• Minimal meetings: While efficient and timely meetings can be extremely important, some may need to be revised. When holding meetings, ensure only those relevant to the discussion are present. When possible, consider using email or team collaboration platforms, such as Slack or Microsoft Teams, to share information. 

• Limited social media use: You may choose to limit social media use when platforms aren’t used for business objectives. It’s easy for employees to become distracted while scrolling through social media, but some strategies can help mitigate this. These include employee monitoring software or simply communicating why social media use during the workday affects productivity.

• Deep work: While multitasking often harms productivity, deep work, or uninterrupted time when employees focus on one task, can increase productivity substantially. Rather than giving employees multiple tasks to complete at once, properly delegate the workload to minimize these effects. Allow your employees to focus all their energy and attention on one task or utilize specific periods to prioritize certain tasks free of any other distractions, including notifications, meetings, and other interruptions or obligations.

Read more: Company Culture: Why It Matters

Upskill your team with Coursera

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