Manpower productivity formula

Manpower productivity, also known as labor productivity, is a measure of the efficiency of labor in generating economic output. It is typically calculated by the formula, ratio of output (goods or services produced) to the input of labor.

The goal of measuring manpower productivity is to assess how effectively human resources are utilized in the production process.

It was the year 2011 and Japan stood bearing the wrath of a 9.0 magnitude earthquake, followed by a tsunami. Japan’s remarkable bounce back from a devastating disaster showed its ability to adapt and handle resources effectively.

Ten years was the time allocated for the reconstruction of what was then nothing but debris. Today, 95% of the debris from the terrible tsunami is recycled or burned. Seeing Japan rebuild after destruction is proof of their strong spirit, hard work, intelligence, and resourcefulness.

Japan rebuilt itself from ruins in just ten years, showing a strong spirit and hard work. Businesses can do the same by using resources and labor efficiently to increase productivity. In order to succeed, businesses should concentrate on increasing labor productivity.

What is labor productivity?

Understanding how to calculate labor productivity is essential for business owners and managers. This measure evaluates how well workers use resources and helps them make improvements. It’s similar to Japan’s methodical reconstruction process.

By evaluating labor productivity, identifying areas for enhancement, and utilizing resources more effectively, businesses can enhance their competitiveness, increase profitability, and improve employee engagement.

How to calculate labor productivity?

The way you calculate labor productivity depends on the output and input you want to use. A common way is to divide the value of goods and services by the total man-hours worked.

Example 1 Calculation:

Suppose a value of ₹ 80,000 is produced by 40 workers in 10 hours.

To calculate labor productivity, divide the ₹ 80,000 output by the man-hours used for producing that value.

Labor productivity = Output / Input

Labor productivity = ₹ 80,000 / (10 x 40)

Labor productivity = ₹ 200 per hour

How to use this labour productivity metric:

This means that employees produce ₹200 worth of output for every hour they work. You can use this metric to compare your productivity with other companies in your industry or to track your productivity over time and take actions if necessary to improve.

Example 2:

Similar way we can calculate the productivity by sales completed by your sales and marketing team. This method is useful if you want to measure the revenue generation potential of your sales force. To calculate labor productivity, divide ₹ 350000 in sales by the total hours worked. There are 35 employees who work for 10 hours per day for 20 days.

Labor productivity = Sales / Hours worked

Labor productivity = ₹ 35000000 / (35 x 10 x 20)

Labor productivity = ₹ 5000 per hour

This means that your employees generate ₹ 5000 in sales for every hour they work. You can use this metric to check how well your sales and marketing strategies work. You can also motivate your employees with bonuses based on their sales performance.

Why is labor productivity important for your business?

Increased profitability

By improving your labor productivity, you can reduce your labor cost, more value for money to customer and increase your profit margins. When the organization has more profit, they can invest in new ideas, growth, or making customers happy. This extra capital helps achieve the goals set by the management.

Enhanced competitiveness

To get ahead of your competitors, increase how efficiently you work. You can provide higher quality products or services for less money. Another option is to stand out by offering unique features or benefits. Toyota became a major player in the global car market by using Lean manufacturing techniques.

Improved employee engagement

To motivate your employees, you can track their work and give them rewards. You can also provide them with feedback, recognition, and opportunities for growth and development.

How can you improve your manpower productivity?

Technology

You can improve how well and how quickly you make things by using new or better technology. You can also automate or streamline some tasks that are repetitive or low value, which helps to reduce the lead time or cost to make the goods.

Training

If you give your employees enough training and education, their skills and knowledge will improve. You can teach them the best practices and techniques for their jobs. This will raise employee morale and benefit both the employee and the employer. Lean training lessons also help to get better manpower productivity.

Management

To make the most of your resources, use good management practices and policies. You can encourage your employees to work together, communicate, and come up with new ideas. Employee engagement activities by management are a great way to improve labor productivity.

In summary, the labor productivity of your employees is a crucial gauge of your business’s efficiency. To make your business successful, profitable, and competitive, improve your employees’ productivity.

Abin Antony @abinantony

View Profile