Are you looking for a way to measure the economic growth of your business and compare it with others? With this productivity calculator, you can quickly assess your company's overall productivity and organization. 💵💵 It gives you the result per working hour and individual performance per one employee.
In the article below, you'll find more information on how to calculate productivity, the labor productivity formula, and how to apply the results in practice.
What is labor productivity?
Labor productivity measures the number of goods and services produced over a certain amount of time. Most often this certain amount of time means one labor hour. Here, we also calculate the output per worker. The term is common in business planning and when comparing between businesses and economic plans.
↗️ A business may increase productivity, thus boosting their income by introducing new technologies or improving the workers' performance. Labor productivity is useful when assessing economic growth and the standards present in a unit. It indicates the efficiency and quality of human capital.
Labor productivity formula
The formula for calculating labor productivity differs from the one used to calculate the output per person or per labor hour. The type of work doesn't matter, it can be anything. For example, making a roof, putting up a fence, or working in an office.
Revenue may be the money earned, the number of sales completed, the number of units produced, or a service-made income, among many others measures. What we invest are either employees, time, materials, or machines. You can use the labor productivity formula in two ways:
Labor productivity per person:
productivity = revenue / number of employees
Productivity calculation per hour:
productivity = revenue / number of hours
In this calculator, we focus mainly on hours or employees working on a project. Instead of putting the number of employees, you can always give the number of machines as the formula stays the same, regardless of income type.
Productivity calculator explanation
How to calculate productivity using this tool? It's easy! All you need to know is:
- The revenue 💸 - from the goods or services produced within a given time or by a given number of employees
and one of the two below:
- The number of employees; or
- The total number of working hours.
If you know both - it will determine the productivity per hour and employee. Insert the numbers, and you'll find the answers in the results section below. This calculator also works backwards, which means that you can fill in the results section and know how much revenue, employees, or hours till the deadline you need.
Productivity calculation - examples
Now, let's think of a small business of cleans houses. Two employees are working for 8 hours. After a day of work, the revenue reaches $1200. Therefore, the productivity is:
Per person 🧑💼
$1200 / 2 = $600
Per hour ⏱️
$1200 / 8 = $150
Now, how can you use this calculator to compare? Imagine there are two employees who specialize in construction, especially putting concrete down as a driveway, Mark and Rob.
Mark works full time (40 hours per week), while Rob only does three days a week (24 hours per week). Mark's outcome is $12,300 in a month, and Rob's $5,500. Let's see who's more productive. How to calculate the productivity in that case?
- Mark's productivity:
$12,300 / (40 h * 4 weeks) = $12,300 / 160 = $77 per hour
- Rob's productivity:
$5,500 / (24 h * 4 weeks) = $5,500 / 96 = $57 per hour
Therefore, as you can see, Rob's productivity per hour is much smaller than Mark's.