Grade Booster student workshops are back in cinemas for 2022. Learn more

Home
Subjects
Shop Courses Live Jobs board
Account Shopping cart Logout

Business

Business
Explore
Blog Reference library Collections Shop

Study Notes

Labour Productivity

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB
Share:

Labour productivity is concerned with the amount (volume) of output that is obtained from each employee.

Why does measuring and monitoring labour productivity matter?

  • Labour costs are usually a significant part of total costs
  • Business efficiency and profitability closely linked to productive use of labour
  • In order to remain competitive, a business needs to keep its unit costs down

Achieving higher labour productivity is not a simple task. Several factors influence how productive the workforce is: e.g.

  • Extent and quality of fixed assets (e.g. equipment, IT systems)
  • Skills, ability and motivation of the workforce
  • Methods of production organisation
  • External factors (e.g. reliability of suppliers)

How can labour productivity be measured? The common formula is as follows:

An example of this calculation is provided below:

How can a business improve its labour productivity? Here are the main approaches:

  • Measure performance and set targets – it is often claimed that "what gets measured, gets done!"
  • Streamline production processes
  • Invest in capital equipment (automation + computerisation)
  • Invest in employee training
  • Make the workplace conducive to productive effort
Share:

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2022 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.

Back to top