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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.

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

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

Tel: +44 0844 800 0085