Productivity = Money
What actually makes your business money? If you search online, you will find many tips about how to improve your staff’s efficiency and in turn productivity. However, the question we need to ask ourselves, is why? Increasing efficiency is not a waste of time, it can make you money. ClockInstant looks at the effect of improving efficiency in the workplace. Furthermore, we go about allocating a figure to improve productivity. The real challenge is proving the monetary value of our efforts.
Assigning a monetary value to efficiency will demonstrate to you just how much you can save (or make) for your company. There are many external factors that can affect your organisation’s efficiency metrics. Employee efficiency has a huge impact on profits, and you can track productivity per individual, per team or per department.
We’ll start by breaking it down and stating the simplest equation.
Productivity = Total Output/Total Input.
See the different results you can get below if you use the following data. You will probably already have these figures for your company available.
Monthly turnover = R1 million
Number of staff = 80
Staffing costs = R400, 000
Overall productivity = Total Input/Total Output = R1 million/R400, 000 = 2.5
Productivity per staff member = Total Output/Total Staff = R1 million/80 = R12, 500
Your overall efficiency index will increase if you improve output with your current number of staff. Furthermore, decreasing the input needed to achieve the same level of output. Most noteworthy, if each individual staff member works at a rate closer to their full capacity, then your efficiency will increase. Consequently, you will improve your revenues and shred your costs.
For example, let’s say that you implement a performance management system which motivates employees to work harder. As a result, each staff member increases their productivity by 5%.
New Productivity per staff member = Old productivity per staff member x 1.05
R12, 500 x 1.05 = R13, 125
New Total Output = R13, 125 x 80 = R1.05 million
You are keeping your costs the same, but increasing efficiency by just 5% per employee. This particular business would see its monthly revenue increase by R50, 000.
See another featured article on workforce data from our parent company to see how you could drive productivity in your workplace. Give your Revenue figures a totally new look!
Contact us to find out to to simplify your business.