What is 'Productivity'
Productivity is an economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in revenues and other gross domestic product (GDP) components such as business inventories. Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement.
BREAKING DOWN 'Productivity'Productivity gains are vital to the economy, as they mean that more is being accomplished with less. Capital and labor are both scarce resources, so maximizing their impact is a core concern of modern business. Productivity enhancements come from technology advances, such as computers and the internet, supply chain and logistics improvements, and increased skill levels within the workforce.
Productivity and GDP
Many economists measure and track productivity as a clue for predicting future levels of GDP growth. The productivity measure commonly reported through the media is based on the ratio of GDP to total hours worked in the economy during a measuring period. This productivity measure is produced by the Bureau of Labor Statistics four times per year.
How to Improve Company Productivity
Productivity can be improved by utilizing technology that allows more to be done in less time. For example, a stockbroking company may introduce an algorithm for its back office that eliminates a key task that was previously performed manually. Empowering employees can increase productivity. Employees who have the resources and flexibility to do their jobs more efficiently are likely to boost productivity; this frees up management's time to focus on more critical business functions.
Unfiltered internet access can be a hindrance for productivity. For example, employees may spend a large proportion of their time on social media or e-commerce sites such as Facebook, Instagram or eBay instead of performing work related tasks. Using modern communication tools such as an internal instant messenger is likely to enhance productivity as it promotes collaboration between employees.
How to Improve Individual Productivity
Monitor how much time you spend on tasks, and prioritize important work. Productivity can be reduced if you allocate time inefficiently. Use programs such as Rescue Time to increase productivity by tracking the time you spend on specific applications and websites.
Although it may sound counterintuitive, taking regular breaks has been shown to improve productivity; taking a five-minute break every 90 minutes often refocuses concentration. Increase your productivity by starting your workday on your daily commute. For example, a commodities trader may look at how the markets performed in Asia overnight, providing ideas to discuss in the morning meeting.
Ensure that your office space is inviting. Productivity can be increased up to 15% by an office that is aesthetically pleasing. Desktop wallpaper and photos of family, friends and favorite places creates positive feelings that can lead to increased productivity.