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labor productivity ratio

Contributor(s): Ivy Wigmore

The labor productivity ratio is a metric expressing the number of work units produced per time worked. Productivity ratios essentially quantify output/input, with input being time worked and output being work units.

The ratio can be used to quantify productivity for most types of work, as long as a valid work unit can be identified. For a factory worker, the labor productivity is simple to calculate. If the worker produces 1000 widgets in a week, the productivity ratio might be 1000/40. For a writer, the situation is less clear-cut but a work unit might be the number of words or the number of pieces of content per day or per week.

The labor productivity ratio can identify the effectiveness of individual employees, groups of employees, teams or the organization as a whole. The ratios can also be used to examine variability of employee productivity in different environments and conditions.

Research into productivity ratios can help management determine the most effective scenarios for optimum output. The results can confound expectations and have compelling implications for corporate policies and decisions. For example, multiple workplace studies have indicated that long hours of overtime can negatively impact overall productivity, rather than increasing it as intended. One such study comparing productivity at 40 and 60 hours per week, for example, reported the ratios as 35:40 (35 work units produced in a 40-hour workweek) and 25:60 (25 work units produced in a 60-hour week): People working 60 hours per week actually produced fewer units than those working 40 hours per week, probably as a result of things like fatigue, injury and burnout.

In recent years, comparisons of productivity ratios have supported the business case for reducing work hours, providing a pleasant work environment and supporting work-life balance, as these things have been demonstrated not only to lead to greater employee engagement but also better overall productivity and profitability for the organization.

This was last updated in July 2019

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