About this calculator
Productivity compares what was produced (output) with what was used to produce it (input). Labour productivity uses labour-hours; machine productivity uses machine running hours; any other pair, such as sales value per unit of labour cost, can be used as a general ratio. Productivity is different from efficiency: efficiency compares actual performance with a standard and is a percentage, while productivity is a rate with units such as units per hour.
Formula
Per labour-hour
Labour productivity = Output ÷ (Workers × Hours each)
Workers × hours each is the total labour-hours — not the clock time. Four workers for 8 hours is 32 labour-hours.
Per machine-hour
Machine productivity = Output ÷ (Machines × Running hours each)
Output ÷ input
Productivity = Output ÷ Input
Both in the units you choose; the result keeps those units (for example, sales value per unit of labour cost).
Worked example
- Labour: 4 workers × 8 h = 32 labour-hours; 1200 units ÷ 32 = 37.5 units per labour-hour (300 per worker). If last month it was 30, that is a 25% increase.
- Machine: 2 machines × 20 running hours = 40 machine-hours; 5000 kg ÷ 40 = 125 kg per machine-hour.
- Ratio: sales value 250 000 ÷ labour cost 200 000 = 1.25.
Assumptions and limitations
- Single-factor (partial) productivity only: it measures one input at a time. A rise in labour productivity may come from more machinery rather than better work.
- Use total labour-hours or machine-hours, not elapsed clock time, when several people or machines work at once.
- Comparisons are only meaningful for the same product mix, the same units and periods of the same length. Money-based ratios are also affected by price changes and inflation.
References
- Standard single-factor productivity measures as used in operations management texts (e.g. Heizer & Render).