How labor productivity is calculated: methods and methods for determining, ways to increase it

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

Labor productivity is a very important indicator in production. Such information makes it possible to reduce the cost of unprofitable activities, to determine decent wages for employees, and to highlight the most productive departments and workshops. But how is labor productivity calculated? We will devote the article to the answer to this question. At the same time, we will analyze the definition itself, present important formulas, indicate the factors that affect performance, and look at a real example of how to improve it.

What is this?

Before answering the question "How is labor productivity calculated?", let's consider what it is.

Labor productivity is an important indicator that reflects the efficiency of the enterprise. It shows the ratio of output to input raw materials. Reflects the level of fruitfulness of the purposeful work of people in the production of material or spiritual goods.

Thus, labor productivity is the amount of work done (the numberoutput) that was produced by an employee in a specific unit of time (per hour, week, quarter, year). It is also the time it takes to produce a unit of output (or perform a particular service).

Production and labor intensity

How is labor productivity calculated? It is calculated through a system of concepts of production and labor intensity. Consider them too:

• Yield is the quotient of the volume of work performed (or manufactured products) by the number of employees (or labor costs). The volume of work (manufactured products) per unit of labor.
• Labor intensity - the division of the number of workers (labor costs) by the volume of output (the amount of work done). The labor costs of the team to produce a unit of output.

Indicators of labor intensity and output can be calculated in qualitatively different categories: natural and conditionally natural expression, standard hours, cost characteristic.

In this case, the labor intensity is divided into several categories in production:

• Technological. The labor costs of those employees who are engaged in the main production process.
• Production service. Labor costs of personnel employed in the field of production maintenance, equipment repair.
• Production. Labor intensity of the first two categories.
• Production management. Labor costs of management personnel, security companies.
• Full. This is the sum of production andmanagement effort.

Performance Formula

Labor productivity is calculated as the ratio of output (work done) to the number of workers involved in this work.

The above can be done in the form of a simple convenient formula. Here is how labor productivity is calculated:

P=Q / H.

Decipher:

• P - labor productivity.
• Q - release of certain products per unit of time (number of work performed per unit of time).
• H - the number of personnel involved in the action.

Methods for measuring labor productivity

How the indicator of labor productivity is calculated, we have analyzed. But in what quantities is it expressed? Several options are possible here:

• Natural. Accordingly, standard values \u200b\u200bare used - meters, kilograms, etc. The advantage here is that complex calculations are not required. But the disadvantage is the limited calculations: we need the release of only homogeneous products and unchanged working conditions.
• Conditionally natural method. The main thing here is that a feature is determined that can average the properties of several types of manufactured products at once. It is called a conditional accounting unit. This method is abstracted from pricing. It can take into account differences in the complexity of the process, the power and utility of the manufactured products. But constrained by the same shortcomings as the previous one.
• Labour. Herethe ratio of labor costs for the manufacture of products in standard hours is determined. How it's done? Already a certain number of standard hours correlates with the actual hours worked. This method, however, is suitable only for a few types of production, since when applied to differently stressed forms, it is fraught with a large error.
• Value. Accordingly, the key unit here is the cost of production. This is the most versatile of all the presented methods. How is labor productivity calculated at repair plants? This method is used there. It allows you to average the indicators of the state, industry and enterprise. But it depends on pricing and requires very complex calculations.

Yield formula

Labor productivity is calculated by dividing the number of products produced (the amount of work done) by the number of workers employed in this business. But what about production?

Production - the ratio of the number of products to the number of workers. Or the price of production per unit of time. The calculation of output allows you to evaluate the dynamics of labor productivity by correlating planned indicators with real ones.

The formula here is also simple:

Q=Q / T.

Here's what it means:

• B - output.
• Q is the volume of production. It is expressed in physical or value terms, as well as in standard hours.
• T - the total amount of labor time spent on production.

Labor formula

We have determined how labor productivity is calculated in the enterprise. How to define labor intensity? This is the inverse of productivity. Labor intensity is the ratio of labor costs and units of already manufactured products.

The following formula is used to calculate it:

T_{p=T / Q.}

Here's what the letters mean:

• T_{p - the complexity of the process.}
• T - the amount of time that workers spent on the production of products.
• Q - production volume. It can be expressed in cost, natural value, in standard hours.

Factors that reduce productivity

How to calculate labor productivity in an enterprise according to the balance sheet? We defined the simplest formula above.

Why is labor productivity low? The workflow should be checked for a number of factors that slow it down:

• Obsolescence of used equipment.
• Inefficient enterprise management, inefficient workflow organization.
• Inconsistency of wages of employees with modern market conditions.
• No structural shifts in production.
• Tense social or psychological atmosphere in the team.

Factors that increase productivity

At the same time, it is quite easy to find reserves to increase labor productivity. Themcan be roughly divided into three categories:

• National. Creation of innovative, modern equipment and technologies. Giving permission for the rational location of production facilities.
• Industry. Improving cooperation within the industry.
• In-house. The reserves of the enterprise itself are first of all opened with the rational use of their own resources. Something like: efficient use of the labor of employees, successful planning of the work schedule, reducing the labor intensity of production.

Productivity improvement example

Let's look at a rather vivid example. This is the Cherepovets Casting and Mechanical Plant. This company was actually on the verge of ruin. However, competent management of the production process helped to move from minus to plus, to achieve stable economic growth.

It should be noted that the company did not follow the expected path of reducing the number of workers. The number of employees remained the same. But at the same time, the cost of manufactured products increased 10 times. At the same time, output per employee in physical terms decreased by half.

Among other striking positive developments, it is important to highlight the increase in average wages. As well as the cost characteristics of output per worker. What is the secret of such positive dynamics?

One of the ways that the top management of the Cherepovets plant turned to is a change in the system of remuneration for work. Everything is quite simple: a progressive bonus system was introduced for employees based on two indicators - the fulfillment of a given production plan and the quality of manufactured products.

Labor productivity is an important indicator that helps to determine how successful an enterprise is, how well employees perform their duties, how well the labor process is organized. It is not enough to eliminate the negative influencing factors. It is important to turn to programs that can stimulate high productivity.