Productivity

April 13, 2006

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What is productivity? A simple way to think of your business's productivity is in terms of:

how much of a product you produce over a certain period of time
how much of a product you sell over a certain period of time
how quickly you perform a certain service
how many customers you serve over a certain period of time

Did You Know?

The cost of "doing things wrong" is, on average, 10 percent. "Doing things wrong" means missing deadlines, shipping the wrong orders, and making billing errors and other mistakes that require time and effort to correct. That means that if your business does sales of around $100,000 per year, then the cost of doing things wrong could be near $10,000 annually. When you figure in all subsequent paperwork, service trips to customers, shipping, sales reps.' time, and in-house time, the cost could be as high as 15-20 percent!

While factors within your business, such as the quality of equipment, the management of materials flow, and general economic considerations (e.g., inflation or recession), can affect your business's profits, the extent to which your business realizes a profit from its activity depends largely upon the quality of your employees' performance. It's important to know how hard your employees are working and how much they are producing. One way to find out is through performance evaluations and productivity measurements.

To examine your productivity, you need to: