What is productivity? What are the key points to improve productivity?

With a declining birthrate and an aging population, productivity improvement has become an essential matter. That being said, still many companies may wonder what is productivity and how to increase it.

There are different types of productivity, and we need to take measures to address each issue.

Currently, consulting firms provide services to improve productivity, and such outsourcing 
services can help you take measures smoothly.

In this article, we are going to explain the key points to improve productivity and how to improve 
productivity successfully.

Basic knowledge of productivity

There are many companies that do not have a basic understanding of what productivity is, even when it comes to productivity improvement. Here, we will introduce basic knowledge about productivity, based on the key points.

What is productivity?

Productivity is defined as the ratio between the output produced and the amount of resources invested by a company to produce that output.

Productivity can be expressed by the formula “output / input,” which is the degree of efficiency of how much results achieved from the resources used. Less input with more output means higher productivity, and when a company takes various measures and efforts to increase productivity of its organization, it is called productivity improvement.

Types of productivity

There are two types of productivity: labor productivity and capital productivity.

Labor productivity is the ratio of how much deliverables produced to the amount of labor, including the number of workers and working hours.

Also, labor productivity can be divided into “physical productivity” and “value-added productivity.” Physical productivity is the productivity that the amount of output can be expressed with numbers. On the other hand, value-added productivity may vary depending on the company’s criteria, as value-added amount is gross profit excluding raw materials and outsourcing costs from sales, or the sum of operating income, labor cost, and depreciation expense.

Capital productivity is the amount of value added generated in relation to the tangible fixed assets invested, and it conflicts with labor productivity.

The difference between productivity improvement and operational efficiency.

A similar term to “productivity improvement” is “operational efficiency,” which is often confused, but there is a difference.

Productivity improvement is a matter of how much output obtained from management resources: producing great results with less investment.

On the other hand, operational efficiency means eliminating unnecessary work and reducing costs such as time and expenses. Conceptually, operational efficiency can be considered as one of the measures to improve productivity.

Reasons why productivity decreases

What causes a decrease in productivity? Let’s take a closer look.

Long working hours

Companies with low productivity are more focused on following the rules than creating profits, often with longer working hours. For example, unnecessary meetings and filing documents are the causes of long working hours.

Long hours of working will not only reduce concentration and judgment but also cause individual employees to accumulate fatigue and lose motivation. This will lead to mistakes and accidents; thus, productivity will decrease.

Too many tasks

There are many work-related tasks, and various tasks tend to occur simultaneously. It can be said that processing tasks at the same time is inefficient because it increases not only the number of work errors but also the workload of workers. It is necessary to create a good work environment and mange it well so that there is no backlog of work.

Key points to increase productivity

In order to improve productivity, it is necessary to work efficiently. For that purpose, we will introduce specific key points about what companies can do.

Make the work visible

In order to improve productivity, we need to apply visual controls in the workplace. By making the work visible, you will be able to understand the problems of your current work and what needs to be improved.

In addition to visual controls, work visualization is also important. Visualize work can be done in-house by using tools, but outsourcing it to a consulting firm and using their work visualization service will save your time and effort.

Systematize the work

There is a limit to the amount of work that can be done manually, and if the volume is too high, mistakes are more likely to occur. Especially for high-volume operations, implementing systems and tools will help improve productivity by reducing labor. However, it is important to consider the implementation of system carefully, as it will result in large amount of investment cost and lower capital productivity.

Standardize the work

If there is more than one person doing the same task, each may work in his or her own way. If it depends on individual skills, there will be more mistakes and troubles; there will be confusion when you need to change workers due to retirement or personnel changes. Therefore, it is necessary to standardize the work with a common manual and clarify the business indicator.

5 things highly productive organizations do

According to a study conducted at Massachusetts Institute of Technology, highly productive organizations have three characteristics: high social sensitivity, fair time allocation, and women playing active roles in the workplace. This is an example, but it should be recognized as something that productive organizations have in common.

Now, let’s take a closer look at what highly productive organizations do, while identifying key points.

1. Share the company’s management philosophy

The more employees you have, the more values and ways of thinking you get. If you do not make the company’s management philosophy known to employees, it is expected that there will be a gap between the company and the employees; therefore, operational efficiency will be lowered.

If the management philosophy is firmly recognized by employees, productivity will improve by having a sense of unity in the organization.

2. Set goals

By setting a goal and clarifying the process to the goal, you can create a cohesive organization and increase productivity.

It is important to be specific in setting goals and develop the best organizational structure so that everyone in the organization can work toward the same goals.

3. Make rules

By creating rules, such as work manuals and workflows, all employees will be possible to work with the same quality. By creating rules, it will also help further improve operations, such as reviewing unnecessary work and work methods. In order to improve operational efficiency, it is necessary to create rules.

Also, rule creation can be outsourced to a consulting firm. By outsourcing it, unnecessary tasks that might otherwise be overlooked will be identified; thus, it will lead to higher productivity improvement.

4. Clarify the personnel system

If personnel evaluation is not conducted fairly, employees will be frustrated and stressed, and that makes it difficult to create a cohesive organization.

By establishing a fair personnel system and informing employees of it, it will lead to improve not only productivity but also efficiency throughout the organization.

5. Implement measures to improve productivity

It is necessary to take measures to show that productivity is improving with numbers. The measures are broken down into four patterns: reducing unnecessary work processes and other input resources, increasing output to improve added value and physical production, downsizing employees by restructuring unprofitable departments and offices, and expanding the size of required human resources and departments to improve productivity.

Now, let’s take a closer look at what highly productive organizations do, while identifying key points.

A service recommended by Mamasan&Company

In order to improve productivity, it is essential to visualize work. Visualization of work can be done in-house, but you can make more specific visualizations by ordering from a third-party consulting firm. This time, we will talk about business visualization service offered by Mamasan&Company, a company which has been providing BPO services since 2008 with success stories.

“Business process visualization by creating manuals – Mamasan&Company “

Create highly accurate manuals

Many remote workers of Mamasan&Company work in a limited amount of time while raising children or nursing family members at home, and work manuals are created so that anyone can perform efficiently.

It is characterized by the fact that multiple remote workers can create highly accurate manuals by communicating in the processes of creating and checking tasks for you.

Improve business processes

By visualizing business processes, waste and problems can be identified; by creating work-flows and manuals, those processes can be improved. In addition, if the processes become more efficient, it will lead to cost reductions.

At Mamasan&Company, the consultant will ask you about your business, clarify your work-flow including procedures and tools, and create a flowchart that provides a bird’s-eye view of your work processes. Creating a flowchart is a necessary task for visualization because you can share who should do what. After that, not only manuals for each work but also operational rules will be prepared, so you will be able to start working efficiently.

Communication using information technology (IT) solutions

Mamasan&Company uses IT solutions such as secure business chat to communicate with you. Files can be shared and managed to keep the content up to date, so that it will save you the trouble of managing them in-house.

Summary

To improve productivity, companies need to take various measures. The larger a company, the larger its structure and the number of its employees This makes it difficult to implement measures to improve productivity as well as to put enough time and effort to do everything in-house, even productivity may decrease in the meanwhile. By outsourcing work visualization to a consulting firm, which is part of the measures, productivity improvement can take place more quickly. In addition, outsourcing may also make new discoveries that in-house could not identify. Why not take the best measures for your company and create a highly productive organization.