What is productivity? Definition and ways to improve

The Bureau of labor Statistics defines productivity as “a measure of economic performance that compares the amount of goods and services produced (output) with the amount of inputs used to produce those goods and services.”

When people think of "being productive," they often think about what they’re personally getting done. For many people, that means checking things off the "to-do" list. That type of personal productivity reflects how efficient you are at completing tasks. But not all tasks are created equal.

Different perspectives on productivity

Politicians, economists, and pundits talk about it at a macro level. Business leaders and managers worry about it in terms of their teams and employees working in a hybrid environment. And most of us, individually, make some assessment as to whether we "felt" very productive on a given day. 

Each of these examples incorporates a different view of productivity. Here are a few examples of different perspectives on productivity. Important to mention here is that when we're talking about productivity, we're talking about positive productivity, not toxic productivity.

Personal productivity

Productivity can mean different things in different contexts, especially with the rise of knowledge work and automation. Personal productivity refers to how consistently and efficiently an individual completes tasks or accomplishes goals.

Understanding the different layers of productivity can help you see how your personal productivity at work contributes to your business’s productivity and maybe even how both relate to your country’s productivity.

National productivity

For countries, productivity measures how well they turn labor and materials (the input) into goods and services (the output, gross domestic product [GDP]). It's a broad measure that reflects trends in policy and technology and indicates economic growth relative to other things happening in the macro-environment. This can ladder to a higher standard of living for the residents of that country.

Business productivity

For businesses, too, productivity measures how well they generate revenue from input, labor, and materials. Business productivity usually refers to productivity as revenue divided by hours worked.  For company leaders, an aggregate productivity level isn't likely to provide actionable insights, but it can help them see how they compare against the competition or other leading firms. 

Organizational productivity

Productivity at the company level — revenue relative to employee labor hours in a quarter — can seem far removed from our own activities, which might see results or deliver value in a different timeframe.

What is productivity in the workplace?

Workplace productivity is the value each team brings to the success of the overall business. It measures the output of individuals or teams to better understand how an organization can optimize its workflows.

Fostering employee productivity that drives business outcomes is an essential part of business success. And it also has a positive impact on employees.

• For businesses: Productivity growth signifies the health and growth of the company. A productive business can expand, offering new services and potentially lowering prices. 
• For employees: Productivity is important because it keeps individuals progressing toward their full potential. Being productive allows us to manage our work, home lives, hobbies, and family commitments with ease and peace of mind.

How to measure productivity

Unfortunately, personal productivity, at work or in life, can be hard to pin down, especially now that many people don’t do repetitive tasks — it was much easier when productivity could be measured by how many widgets a person built per hour.

Personal productivity is a topic of some disagreement in the age of knowledge work. Creativity and innovation, even excellent customer service, don’t neatly sum up to an efficiency metric. Nonetheless, it’s useful to think about what productivity means in your role and type of work. Then try to set the conditions to improve it — whatever the metric: 

• What is the appropriate way to assess quality or value?
• What is the relevant measure of quantity?
• What are the inputs we want to use most efficiently?   

For your teams and for yourself, the most relevant output to think about is value. Productivity = (value of work) / (employee time, effort).

Value might seem hard to define, but you can start by thinking about outcomes. Something is valuable to you (or to a company) when it helps you achieve your desired outcomes. Not everything on your task list is equivalent in terms of the value it delivers to you or others. 

This changes the way we think about productivity to incorporate how effectively an activity delivers value in addition to how efficiently we do that activity.  In a company, the value of work is a function of how well the work aligns with the organization's priorities, the quality it is executed at, and the efficiency with which it is done.

Being more productive is a common goal, but it’s also a goal that many people struggle with. 

Only 21% of UK office workers report that they are productive all day, and the average actual productive time in an 8-hour workday is 2 hours and 53 minutes. 

Naturally, the challenges employees face with productivity ultimately reflect in the company’s overall output, too.

• Increased efficiency: By being more personally productive, people can complete their work efficiently, tackle errands quicker, and enjoy more free time. 
• Improved employee well-being: Productivity can help employees enforce healthy work/life boundaries and feel more in control of their circumstances. Some people may even enjoy their work more when they’re productive, and they’re likely to feel less stressed, too.
• Improved individual and company performance: Traditionally, we associate productivity with performance. Each person’s productivity and performance contribute to business success, leading to lower prices, higher profitability, and potentially higher pay for employees. 
• Enhanced scalability: When a business has high productivity levels, it uses its resources more efficiently and is poised for growth and expansion.

Whether we’re considering personal productivity or business productivity, it always comes down to getting the most output (or benefit) from the input. For businesses, input can mean capital, materials, or labor cost. For people, input usually represents time, effort, and dedication.

Motivating employees is a key part of labor productivity, and being motivated and inspired contributes to your personal productivity. 

There are many ways to foster motivation and increase productivity on a personal level and an organizational level. 

For personal productivity, there are many techniques that can increase how much you get done in a day without compromising quality. Some popular ones include:

• Breaking large projects into smaller tasks
• Using the Pomodoro Technique (work in short 25-minute intervals)
• Developing a restorative morning routine
• Prioritizing your to-do list to focus on the most important tasks

Businesses can use gamification to motivate employees and increase employee engagement. 

When Microsoft added gamification to the sales processes, they saw a 10% productivity increase in contact centers. Plus, 78% of their agents stated they felt empowered and encouraged to perform better at work.

Certain benefits can also increase business productivity. Software company Myosh has seen significant productivity gains and cost benefits to maintaining a remote work policy, even before the COVID-19 pandemic. 

Understanding what motivates your employees and developing a strong company culture can ultimately drive productivity, performance, and profitability.

Most of us understand how personal productivity makes our lives better, but what about corporate or national productivity?

When you’re productive, it takes less time, effort, and mental demand to achieve what you want or create a high-quality finished product. 

When the output is the same (achieving what you want), but it takes less input to accomplish it (time, effort, and resources), you are more productive. 

It’s the same for businesses. 

When businesses produce a larger amount of a given output (goods and services) with less input (labor, capital, and materials), they’re more productive. 

Of course, in today’s business, the output for our efforts can be harder to quantify. (That's why so many people default to a checklist — "done" or "not done" is easy to measure, even if it has no connection to value.) It is hard for individuals or businesses to compare output as value is less and less often delivered as a standard unit of product. However, at the business level, in aggregate, you can compare the level of effort, time, and resources used to produce an equivalent output of sales or revenue. 

Businesses measure productivity by taking total revenue (or net sales) in a particular period (the output) and dividing that by the total number of employee labor hours worked in the same period (the input). This is called the labor productivity formula.

Traditionally, higher workforce productivity meant employees are working more efficiently and creating more goods in less time. This leads to increased profits since companies are spending less on employee payroll expenses to generate a number of units of goods or an amount of sales revenue.

Meanwhile, low productivity or partial productivity can indicate issues in the processes used to produce the goods or generate and fulfill the sales. 

Even when employee engagement is high, if the production process slows due to a lack of materials or capital, productivity levels will drop. This is because labor cost (or workforce productivity) is only one input that goes into the labor productivity formula.

Governments measure multiple productivity factors to understand the overall economic productivity and recognize productivity trends. 

For example, one 2020 productivity trend was working from home, and the economic data shows that GDP could increase if employees continued to work remotely 1-2X a week.

While one productive person makes a difference, national GDP and corporate productivity rely on extensive employee engagement to deliver results.

What factors affect employee productivity?

A lot goes into creating a work environment that fosters productivity. Here are some of the most common factors we’ve seen companies enhance to engage and motivate their employees to embrace a productive work culture.

Work environment

An employee’s work environment has a huge impact on their well-being and performance. It includes many elements, such as management styles, company values, company culture, communication styles, leadership, and trust in the workplace. Investing in improving each of these areas helps avoid a toxic work environment and boosts productivity.

Growth opportunities

Many individuals are motivated by career growth and professional development opportunities. They like to be challenged, work on interesting projects, feel like their work is valued, and be rewarded for their impact. To build momentum among teams and increase productivity, try building out your career growth paths.

Opportunities to socialize

Not everyone wants to work in an office every day. And there are individuals who would rather not participate in group events. But creating opportunities for employees to meet, either in person or virtually, is important. Socialization helps build trust, increase creativity, boost collaboration, and bolster communication across teams. These events can be social or work-related team-building activities. 

Manager and peer feedback

Employees thrive in organizations with healthy feedback cultures. In fact, a recent survey showed that 72% of employees consider recognition the most impactful element of employee engagement. This is not to say that all feedback has to be praise. But ensuring that there are regular check-ins with employees and offering opportunities for them to give feedback can help increase productivity.

Psychological safety

Psychological safety directly correlates to productivity in the workplace. Higher belonging is also positively correlated with increased focus, strategic planning, and goal attainment. These benefits make a strong case for developing a psychologically safe workplace by leveraging communication, vulnerability, and empathy.

Access to tools and systems

Another important factor in developing a more productive team is improving their digital employee experience. This involves offering the tools individuals need to do their work most efficiently. They can be transactional such as sales enablement tools, or focused on maximizing soft skills such as project management and collaboration tools.

Additionally, many teams function more effectively within some form of structure. So having systems and processes in place for employees to do their best work is essential.

Clear expectations

Setting and clearly communicating expectations before starting a project can save teams an immense amount of time. Investing this time upfront often cuts down on the time needed for revisions or even redos of certain tasks.

Now that you see how your personal productivity affects the whole system, you’re likely feeling inspired to become more productive at work. It helps to know that your role makes a difference! 

Here are some valuable tips to help you be more productive at work. 

Gamify your tasks

Turn checking off your to-do list into a challenge, and get your co-workers involved, too.

89% of employees feel like gamification would make them more productive at work, so increase your productivity level with some healthy competition. Create a productivity group and set prizes for whoever checks the most off their to-do list in a day or week. 

Take breaks

While deep work can be powerful, taking breaks ultimately helps us be more productive. Using the Pomodoro technique can remind you to step away from your desk, stretch, and refocus your mind. 

Taking a short break refreshes your perspective and helps you discover new ways of solving problems.

Avoid distractions

It might be easier said than done, but distancing yourself from distractions will help you to be more productive. Turning your phone on "work mode," silencing your chat notifications, or leaving your phone out of sight all help mitigate interruptions. 

Define your goals

Knowing your objectives can help you stay on track and get more done.

Keeping your goals top of mind and creating a short-term to-do list that focuses on an overarching goal can help you stay motivated. 

Discover when you’re most productive 

Track your daily activity and reflect on how you feel about the quality and value of the output to see when you’re most productive. Don't stop at just looking at activity tracking as a measure of productivity. These types of productivity tool reports can be a useful starting point and input into how you understand your own productivity. 

Maybe you work on creative tasks best in the morning, but you save administrative tasks for the afternoon. Understanding how you work best can help you schedule your day for peak performance.

Communicate with your team

You don’t need to figure everything out on your own.  Learn to delegate and collaborate. Ask for help and work together. 

When you're in an efficiency mindset, you might think that doing it yourself is more efficient and productive than taking the time to bring in others. Reaching out to a team member can help you get better answers quickly and ultimately create more value. A quick message or phone call may be all you need to keep moving forward.

Now that you know how personal productivity fits into corporate productivity, you’re ready to boost your productivity skills! 

Your newfound productivity abilities can make every area of your life easier to manage, too.

If you find yourself procrastinating or struggling to stay focused, you’re not alone. Coaching with BetterUp can help you increase your focus and prioritization so that you can be confident that your productivity is creating real value.