How To Calculate Productivity

Accurately calculating productivity is a minefield! Equations, formulas… You name it, there’s a complicated way to go about it.

But come on people! This is way, way too difficult. For those of us who’re working every hour under the sun – you’re probably an entrepreneur who needs to know that every minute you have is working as hard as it can for you – we need a simple, no nonsense way to calculate productivity.

So let’s put it in the simplest terms possible. Ready? OK, here goes….

What is productivity?

What is productivity

Think you know the answer? Because, surprisingly, many people who are ACTUALLY PAID TO MAKE DECISIONS about improving productivity don’t truly understand what it is.

Because, productivity – and the ability to accurately calculate it, needs to be measured appropriately. Because productivity for company A, will have to be measured differently from company B. And if you’re an entrepreneur, your productivity equation will be slightly different from Mr Smith who also works for himself but in another field.

So, once we understand that, we can look at the basic equation for calculating productivity (with the proviso that for each and every company, you’re going to have to tweak it a little).

The equation


In the most simple terms, the equation used to calculate productivity is as follows: Total Output (what it costs to run your business) divided by Total Input (your turnover) equals your Labor Productivity. This way you can get an hourly, daily, monthly, or annual figure of what your productivity is.

You’ll also need to factor industry considerations into the mix. For example, sales and manufacturing are fairly easy fields in which to calculate productivity. The service industry, on the other hand, is one of the hardest areas to equate, simply because there are so many intangibles that need to be factored in.

Big companies versus the entrepreneur – and how calculating productivity differs.

Big companies versus the entrepreneur

So, for the large corporation or big companies out there, then calculating productivity is something that’s regularly assessed – and they’ll be people who have this very responsibility.

But what if you’re an entrepreneur who works for himself (or herself)? Calculating productivity is a) something you might not think you have time for, and b) something you really, REALLY, need to do.

Of course, you can easily workout your own productivity using the equation given above – and you should do this at least on a bi-monthly basis. Because hey, the whole idea of working for yourself is that you increase your worth (and that of your business) on a regular basis.

Ways the entrepreneur can increase their productivity.

increase their productivity

  1. Plan ahead. The first thing you should do with your day is map out how it’s going to go. Or do this last thing in the evening for the following day. Having clear, defined goals set up for the day will mean you can systematically work though your ‘to do’ list.
  2. Stop multi tasking. Guess what? Multi tasking is actually a waste of time. It’s far more productive to work though thins one at a time.
  3. Prioritize your goals. Write a list of all your goals for the quarter (or for the year). Then prioritize the top 5. Concentrate on these – and only once they’ve been achieved should you consider attacking the next ones.
  4. Cut out meetings. Are all those meetings really necessary? Could they be handled with a phone call, Skype call, or simple email? If you do have to have meetings, make sure they’re time boxed and you don’t go over the allotted length allowed.
  5. Don’t put things off. If something needs doing, then just get on and get it done. One of the worst culprits of destroying productivity is having something hanging over your head that you need to go back and do. There will always be more things that’ll take up your time. So doing things in the here and now means you can then move forward and concentrate on more important thing.
  6. Know when to say no. Ah – the bane of the entrepreneur..! But in order to increase productivity, it’s essential to know when to say that most difficult of words – NO!
  7. Get rid of social media. Facebook, Twitter, Instagram… Delete those apps from your phone. Every time you get a notification it’s almost impossible not to want to check it. But all this is doing is eating into your productivity. So by taking away the temptation, you automatically increase your productive output.
  8. Take a vacation. You might not realize it, but being fresh, relaxed, and content will make you a far more productive machine. Knowing when to rest up is one of the best ways to ensure you’re firing on all cylinders. Richard Branson, one of the world’s most successful entrepreneurs, was king of this.