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Productivity Formula (Table of Contents)

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What is the Productivity Formula?The term “productivity” refers to the performance metric used to measure the efficiency of a company’s production process’s efficiency during a given period. It can be used to measure the efficiency of human capital or machine.

The formula for productivity is very simple, and it can be expressed as the output produced divided by the input provided. Mathematically, it is represented as,

Productivity = Output / Input

Examples of Productivity Formula (With Excel Template)Let’s take an example to understand the calculation of Productivity in a better manner.

You can download this Productivity Formula Excel Template here – Productivity Formula Excel Template

Productivity Formula – Example #1Let us take the example of a production manager who wants to assess the company’s productivity. According to the accounts department, the company produced 150,000 units last quarter, requiring 20 laborers to work 22 days a month and 8 hours per day. Calculate the productivity of the employees in terms of units produced per hour.

Solution:

The input of Man Hours is calculated using the formula given below

Input = No. of Labors * No. of Months * No. of Working Days per Month * No. of Working Hours per Day

Input = 20 * 3 * 22 * 8 hours

Input = 10,560 hours

The productivity of the Employees is calculated using the formula given below.

Productivity = Output / Input

Productivity = 150,000 units / 10,560 hours

Productivity = 14.2 units/hour

Therefore, during the last quarter, the employees produced at a rate of 14.2 units/hour.

Productivity Formula – Example #2Let us take another example where the company’s senior management wants to calculate the productivity of its employees in terms of revenue generated per employee. In 2023, the company generated $35.0 million in revenue, and the company started the year with 200 employees and ended the year with 220 employees. Calculate the revenue per employee for the company based on the given information.

Solution:

The average No. of Employees is calculated using the formula given below

Average No. of Employees (Input) = (Opening Employee Count + Closing Employee Count) / 2

Average No. of Employees (Input) = (200 + 220) / 2

Average No. of Employees (Input) = 210

Revenue per Employee (Productivity) is calculated using the formula given below.

Productivity = Revenue (Output) / Average No. of Employees (Input)

Productivity = $35.0 million / 210

Productivity = $166,666.67 per employee

Therefore, the company generated $166,666.67 per employee in 2023.

Productivity Formula – Example #3Based on the given information, Calculate who is the most productive analyst.

Solution:

Productivity is calculated using the formula given below

Productivity = No. Of Cases Executed / No. of Months Served

Jason’s Productivity

Productivity Jason = No. Of Cases Executed Jason / No. Of Months Served Jason.

Productivity Jason = 16 / 4

Productivity Jason = 4.0 cases per month

David’s Productivity

Productivity David = No. of Cases Executed David / No. of Months Served David.

Productivity David = 25 / 7

Productivity David = 3.6 cases per month

Henry’s Productivity

Productivity Henry = No. of Cases Executed henry / No. of Months Served Henry.

Productivity Henry = 19 / 5

Productivity Henry = 3.8 cases per month

Therefore, from the above analysis, it can be seen that Jason is the most productive analyst, with an execution rate of 4 cases per month.

ExplanationThe formula for productivity can be derived by using the following steps:

Step 1: Firstly, identify what you want to consider as the input for the production process and then determine the input used value. The input is the initial resource provided for the production. Examples of input include human labor regarding the number of labor or man-hours.

Step 2: Next, determine the value of the output produced in the process. The output is the final intended product of the process, which can be revenue, number of units produced, etc.

Step 3: Finally, the formula for productivity can be derived by dividing the output (step 2) produced by the input (step 1) provided, as shown below.

Productivity = Output / Input

Relevance and Use of Productivity FormulaThe concept of productivity is important and interesting as it is used in many different processes to assess production efficiency. Each productivity ratio can have an atypical input that differs from another ratio. As such, despite having the same basic underlying formula, the productivity ratio for different forms of production looks different. Some of the most common examples of inputs are labor hours, materials, capital, etc., whereas common examples of output include sales, amount of goods produced, etc.

Productivity Formula CalculatorYou can use the following Productivity Formula Calculator

Output Input Productivity Productivity = Output = Input

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= 0

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