Productivity has increasingly become a key factor in determining an organisation’s success. Although it is often associated with sales volume or team size, these indicators can be misleading if not analysed in the proper context. Measuring productivity effectively involves much more than observing superficial numbers; it requires the use of specific performance indicators that reflect the true health status of the company.
What is productivity?
Productivity is defined as the efficiency with which a company converts its resources into higher-value products or services. In other words, it measures how resources such as time, materials and personnel are used to generate results. A productive company not only maximises its output but does so in a sustainable and competitive manner, allowing it to remain relevant in the market.
This concept is essential because higher productivity allows companies to offer better prices, increase the number of customers or generate higher profit margins, thus strengthening their position against the competition.
Why is it important to measure productivity?
Without accurate measurements, a company may mistakenly believe it is thriving when, in reality, its performance is stagnant or even declining. For example, if a company increases its total sales but also increases its number of employees, productivity per employee may have decreased. This imbalance can reflect a lack of efficiency that affects profitability in the long term.
Measuring productivity not only allows for identifying areas of improvement but also helps align team efforts with the company’s strategic objectives. Additionally, it provides a solid basis for informed decision-making, such as resource allocation, process adjustments and growth strategies.
Improving productivity involves a combination of strategies, such as optimising processes, investing in staff training, adopting more efficient technologies and fostering a work environment that motivates employees. Moreover, it is crucial to establish clear and achievable goals so that all team members work in the same direction.
Performance indicators: the core of productivity measurement
Performance indicators are fundamental tools for evaluating and monitoring productivity. Each company must select those that are most relevant to its industry, size and objectives.
Productivity is a key indicator for business success, but measuring it properly requires going beyond superficial figures. Performance indicators offer a clear and objective view of how a company is performing, helping to identify areas for improvement and make strategic decisions.
Below, we explore nine key indicators that are applicable to most companies:
- Completed projects: Measures the number of projects completed in a specific period, reflecting the team’s ability to meet established objectives.
- Sales: A basic indicator that shows commercial performance, although it should be analysed in conjunction with other indicators to obtain a more complete view.
- Sales growth: Assesses the percentage increase in sales over a given period, helping to identify positive or negative trends.
- Revenue per employee: Calculates how much each team member generates on average, a key metric for evaluating staff efficiency.
- Effectiveness ratio: Compares resources used with results obtained, providing a direct measure of efficiency.
- Total labour cost: Includes salaries, benefits and other personnel-related costs. Its relationship to generated revenue is a crucial indicator.
- Extra costs: Analyses unplanned expenses that can affect the profitability of projects or operations.
- Turnover rate: Measures the percentage of employees leaving the company in a given period. High turnover can be a symptom of internal problems affecting productivity.
- Customer satisfaction level: Reflects the quality of the product or service offered, as well as the efficiency of internal processes.
