The Ultimate Guide to Operations Productivity: What It Is and How to Measure It

When it comes to sales, productivity is of utmost importance. What and how much the team is inputting can directly translate to outputs of goods and services, meaning better productivity can lead to more sales.

For operations management, it’s important to understand how productivity works to help your team achieve its goals. That might mean identifying and reaching out to team members that are falling behind or reflecting on company and management processes that can either help or hinder productivity.

Let’s dive into what exactly is operations productivity, how to measure it, and how to make it the best it can be within your organization.

What is Operations Productivity?

Operations management is the overseeing and designing of production, manufacturing, and distribution of products and services, particularly to make sure all processes are moving as efficiently as possible. Productivity itself is how efficiently inputs, like business processes, result in outputs of goods and services. The operations team is in place to ensure the company is running at peak efficiency.

Productivity Measures in Operations Management

So how do you measure productivity? What metrics do you use? Productivity is computed as a ratio of total output divided by total input using the following equation:

Total Productivity = Total Output / Total Input

Let’s walk through an example. If a manufacturing facility is able to produce $12,000 worth of product using inputs such as machinery, and labor costs that equal $6,000, the productivity output would equal two.

Total Productivity = Total Output / Total Input = $12,000 / $6,000 = 2.0

As you can see, the items to consider in measuring productivity will vary by your business but includes the costs or values, such as hours worked/labor costs and materials to make the products, for a set amount of time — say a week — divided by how much you make in sales from the products or services you are selling.

The resulting number, 2.0, is pretty relative, which is why tracking productivity regularly is important. If you notice that your highest-performing week has higher outputs but the same inputs and results in a productivity ratio of 5.0, you know that productivity could be improved when it is at 2.0.

Factors That Boost Productivity in Operations Management

There are a number of factors that help boost productivity in operations management.

1. Training

When you think of training, think of the return on investment (ROI). You might have to spend money and time to offer additional training to employees, but you’ll make that money back and then some with employees that can work more efficiently. Well-trained employees can work faster with less waste or errors, meaning higher output in less time.

2. Team Goals

Work can be pretty uninspiring when there are no defined goals to reach. Ensure the entire team is aware of the goals, and make those goals realistic. Too low, and employees might feel less motivated after reaching an easy goal. Too hard, and employees will feel deflated and stressed. Also, incorporate rewards for when the team hits their goals.

3. Working Conditions

Make the workspace comfortable and inviting for employees. That could mean choosing an office with plentiful windows, adding in standing desks, or outfitting a break room with tons of amenities like coffee, snacks, and comfy sofas.

4. Support

If an employee is struggling with something, listening to their problems and providing swift guidance and understanding can make all the difference. Training plays a role here, too; if an employee is having a hard time meeting goals due to a specific weakness, offering support via training can help them grow their skills.

5. Fair Wages and Benefits

Knowing they are being paid fairly for their work and they can enjoy free healthcare or plentiful vacation time will motivate employees to give their all at work. Competitive pay and benefits help employees feel valued and dedicated to the job.

6. Technology

Technology can improve productivity immensely. It can be used to improve team communications through collaborative tools, like a project management app, track inventory, and automate monotonous tasks so the team can focus on more pressing issues.

Factors That Hurt Productivity in Operations Management

While there are many ways to boost productivity, also keep in mind that there could be tools or business processes that are doing more harm than good.

1. Micromanaging

When employees feel trusted, they are more motivated to work hard. But if you’re constantly checking in on them, you’re actually distracting them from getting the work done, therefore reducing productivity.

2. Outdated Technology

While the latest technology can improve productivity, outdated technology can ruin it. The more time employees are stuck fixing glitches or waiting for something to load, the longer they are taking to produce outputs. Again, think of ROI here. Sometimes, investing in technology can be costly upfront, but it will make all the difference when it comes to productivity.

3. Undefined or Uninspiring Goals

Goals give teams something to work toward. Without them, there’s no drive to make the work more efficient. When setting goals, make them realistic, too. If you are setting low goals to make them easily achievable, workers might be productive up to the point of reaching that small goal, then will feel unmotivated to continue the hard work.

4. Unnecessary Meetings

In the same vein as micromanaging, pulling employees into constant meetings also means they are spending less time on producing outputs.

5. No Automation or Delegation

Did you know that 40% of workers feel their work is very or extremely stressful? Not only that, but about 1 million Americans miss work each day due to stress, costing businesses millions of dollars each year.

6. Poor Working Conditions

A dark, dim office, a noisy environment, and cheap desks and chairs can all leave employees feeling uninspired and uninterested in their work.

7. Lack of Benefits

If employees are dedicating 40+ hours a week to a business but aren’t making enough to live comfortably or aren’t accruing time for vacations, they’re not going to have an interest in sticking around. Instead, they’ll search for something better.

How to Help Operations Teams Improve Productivity

One way to help reduce employee stress is to first implement technology to automate some of their tasks and to allow workers to delegate their work. This can help lighten workloads, reduce stress, and improve productivity.

Stress can also stem from the work environment. If the office is always loud and it’s hard to focus, employees can feel stressed and distracted. Dim, uninspiring spaces can leave employees dreading the job. Improving access to natural light, quiet work zones, and ergonomic furniture can make the office more inviting and help reduce stress.

One of the top ways to improve productivity is to offer support, training, and trust to employees. When you spend time with skill-building activities, listening to problems and offering guidance, and steering clear of micromanaging, employees will feel much more valued and in turn motivated to work efficiently.

Learn More about improving productivity in HubSpot's RevOps & Operations Community.

Happy Employees Leads to Higher Productivity

When it comes down to it, employee happiness can really make or break productivity. You can invest in the latest technology and fine-tune your company operations to every last detail, but if employees feel undervalued, productivity will suffer.

The business will likely experience high turnover, and you’ll spend more time and money searching for, hiring, and training new talent rather than motivating existing team members and helping them do their best.