# Productivity Calculator

Use this calculator to easily calculate the labor productivity based on hours worked or number of employees (or machines, depending on use case). You can enter number of hours, number of employees, or both.

## Productivity Formula

Productivity is a measure of a company’s **efficiency regarding the production process**. It takes into account the input and output of different factors, which are obvious from the inputs required by our productivity calculator.

One of the core purposes of every business organization is to produce more goods or services, while using less resources. This efficiency is a goal which can be achieved by improving productivity. Business owners analyze productivity calculator results in order to find ways to boost their operations - increase production and minimize resource expenses.

In order to calculate productivity, you can use the formula:

**Productivity = Output / Input**.

We categorize resources as input - materials, capital, *working hours*, etc. Output on the other hand is the ready product - realized sales, units produced, number of service interactions, and so on.

Productivity may be **affected** by different socio-economic factors, such as competition, inflation, or recession.

We are going to look into the labor factor as a key aspect of any business initiative, and its analysis as a starting point to any manager’s efforts regarding optimization of the working process.

## How to calculate labor productivity?

If you wish to find the estimate labor productivity over a time period, you need to find the total labor and the total output. You can do that in terms of units produced, or sales realized, using our productivity calculator, or by hand following these formulas:

**Labor productivity = Total units produced / Total hours worked**;

**Labor productivity = Total net sales / Total hours worked**.

Let’s say you employ 12 people, 8 of which are part-time workers, while the other 4 are full-timers. You see that the sales made last January, February and March amount to respectively $25,500, $36,000, and $29,000.

In order to calculate the overall labor productivity of your employees over the first trimester of the year, you add up the sales and divide them by the product of the months, weeks, and hours worked each week:

Productivity = total sales / total hours worked = (25,500 + 36,000 + 29,000) / 3 x 4 x (8 x 20 + 4 x 40) = 90,500 / 12 x (160 + 160) = 90,500 / 12 x 320 = 90,500 / 3,840 = 23.57.

You see that in the first three months of the year, your company’s productivity was equal to $23.57 per hour of work.

**Labor productivity is often used as a trusted economic indicator** that provides accurate information about the current situation on the job market. It signals whether or not there is growing competition, what is the expected GDP, and helps estimate a country’s living standard ^{[1]}.

## Productivity - Practical Examples

We will now look into a few practical examples, where productivity is measured.

In this first situation, we are examining a local brewery. The owner has hired 7 people to bottle up the beer he produces. Each of them works 40 hours a week. At the end of the week the number of bottles ready to be sold is 19,600. Let’s calculate the productivity of the workers per hour:

Productivity = 19,600 / (7 x 40) = 19,600 / 280 = 70.

Evidently, the employees of this brewery managed to produce 70 bottles per working hour

For our next example, we will look into and compare the productivity of 2 workers - Maria and Jane. Maria is a full-time employee, working 40-hour weeks. In a month she realizes sales of $25,000. Jane works only 4-hour shifts. Her monthly sales amount to $16,000.

Maria’s productivity = 25,000 / (40 x 4) = 25,000 / 160 = 156.25

Jane’s productivity = 16,000 / (20 x 4) = 16,000 / 80 = 200

Even though Maria works more hours and generates greater cash flow, her productivity of $156/hour is at a minor level than that of Jane - $200/hour.

#### References

[1] Krugman P. (1994) "The Age of Diminishing Expectations", *Cambridge, MA: MIT Press*.

#### Cite this calculator & page

If you'd like to cite this online calculator resource and information as provided on the page, you can use the following citation:

Georgiev G.Z., *"Productivity Calculator"*, [online] Available at: https://www.gigacalculator.com/calculators/productivity-calculator.php URL [Accessed Date: 20 Jan, 2020].