Productivity is a measure of the efficiency of production, expressed as the ratio of output to inputs used. Performance is defined as the accomplishment of a given task measured against preset standards of achievement, such as accuracy, completeness, cost and speed.
In the wider context of performance management, productivity is measured against productivity KPIs. In their simplest form, productivity KPIs, such as # Units per man-hour, stand at the basis of both modern and older performance evaluation systems. However, it is only but natural that we ask ourselves the following question: How much productivity is there left to both measure and reflect on performance?
In her book, The Measurement Nightmare: How the Theory of Constraints Can Resolve Conflicting Strategies, Policies, and Measures (1999), Debra Smith talks to her readers about a real-life situation, based on one of the most common productivity KPIs in use: # Units per man-hour. And it all starts with defining the KPI. According to her, # Units per man-hour is a “summary of standard costing’s use of standard labor hours and standard labor rates, resulting in labor variance analysis and decisions designed to improve.”
“There is not one productivity indicator that does not reflect on performance. And there is not one neglected faction of performance that does not impact productivity in one way or the other.”
From here on, Debra Smith describes this particular situation in which, on an intuitive basis, some executive manager from a manufacturing company decides to increase # Units per man-hour by cutting labor costs with highly automated machines. So, instead of six loom operators, four were assigned to tend to one loom per shift.
And the effect was as expected…at first. # Units per man-hour had increased at the loom. However, because of the downtime of the looms which now increased, the total output of the looms had decreased.
Due to a lack of attending operators, the downtime of the machines escalated up to a point where it impaired all subsequent processes. When that happened, all downstream processes began to suffer from starvation. % On-time delivery of products declined, $ Labor costs went up due to # Overtime and, instead of going up, $ Net profit went down.
Debra Smith’s account of the negative side effects one productivity measure can propagate, when taken out of the context of performance, stand to show that there is more to productivity in performance than counting outputs per unit of input. And this is more visible when dealing with the most popular dimension, which is labor productivity.
In the context of performance management, labor productivity can be translated through individual KPIs. When dealing with employee performance, individual productivity KPIs become part of a more complex performance evaluation system. The overall individual performance index simulates an average between the score of the individual performance scorecard, the individual competencies score, and the employee behaviors score.
Where do KPIs fit into this equation? Productivity KPIs are mindfully incorporated into the individual performance scorecard, to best reflect the quantitative aspects of employee performance. And this is where everything gets tricky and we start asking ourselves: How much of one employee’s performance should be measured in terms of quantity?
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Let’s take, for example, the automotive industry. With automotive manufacturing, productivity is a key performance indicator that measures the total production volume of the actual manpower, while taking into consideration the effective days officially scheduled for each automobile.
The core performance indicator of the automotive industry is # Hours per unit or # HPU, and it reveals the number of hours required to build a car. However, at its basis, this # HPU cannot be measured outside # Available manpower, # Effective working time, and # Individual production volume. Let’s add % Absenteeism rate to this reasoning.
When dealing with target production volumes it is important that the plant works at its full throttle to achieve those targets. Given this requirement, % Absenteeism rates should not be overlooked, as they have a major impact on the # Effective working time, which here on, impacts the # Production volume, and, ultimately, the # HPU.
However quantifiable, % Absenteeism rates also reflect on less quantifiable variables. This further takes us to the issue of % Employee engagement: a roughly quantifiable, uncontrollable driver of not only productivity but of performance as well.
So, how much productivity is there left, to both measure and reflect on performance? A great deal. And maybe the best way to look at it is by envisioning this revolving cartwheel…this continuous circle, which turns productivity into performance and vice versa.
All things considered, there is not one productivity indicator that does not reflect on performance. And there is not one neglected faction of performance that does not impact the former in one way or the other.
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Editor’s Note: This article has been updated as of September 18, 2024.
The topic of work-life balance is at the front of the minds of many companies and employees. In today’s fast-paced culture, human resource professionals are looking for ways to improve their firms’ bottom lines, boost employee morale, retain people with vital company expertise, and keep up with workplace changes.
Pandemics continue to wreak havoc on people’s lives and livelihoods across the world. While most talks center on the fear of contracting the disease, living in houses, overcrowded nursing homes, and business closures of all kinds, the crisis has also produced some positive outcomes. Reduced vehicle traffic and traffic accidents, decreased levels of air pollution, which must contribute to lower heart attack rates, and a renewing atmosphere could be considered the “silver lining” during these times.
The pandemic became a bridge for community action, family communication, behavior, sanitation, cleanliness, and online and distance education to happen. It is a blessing to be able to breathe clean air and drink pure water. It is now up to people to live a life considerate of all the gifts that nature has bestowed upon them. This kind and sensitive way of life will give you hope for a healthy and stress-free life.
Does work from home raise productivity?
“Working remotely has given me more space for long-term thinking and helped me spend more time with my family, which has made me happier and more productive at work,” Mark Zuckerberg,Facebook founder and CEO wrote. He has also said that he expects about half of Facebook’s employees to be fully remote within the next decade.
According to aStanford study of 16,000 workers done over nine months, working from home enhances productivity by 13%. Workers in the same research reported higher job satisfaction and a 50% reduction in attrition rates.
Whether they are a parent, carers, or pet owners, today’s remote employees must juggle a multitude of duties while working from home. Many employees have struggled to reconcile the obligations of their business with the needs of their families or households. This is why the concept of work-life balance is often tossed around. Employers, on the other hand, have acknowledged that each employee is unique. To ensure self-managed and independent personnel, several firms choose to offer personality-like assessments in the workplace.
Work-life balance is not a new notion in human resource research. It would continue to be studied in a variety of ways. This only makes sense because work-life balance has an 8.3 percent impact on job satisfaction and a 4.4 percent impact on employee retention.
Useful statistics for both employer and employee
Commuting saves remote employees an average of 40 minutes every day.
Fewer real estate expenditures, lower absenteeism and turnover, and greater catastrophe readiness are the key savings for firms.
Since 2020, people have been meeting by video calls 50 percent more since COVID-19.
Nearly 70% of full-time workers are working from home during COVID-19.
After COVID-19, 92 percent of those polled intend to work from home at least one day per week, and 80 percent expect to work from home at least three days per week.
23 percent of those polled said they would take a 10% pay cut to work from home full-time.
Being at home during COVID-19 saves people on average close to $500 each month. As a result, you’ll save around $6000 every year.
Only 20-25 percent of businesses cover some or all of home office equipment and furniture costs.
After COVID-19, 81 percent of respondents expect their employer will continue to promote remote work.
Compared to those who did not, 59 percent of respondents indicated they would prefer to work for a company that offered remote work.
Mental health at work has now become an important area of concern for several organizations. Half of working adults worldwide have admitted experiencing anxiety about job security, stress caused by changes at work, loneliness, and difficulty balancing work and life due to the COVID-19 pandemic, according to the mental health data published by the World Economic Forum.
Mental health issues affect not only one’s quality of life but also work performance and productivity. Studies cited in a Unite for Sight report show that psychological issues lead to reduced income, “lowered individual productivity due to unemployment, missed work, and reduced productivity at work.”
The effects of mental health issues on workers go beyond the offices. The Black Dog Institute, a medical research institute in Australia specializing in mental health, reported that the Australian economy alone loses more than $12 billion each year due to mental health challenges. Such economic losses support the findings by the World Health Organization (WHO), which states that the cost of depression and anxiety to the global economy is US$ 1 trillion per year in lost productivity.
What organizations can do
According to WHO, among the factors affecting the mental health of employees are poor communication and management practices, limited participation in decision-making, long or inflexible working hours, and lack of team cohesion. Bullying and psychological harassment are also listed as well-known causes of work-related stress and related mental health problems.
Given that information, how can organizations take care of their employees’ mental health? Taking action on this matter requires an entirely different and mostly less-traveled or less successful path.
The Chartered Institute of Personnel and Development or CIPD reports in their Health and Well-being at Work Survey in 2019 that just one in 10 (or 9%) of organizations in the UK have a standalone mental health policy for employees.
Marcela Prescan, a performance management expert at The KPI Institute, previously wrote that performance management does focus most of its practice on the human element. She explained that a performance management system is anchored on homogeneity, which can mean several things, including having “a common understanding of the organization’s mission,” “communication that exceeds the boundaries of formality and begets familiarity,” and a “full grasp of the role and responsibilities that come with being part of a community.”
With that in mind, performance management may recognize and include the needs of employees in terms of their mental health.
Memish (2017) emphasized in their study that it is important to focus on the promotion and prevention side. According to them, “The Canadian Standard (Mental Health Commission of Canada, 2013) was the only guideline that adhered to all levels of the integrated approach and included extensive guidance and practical tools for the implementation of recommendations at each of these levels.”
This is the model in the Standard that shows how mental health is promoted at the organizational level.
In the diagram, the model envisions psychological well-being promotion and is implemented through key drivers and strategic pillars as an umbrella to the thirteen workplace factors. These factors are the more targeted areas to achieve the vision. As mentioned by the Standard, “addressing these factors as listed on Figure A.1 effectively has the potential to positively impact worker mental health, psychological safety, and participation. This in turn can improve productivity and bottom line results (p. 19).”
At the individual level, employees can start with small steps. The Mental Health Foundation in the UK recommends that they discuss their feelings to gather support, remain physically active to keep the brain healthy, take a break, ask for help, and reflect and value one’s strengths, uniqueness, and relationships.
