What Is Labor Productivity?
Labor Productivity represents the rate of output per person in a unit of time in a business. This measure is also used in a macro sense for an economist to measure the strength of GDP. It compares the amount that someone is producing to what they make an hour. It is an important metric to determine how efficient employees are with work processes, it can inform the company if there are trends that point to a lapse in productivity, and if company’s performance management process should be improved.
A low productivity of labor can reveal that workers are being overpaid or that there are too many employees doing the same job. On the other hand, a high productivity of labor is naturally desired, but it can also reveal that workers are doing the job of multiple people and need a redefinition of duties.
- The Current State of Labor Productivity Statistics Part 1
- The Cost of Labor Productivity Part 2
- The Most Substantial Challenges to Labor Productivity Part 3
- How to Fix Low Labor Productivity? Solutions and Best Practices Part 4
The Current State of Labor Productivity Statistics
Below are a few productivity statistics:
- Since the 1950s, the average American worker’s productivity has increased 400 percent. This means that it should now only take 11 hours a week to achieve the same standard of living as a worker that was alive during that time.
- Americans work almost 140 hours more than Japanese workers, 260 more than British workers, and nearly 500 than French workers.
- While Americans may be more productive than their industrialized counterparts, in the summer of 2016, worker productivity fell by 0.5 percent in comparison to the previous year. It was regarded as the most rapid decline in productivity since 1979. This means that Americans are working more to create less.
- Productivity has increased in four of the last six years.
- 47 percent of respondents to a productivity survey felt that meetings were a considerable waste of time at work. Also, these workers only spent 60 percent or less of their time productively.
Studies also show that employees on average experience 56 interruptions per day causing 2-3 hours of mental recovery a day.
Also, the average worker spends 31 hours a month in meetings many deemed unnecessary.
How are these distractions and lapses in productivity impacting the bottom line?
The Cost of Low Labor Productivity
There are substantial monetary losses associated with a decrease in productivity for business.
Technology has a lot to do with this, from social media to endless work emails, it is growing increasingly difficult for consumers to stay on task and finish designated work projects.
- Due to these workplace distractions, 87 percent of employees reported feeling disconnected from their job resulting in a $300 billion cost to American businesses.
- Unnecessary business meetings cause a salary cost of $37 billion, another primary distraction for workers.
However, the cost also goes beyond monetary value. Workplace interruptions not only lose money but they can negatively impact another critical unit, morale.
According to a Washington Post interview with Edward Brown, an efficiency, and workflow consultant, workplace distractions can have a detrimental impact on employees and productivity.
He cleverly refers to these instances as “Time Bandits,” people and moments that steal an employee’s time.
His work revealed that 40 to 60 percent of an employee’s time was wasted because of these distractions.
As a result, workers were unable to finish projects on time which caused managers to look at them unfavorably. A move that drastically impacted morale and worker happiness. These interruptions also led to almost an hour of stress and fatigue. These minor setbacks are nearly taking a whole day away from workers.
The Most Substantial Challenges to Labor Productivity
In today’s world where employees are always connected by phone or email, it is easy for managers and co-workers to come by and ask for help or interrupt a project. The problem is that the interruption does not stop when the person leaves or the interrupting task is done.
It takes workers approximately three minutes to recover after a break in thought.
Workers are experiencing an average of 56 interruptions every day and companies are seeing 2- 3 hours of lost productivity daily.
The Problem of Social Media
While there are work-environment related factors that negatively impact productivity, workers are also using social media as an escape.
Roughly, 34 percent of workers use social media as a way to take a mental break from their job. While it can take employees away from their jobs, a study by the Pew Research Center revealed that 23 percent of younger workers found information on social media platforms that helped them in their current positions. Is there a balance that employers can strike with workers to capitalize on their interest in social media, but also curb some of its distracting nature?
Who Knew Emails Were Such a Time Waster?
During the work day, emails can take up a lot of time for the average worker. Employees send and receive an average of 112 emails a day.
According to The McKinsey Global Institute, employees spend 28 percent of their time reading emails. In a similar study by the Danwood Group, they found that it takes people 64 seconds to recover from an email.
This is a significant distraction that takes workers away from getting actual work done.
While emails are necessary to get out formal messaging, there have to be strategies put in place to prevent information overload. The annual productivity cost of unnecessary emails is roughly $1,800 per year per employee.
In 28 percent of projects that fail, poor communication was cited as the main culprit according to a study by CompTIA.
When instructions are vague or unclear, it creates the perfect setting for miscommunication and a poorly done project. A manager may inform an employee that they need a project on Monday, but did not add the detail that they need it Monday morning. The employee might take it to mean they have all day Monday to complete it. This creates a disconnect between what the manager expected and what the employee provided.
Another issue concerning productivity is poor instruction. An HR Magazine survey revealed that 37 percent of 4,000 respondents experienced uncertainty about tasks they were asked to complete by their managers. This vague direction contributed to employees spending a collective 40 minutes a day figuring out what employers actually meant. Alarmingly, this is the equivalent of 83 employees in a company of 1,000 doing nothing each day. Time is money, so this is an enormous drain on the bottom line.
According to the Tower’s Watson Global Benefits Attitudes Survey, of those that said they experienced high stress at work, 57 percent reported feeling disengaged.
High levels of stress negatively impacted a third of the respondents at work which significantly decreased their overall productivity. This contributed to higher levels of absenteeism and disengagement, two significant blows to worker productivity. From workplace interruptions to an overwhelming amount of duties, employees may not always have the best tools to manage these stressors. Dealing with these issues may cause workers to disengage and produce minimally if at all.
How Can Business Fix Low Labor Productivity?
There are so many situations that can distract or take employees away from their work, that leaders have to plan for a lot of scenarios. However, to improve productivity, leaders have to begin assessing what is causing low-levels of worker output.
Conduct a Productivity Assessment
It is difficult to diagnose the problem if employers do not keep regular productivity metrics. It is vital for businesses to assess how long it take various employees in different departments to complete critical tasks, as well as keep track of factors that could indicate disengagement: late arrivals, an increase in call-outs, increased social media activity, etc. This will give leaders an idea of what is happening regarding productivity, and if the issue is with a specific group of people or if it is company-wide.
Develop “Mutual Time Lock Agreements”
In an interview with the Washington Post, Edward Brown, efficiency and workflow consultant, described clever way managers and leaders can help employees stay on task and honor their time needed to get work done.
He suggested “Mutual Time Lock Agreements.” These are agreed upon times that managers and workers will decide to allow each other uninterrupted time to complete a task.
This is a great way to dedicate time to work with no distractions, and it creates a culture where managers and employees respect each other’s time.
Find Out Primary Employee Stressors
Employees cannot produce if they are not at work due to take a day off or taking care of medical concerns due to stress. Therefore, it is essential for employers to get to the bottom of what employees are the most stressed about and create a plan to address it. If employees are feeling isolated from others, employers can set aside a few times a week for employees from different departments to interact. An uptick in work tasks may cause employees to feel overwhelmed, so employers can examine ways they can redistribute duties to be sure everyone has an appropriate amount of work to do. Going the extra mile to help employees manage work stress increases productivity.
Use Status Platform to Improve Communication and Productivity
A lack of effective communication and an influx of emails spells disaster for productivity.
When managers have modern and efficient feeds that include departmental and interdepartmental updates and company-wide changes, these take the place of an overwhelming amount of emails. Also, topics on Status Platform allow for questions to clarify any confusing communications or vague tasks, while daily or weekly status reports with scheduled auto-reminders increase employee satisfaction, productivity and transparency.
How to use Status Platform for status updates:
- Easily implement daily or weekly status updates for your team members by creating a status feed with questions like “What did you do today?” or “How did you contribute to the team’s goals this week?”.
- Peace of mind: No one forgets to fill in their status updates because Status Platform sends timely reminders according to the recurrence schedule you chose.
- Increase workplace satisfaction by improving transparency: Each status update has a separate section for comments, which is used by team members to clarify information, including upcoming goals, and by leaders to provide feedback and coordinate better without micromanagement.
- Use status updates for future reference and decrease time and efforts spent on monthly, quarterly, and yearly reporting thanks to powerful filtering and export features.
- Optionally, enrich reports with the latest updates automatically added from web apps your team uses (such as project management tools, version control systems, support systems, financial applications, CRM, etc.) by connecting these apps to your status feed.
- Spend less time on meetings by making them more productive because everyone is on the same page at all times.
- Sharing: Status updates can be either
— exported to files and printed, or sent by email;
— shared with manager online; or
— shared online as company-wide or team-wide status reports, i.e., all team members share their progress with each other.
How to configure status updates:
- Create a “Status Report” applet — customize our preset forms or easily create a new form in minutes.
- Setup reminders if you want your team members to receive automatic reminders when their reports are due.
- Configure who will submit reports by choosing the “Participants” tab.
Step 2: Users will click the “Open Submission Form” button to fill in and submit the report.
Data such as the report type, date and name will be added automatically.
As soon as a new status report is added, participants with “View” rights can view it in real time.
- Set the status applet as “Team-wide” if you want all team members to view each other’s status reports.
- Alternatively, you can make every participant to view his/her own reports only. Manager/stakeholders will view all reports.
- Add, remove, and assign new team members at any time.
As soon as a new status update is added, participants with “View” rights can view it in real time when they log in to their accounts. They will also automatically receive emails with the full text of status updates.