What Are the Different Types of Productivity?

Every business must assess its productivity to ensure that its time and resources are being put to good use. Inefficient businesses incur high expenditures and waste resources. All successful businesses prioritize cutting expenses and boosting productivity in order to boost revenues. In order to maximize each productivity type, it is essential to understand them.

What Is Productivity?

Productivity is often defined as the number of outputs produced per unit of input. Corporate businesses track the effectiveness of their production process to determine how productive they are. It is determined either by the number of units a business generates per hour of labor or by the number of net sales per hour of labor.

Types of Productivity

Although there are several levels of productivity, they can all contribute to a company's overall efficiency.

Labor Productivity

A company's ability to generate goods and services for each working hour is measured by its labor productivity, which is also known as financial yield. It also serves as a gauge for how effectively labor turned an input into something with increased perceived worth. For instance, in software firms, it would be a gauge of how well a company used its resources to create and develop the necessary code.

If a business wants to increase labor productivity, it can do so by investing in physical capital, strengthening human capital, and innovating how things are done.

Capital Productivity

Input to output ratio, or capital productivity, is the ratio of output to input (physical capital). It establishes the fixed assets' efficiency.

Capital productivity is calculated using fixed asset parity valuation. Either the data from the output produced during the year or the final product from the end of the year are used.

Material Productivity

The term "material productivity" refers to the measurement of the output produced by the quantity of input materials. For a software corporation, for instance, it might be based on the number of resources needed to finish a project or produce software.

Every business should be aware of how well its utilization levels match those of the industry. A corporation is considered to be in the competition when it raises its utilization level above the minimum standards set by the industry.

Factors Affecting Productivity

Numerous things might have an impact on a company's productivity. The following criteria must be monitored by businesses to make sure productivity levels don't drop.


Finding the appropriate workers is crucial for a business. A company's productivity may be in danger if personnel are unable to carry out their duties efficiently. On the other hand, the production levels of the business can be increased with the proper personnel working in the correct positions. Through training programs, a business should ensure that its staff has the appropriate skills. Any firm can increase its productivity levels with the aid of skilled personnel.

Equipment and Machinery

Regardless of the industry, a company needs to have the proper tools and machinery to maximize efficiency. If a business uses old equipment, it will be unable to compete with them and is likely to lose clients. The performance and productivity of employees also enhance when the appropriate equipment is used.

Floor Area

Productivity issues may arise if the space allotted for several departments is not effectively planned. A few businesses may design their floor plan with the utmost accuracy and care to ensure that the departments that work together more closely are not too far apart. The production levels of a corporation can drop significantly if the departments are dispersed around a vast work area.


An organization must measure productivity in order to ascertain how efficiently it transforms inputs into output. For instance, the fabric is produced by cloth and textile manufacturers using raw materials, labor, and machinery. The amount of fabric produced should be divided by the cost of the raw materials, the cost of the machines being utilized, or the amount of labor necessary to determine the textile maker's productivity levels. The project manager should maintain high productivity levels and use the operational and leadership skills required to complete big, complicated transformational projects.

Updated on: 23-Jan-2023

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