Each enterprise works for profit. Therefore, special departments monitor the compliance of all financial and economic indicators with the requirements of the developed plan. There are many methods for a comprehensive assessment of the effectiveness and profitability of the organization. One of the important stages of the study is the analysis of labor productivity.
Based on the data received, the company's management can find constraining development factors and develop measures to eliminate them in the future. Therefore, analysts carefully monitor the dynamics of this indicator. How is labor productivity measured and how to interpret the results? All this must be considered in more detail.
General information
Labor productivity indicators make it possible to really evaluate the effectiveness of the work of the enterprise labor collective. This is an important step in researching a company's profitability. Labor productivity at the enterprise is an economic category that discloses information on the advisability of the collective in the production of material or spiritual goods.
Moreover, a quantitative measurement of the effectiveness of the team is carried out for a certain period of time. It can be a shift, hour, month, week or year. Asking the question of how labor productivity is measured, it is necessary to understand the mechanism for calculating this category. Labor productivity is a relative expression of products created by an employee per unit of time. If we consider the amount of finished products made by one person, this indicator will be called production.
Scorecard
At an enterprise, labor productivity indicators are measured using two categories. This is the development and laboriousness. They are opposite values. Their tandem allows you to look at performance from two opposite points of view.
Production is calculated as the ratio of the total amount of finished products to the average number of employees. Labor intensity, on the contrary, shows how many material benefits one worker produced during the study period. therefore average number of employees in this case is divided by the volume of their labor.
These two indicators are calculated in norm-hours, cost, in-kind or conditionally-natural expression. Depending on the objectives of the analysis, one or another system of calculus is used.
Calculation formula
Carrying out the analysis of labor productivity, the financial manager applies a simple formula. This is a basic model that allows you to assess the status of the indicator in the reporting period. It is calculated as follows:
Fri = RR / HR, where Fri is labor productivity, OR is the volume of work performed during the study period, and HR is the number of workers on the list.
In foreign practice, the definition of productivity is common taking into account the costs of other resources. At the same time, together with the total wage payment for workers, other resources (land, fixed assets and working capital) are taken into account.
Moreover, the opinions of researchers are somewhat divided as to which categories of workers should take part in the calculations. Some argue that only employees in the manufacturing sector. Others add here and maintenance staff, non-production workers.
Index system
To more deeply track the dynamics of changes in the presented indicator, the labor productivity index is used. Statistics in this case distinguishes between groups of methods. Indices can be labor, in-kind or value.
To investigate the dynamics of the average output, which was observed under the influence of certain factors, apply the system of aggregate indices. This is a deeper type of analysis. In it, the value of labor productivity of each unit acts as an indexed indicator.
The number of these units acts as a balance in a similar system. At the same time, each site and employee have different labor productivity. So, you can determine what contribution a particular unit makes to the overall result.
What affects labor productivity?
To increase the efficiency of the indicator in the future, it is necessary to know the factors that influence the decrease or increase in labor productivity. They are internal and external. The latter include natural phenomena (indicators fall in bad weather), political changes, and general economic factors.
The internal causes of changes in performance levels are also quite significant. These include the use of automation, mechanization and other scientific and technological developments, as well as changes in the structure or volume of production. The situation may be affected by the improvement of managerial methods and the competent organization of the manufacturing process. Thanks to this, working conditions are improved, the work of all personnel is stimulated.
Labor productivity analysis
Studying the question of how labor productivity is measured, one should consider the methodology of analyzing the indicator. It is considered in dynamics. Depending on the objectives of the study, one of the above calculus systems is used.
During the study, the management of the enterprise can resort to measures to eliminate downtime of equipment, the failure of employees to appear. All causes of unjustified losses of working time are being clarified. You may also need to make adjustments to the product structure.
Having become familiar with what labor productivity is measured in, considering its formula, components and methods of analysis, you can make a qualitative study of the performance of any enterprise.
