What is productivity anyway?

We’ve been told for the last few years that the UK has a productivity problem. But what is productivity and why should you really care?

BrightHR Team

From experience, productivity appears to be one of those terms bandied around businesses when someone senior thinks we’re slacking - or a colleague who wants to impress in a meeting - but is it actually that important?

Tangible workforce outputs may be the literal meaning of productivity, but we believe there’s much more to it. The three key ways to understand productivity are:

  1. Output
  2. Absence
  3. Employee churn

Productivity is best measured through attendance, efficiency and quality of work or product metrics. Businesses who increase their output and quality, and lower absence and reduce employee churn, can ultimately claim high productivity levels. All of which lead them to higher profits.

What we’ve learnt about productivity

We recently found out that 32% of business owners believe productivity is less important than the bottom line. Yet, without strong levels of productivity, how can your bottom line be the best it can be? Are 32% of businesses wasting their potential?

Our ‘Play and productivity’ research, surveying 2,000 small to medium business owners, says 38% of business owners admit they don’t know their businesses productivity levels. Only 8% of business owners regularly monitor productivity metrics.

And only 22% of business owners believe that productivity should be monitored more closely. We wonder why this is so low. Perhaps there is confusion about what productivity is, or what the benefits of measuring are.

Productivity and play

Our ‘Play and productivity’ report examined if a fun work environment would increase an employee’s desire to work, their motivations and how much importance different employees placed on fun in the workplace.

We discovered that 79% of people rate fun as moderately or very important in their work day. 44% said they believed that a fun workplace would increase their productivity, showing that employees would respond productively to a positive working environment.

This playful work culture that companies such as ours instils can build a level of trust and responsibility in the employees, returning a high level of productivity and one of the lowest absence rates nationally.

Ps for Productivity - Play, Policy and Processes

Play - Business owners and senior managers need to recognise that play at work is wholly compatible with their aims and will actually benefit their companies. If you care about productivity and the bottom line, and you want a happier, more inspired and committed workforce, you need to think more seriously about workplace fun.

Policy and Processes - Business owners say that the biggest time waster of productivity is HR. More than half of business owners (58%) spend less than 10% of their time on their workers - this includes matters such as HR tasks, HR strategy and developing the business culture and recognising excellence. But is this right? It can feel like time spent creating and embedding HR policy and process is a waste, but these will save effort in the long run. Not to mention, potentially protect you from employment tribunals. If managed well, strong employee engagement, effective people management and positive culture will reduce administration and time wasted managing absence, rehiring or training staff. These improvements invariably lead to increased productivity and a better bottom line.

Productivity and bums on seats

Part of productivity, or loss of productivity, is absenteeism and attendance. You can’t afford to lose part of your workforce consistently as it significantly lowers your business’ productivity.

Yet, 69% of employers don’t know how much absenteeism impacts profit. That’s quite a damning statistic. If a significant amount of a company’s workforce is missing regularly it spells danger for profits and turnover. This is why monitoring and managing absence matters.

This is also where a fun and playful workplace helps: it not only motivates better work, it stops needless absences and produces statistically lower absence rates over the year.

Employee turnover is a massive drain on your productivity. When employees move on, your time is diverted from the important stuff, instead focusing on re-hiring, re-training and all the ‘fun’ admin work that comes with it. Think of all the paperwork!

It puts extra pressure on your staff too - not just because your front line is one ‘solider’ short, but also that others may experience lowered morale. The loss of a colleague can be disheartening and raise doubts about their place in your company as well.

So while it’s tempting to join the majority of our surveyed business owners in believing client happiness - not employee happiness - has the biggest impact on the bottom line, we’d suggest otherwise. How can you keep customers happy if your staff aren’t happy?

To find out more on how to play can help you with productivity, download our latest report.