Step by Step Guide to Productivity Management System

Simply put, productivity is the output you get for one unit of input. So, if the input is time, you may say, the total work done in one unit of time, typically an hour.

Industrial work which usually involves manual labour typically calculates productivity by the hour. But why should you look into productivity in the first place? Let’s say you run a business, or manage a bunch of people, and your performance depends on the performance of those that work for you.

In other words, your bottom line is impacted by how well this bunch under your works and delivers for you.Indirectly by way of retaining top talent, upskilling them and giving them additional responsibilities to handle.

The productivity management system is an organizational setup and framework that helps you track, score, reward, and remunerate these workers’ performance, thereby maximizing your gains or the business’ gains directly through better productivity and quality or indirectly.

In an operations management, where it’s all about managing the transformation of multiple inputs into many finished goods and services, productivity is used to measure how well the available resources are utilized. Operations management categorizes productivity into mainly 4 types, Labour, Capital, Material and Total Factor. Labour is work done by labour per person per unit of time giving you the efficiency with which the labour involved is

With productivity reasonably defined, let’s look at what has evolved around it, Productivity Management. A system that maps factors to goals of the business defines these factors or criteria used to calculate the productivity in any given setup, how much should each factor be considered for the calculation and is as unambiguous as possible to avoid conflicts at a later stage. We shall involve ourselves in employee productivity management in this blog.

  • Productivity Management System
  • Total Productivity Management
  • Types of Productivity
  • Productivity improvement techniques
  • Productivity
  • Management Tools
Step by Step Guide to Productivity Management System


According to Gallup Research, a leading global analytics and advice firm, only about 50% of the workforce in surveyed businesses, fully understood what the organization expect from them and their specific role in helping the organization achieve its goals. This gap needs to be bridged by setting up and nurturing a system that enables managers and leaders to be transparent about factors being measured, empower their employees to track their own productivity, and create a continuous feedback and improvement mechanism. This system is the Productivity Management System.

In a typical manufacturing setup, it is quite easy to calculate the majority of employees’ productivity. The ones on the production floor generate some kind of output for a given input in a certain time. Productivity for such workforce then becomes a simple formula-

Productivity = Units of output / time.

Basically, the time required to produce one unit of output. This is so because on the production floor, mostly there is no variety in the produce or output. The same cannot be said of knowledge workers.

There are challenges when it comes to assessing the productivity of knowledge workers.

  • Measuring the value of an asset generated by a knowledge worker.
  • How to measure the input of a worker when the work is done in collaboration.
  • More often than not, the work in case of knowledge worker involves qualitative goals rather than quantitative.
  • The knowledge worker should be able to map his/her work to the team or organisation’s goals.

A productivity management system should be able to address these challenges. It will have to take factors other than time and work done, like quality, the impact of work on the business, both internal and/or external, the depth of insights gained and their benefits.

Now that we know what a productivity management system should encompass, let’s layout a few rules that the system should adhere to.

  • Work should be mapped to organizational or team goals.
  • The system should allow transparency in the measurement of work done.
  • The employee should be able to relate his/her work to any of the goals and self-assess the work at any point in time.
  • How much each goal will impact productivity should also be clear. The weight each goal carries should be explicitly mentioned.

Let’s take an example to understand what has been discussed above.

Assume a sales team, with the following factors, arrived at for deciding productivity and the related weight for each.

  • Deals closed -50%
  • Quality of deals-30%
  • Autonomy -15%
  • Insights-5%

Each factor now is called a metric that the employee is judged on. Applying the weights to each metric’s points will give your employees a productivity score that reflects your company’s goals. These should help you set up a framework to build your product management system that leaders, managers and employees can depend on for helping the team or organization achieve its goals.

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Total Productivity management refers to a system that brings together various improvement activities being implemented in an enterprise to enable top management to meet the enterprise-wide goals. It is a top-down approach starting with a corporate vision and broad goals, which are then broken down into supporting objectives or targets throughout the organization. These then take more granular form with quantitative and qualitative assessments.


In Operations Management, there are 4 types of productivity.

It measures the efficiency of labour in transforming resources into a product of higher value. It translates to a measure of effort needed to produce output.

Capital productivity evaluates the production achieved against the infusion of physical capital. Physical capital includes equipment, buildings and other hardware needed to generate the output.

Material productivity is typically used in the manufacturing sector. It is the measure of output produced against the input of materials used in production. In essence, it is a measure of wastage.

Total Factor Productivity is a measure of everything that is not captured labour, capital or material—attributes like knowledge, management techniques or impact of improvement programs. The components of Total Factor productivity are usually sources of productivity changes in the organization.

  • Labour productivity
  • Capital productivity
  • Material productivity
  • Total Factor productivity


Management can pull several levers to ensure steadily increasing productivity.

The consulting firm, Advanced Workplace Associates, found that six conditions consistently ensure an increase in productivity. Management may employ these techniques across the organization to foster productivity.

1. Ready support and advice

Being available for your workforce for immediately clearing any doubts about the direction they want to take at the workplace and a piece of advice from time to time, will go a long way in ensuring your workforce is motivated and productive.

2. Foster best practice sharing

Encourage the workforce to share information that will improve anything related to the way work is done. It could be anything from the way they are seated to the changes in processes or guides on how to tackle a specific problem. Sharing information among others in the team ensures the others do not spend time reinventing the wheel and encouraging others to contribute.

3. Ensure clarity in the alignment of metrics to goals

Studies have found that a very less percentage of employees really understand how their own metrics are tied to the team’s overall goals or even the organization. The management must understand how to tie the metrics to organizational goals and ensure that everyone on their teams is clear about how their metrics help the organization achieve its own goals.

4. Foster continuous improvement

Let the workforce think about any issues grappling the team, and seek information even outside the team to understand how others might be tackling similar issues and then share the team’s solutions. In this way, they feel that they contribute to the team holistically and drive continuous improvement within the team.

5. Encourage social bonding within the team

Research shows that strong social bonds within the team enable employees to tide over challenges better than otherwise. Management should encourage the development of social bonds by organizing team building activities and team outings.

6. Trust between management and workforce

The workforce must have confidence and trust in the management. Without trust, it is difficult for the workforce to put in their 100% at work. The management must promise only on what it can deliver to keep its workforce’s trust and confidence.


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Implementation of Vite is an effective way of making sure that the company goals and vision will be aligned with employees’ skills and learning opportunities while balancing and maintaining job performance and productivity.


Productivity management is a function of leadership and an investment in time. If driven the right way from the top and at all levels below, with help from productivity management tools available on the market, you will have a workforce that works for the business and not for themselves, which makes products and businesses great heights.

Source: Jigsaw Academy

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