It’s confusing. There’s a big difference between being busy and being productive, but many people think they’re the same thing – especially small business owners. They often mistake a busy employee for a productive one, usually to the business’s disadvantage. Thousands of businesses have closed because, while they may have been busy, they weren’t productive.
This isn’t just playing with words; there’s a marked distinction between the concepts, and the actions which go with them. A difference that’s important for owners to understand. Many don’t have a good working knowledge of the process of or requirements for genuine productivity.
Usually, because they don’t “get it” they don’t make it a priority. They aren’t good at managing it. They don’t track it or, worse yet, even expect it out of their employees (or themselves, but that’s another article). Therefore, let’s look at what it is and why it matters.
Simply put – productivity is the amount of value (money) produced divided by the amount of costs (i.e. time, supplies, personal) required to do so. It’s calculated by dividing the output created during a specific time by the total cost used to produce it. This formula can be used to measure the yield of many things: shifts, individuals, products, machines, crews, etc.
But, how does it actually work? Let’s look at a composite example.
Sam had a successful machine shop with a 1st and 2nd shift. He wanted to increase his volume, but didn’t know how to get to the next level. He believed his employees were as productive as they could be, because when he was on the shop floor they always seemed busy.
He was skeptical when Tim, an outside professional, challenged his beliefs. Tim was able to document, using the formula for productivity, that the 2nd shift was more productive, therefore more profitable, than the 1st shift. He was also able to determine the reasons why.
Even though they worked the same total hours the 2nd shift had higher output, used fewer materials, took less time to do a job and had a smaller amount of rework. In addition, they had lower employee turnover, fewer call offs and not as much tardiness or early clock outs.
However, neither shift had a productivity rating over 70%. Sam admitted that both shift foremen had talked to him about making some changes to increase the efficiency of their crews, but he hadn’t listened. He’d thought the employee’s busyness was equal to their effectiveness.
An owner should be able to recognize which work creates value. Typically, this means thinking and behaving differently than he has in the past. Replacing busy work with productive work can take time and diligence, but it usually results in happier employees, higher profit and increased happiness for the owner.
