One of the benchmarks of whether a company is successful or not is their company productivity. But too few companies take the time to think about what business productivity really means and why it is so important to your business to take steps to improve productivity.
The Importance of Business Productivity
Productivity is the measure of a company’s performance. It is how well a company can use its resources to produce the goods or services it provides. It also may be the most important factor determining whether your business will fail or succeed. Why is productivity such a crucial issue? Because it benefits the business in some very vital ways, including:
Business Efficiency – Efficiency begets productivity which begets more efficiency. An efficient organization is one that effectively utilizes all of its resources at all times. No time or effort is wasted, meaning more products can be created in a given amount of time. More products mean more capital to reinvest in, making the business more efficient. The cycle continues.
Profitability – The bottom line is that you are in business to make a profit. The more productive you are, meaning the more of your products or services you deliver to the consumer in a given amount of time, the more money you make. Greater productivity also lowers the cost per unit for each product, which further boosts that bottom line. Productivity = profitability.
Morale – When productivity is high, profits go up, and you have more money to spend on incentives for employees. Those employees see the efforts of their productivity and work harder and better for you. Not only does your company have happy employees, but you can see even further boosts in productivity and greater profits.
Confidence – Investors who look at your organization want to see productivity. They want to know their money isn’t going to waste. When they see the effects of your productivity efforts, including more, better goods and lower per unit costs, it will give them the confidence to stick with you as you grow.
Potential – If your business isn’t as productive as it should be, you need to be asking yourself why. Even if you are seeing strong revenue and profits now, if you don’t have a good productivity structure in place, it will not last. Conversely, even if you aren’t seeing big profits right now, a strong productivity system should always allow those profits to grow, and once they start, there can be a snowball effect that leads to greater and greater profits for your business.
If you plan to have a successful business, you cannot neglect productivity. Have structures in place to measure productivity and alert you to areas of weakness. Once you identify them, develop strategies to overcome them and shore up your productivity in these spots. Even if this takes time, effort and money in the short term, the long-term benefits when it comes to the stability of your organization and your profitability are too great to ignore.