Welcome to Amanda’s semi-regular blog, where she writes about how to improve business profitability
Why Benchmarking Against Yourself Is the Smartest Productivity Strategy
Many businesses rely on industry benchmarks to measure productivity, but is this really the most effective approach? While comparing to peers can offer some perspective, true growth comes from tracking your own progress over time.
The Productivity Puzzle: Why Businesses Struggle to Measure Effectively
Pushing every process to 100% capacity might seem right, but it often creates inefficiencies and longer lead times. Like a group of hikers, if one stage moves faster than another, everything slows down.
Instead of measuring output alone, focusing on gross value added (GVA) per worker can unlock true productivity.
The One KPI Every Board Should Be Tracking but Isn’t
Productivity: The Metric Most Boards Are Missing
Most organizations measure productivity incorrectly. Traditional metrics like revenue per employee provide a misleading picture of true organizational efficiency.
Two game-changing metrics can transform how businesses track performance:
Productivity Wage Quotient (PWQ) Compares organizational productivity to average salary. A PWQ above 1 signals profitable operations; below 1 indicates potential inefficiencies.
Gross Value Added (GVA) Measures the actual value an organization generates from its inputs, revealing how efficiently resources are converted into profit.
The Importance of Measuring Productivity
Understanding and measuring productivity is not merely a managerial task; it is a critical strategic initiative.
Our productivity sucks
What has happened to our productivity since 2008? And why does our productivity growth remain stubbornly low?