Productivity

Productivity, in economics, measures output per unit of input, such as labor, capital or any other resource – and is typically calculated for the economy as a whole, as a ratio of gross domestic product (GDP) to hours worked. Labor productivity may be further broken down by sector to examine trends in labor growth, wage levels and technological improvement. Corporate profits and shareholder returns are directly linked to productivity growth. At the corporate level, where productivity is a measure of the efficiency of a company's production process, it is calculated by measuring the number of units produced relative to employee labor hours or by measuring a company's net sales relative to employee labor hours.

Steve Pavlina defines productivity as:

Productivity = Value / Time (productivity equals value divided by time)

By this definition there are two primary ways of increasing productivity: 1) Increase the value created 2) Decrease the time required to create that value

Pavlina goes on to talk about how we can understand and measure value:

Value is a quality you must define for yourself. Hence, any definition of productivity is relative to the definition of value. Pavlina defines value as a product:

Value = Impact x Endurance x Essence x Volume

And therefore:

Productivity = Impact x Endurance x Essence x Volume / Time

Impact refers to how many people are influenced by your work, or to what degree they are influenced. Endurance refers to how long your work will last (think of the longevity of a sandwich vs. a digital graphic design vs. a classic work of art). Essence refers to the quality and type of what you do; is it easily mimicked, or unique? Is its effect deep and important, or temporary and self-limiting? Volume refers to the quantity of what you produce as defined by your particular work.