Productivity and Profitability: They Complete Each Other

Every business owner wants their business to be profitable. 

There are many factors that lead to a profitable business, including employee productivity. Naturally, when your employees are more productive your profit margins will increase. Productivity and profitability are two sides of the same coin, you could say… they complete each other.  Without productivity, there can be no profitability.  So how do you make your business profitable through productivity? Let’s explore!

First, let’s dive into what both of these words mean.

  • Productivity is the best way to measure efficiency. As a business owner, you want to see employees’ input result in goal-achievement for the business. The purpose of productivity is to achieve company goals using the least amount of time and effort. 
  • Profitability is a measurement of income compared to expenses. So the cost of paying your employees in balance with the amount of work they generate. 

Profitability and productivity work in a symbiotic relationship. As you work to run a successful business, utilizing these two factors in tandem is essential to your success. 

How can you ensure your employees are productive and it leads to profitability? 

Here are a few tips to lead your employees to greater productivity:

  • Training Programs: Begin with training programs and initiatives to improve operations within your business. As a business owner, you must ensure your employees are equipped to perform their job to the best of their ability. Often this means leadership training for middle management.  Great managers are the key to profitability. 
  • Practice, Practice, Practice: Once your employees have been adequately trained ensure they continue to practice their new skills. The more your employees practice these skill sets, the more second-nature they will become. Once they become second-nature, your employees will be able to perform their tasks faster and more efficiently. What better reason to practice than a company that rewards employees for doing things right. Think about ways to encourage the habits you want to foster. 
  • Encourage constructive feedback: Implementing training programs and leading a team can be challenging. The best way to improve your programs and leadership is to allow your employees to provide feedback. What’s working? What’s not? Where can you improve? Ensure the feedback system gives your employees a sense of safety and that it comes without repercussions. Being heard and being loved are almost indistinguishable for most of us.  So give a little love and let your employees be heard. 
  • Implement follow-up activities: Training and education will not be effectively retained if you do not give your employees the opportunity to continue to use their new skills. As you continue educating your workforce, offer opportunities for them to train newer managers, invite their expertise into the company-wide conversation and remember to reward, reward, reward.  

Once you have implemented proper productivity training programs for your employees, you can begin to focus on profitability. How can your newly trained employees advance your business’ profitability goals? When your employees feel as though they’re contributing to the greater success of the organization, they will work harder for the success of the business, they will work harder to see profits increase. 

Profitability is what keeps your business running. When you inspire your workforce to be more productive, it is all but inevitable that you will see an increase in profit margins. At TGG, we understand that profitability is likely your main focus, especially right now. For more profitability tips, visit our video content library!

This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.

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