Man-hour productivity! Explanation of why it is attracting attention and measures for improvement

Man-time productivity is attracting attention in these days when productivity improvement is required. Man-hour productivity is an index that expresses how much profit is generated per hour per employee . In this article, we will explain the formula for calculating man-hour productivity, the difference between man-hour productivity and man-hour sales, and three ways to improve man-hour productivity.

What is man-hour productivity?

Man-hour productivity is an index that expresses how much profit an employee produces in one hour . Originally, “productivity” indicates the amount of output relative to the amount of input. The man-hour productivity further expresses the productivity of one employee per hour, and the higher this figure, the more profit is generated in a short time. It is mainly used in the restaurant and retail industries, and further classification by department or sales floor enables more effective analysis.

The following formula is used to calculate man-hour productivity.

“Total working hours” in the denominator includes working hours of part-time, part-time and non-regular employees, as well as overtime work. In addition, the numerator “gross profit” uses the gross profit after deducting the cost of sales from sales. In order to correctly calculate man-hour productivity, it is necessary to grasp accurate total working hours and gross profit. In particular, it is important for companies that employ various work styles to thoroughly manage attendance in order to accurately grasp the total working hours.

Difference from labor productivity

Labor productivity is an index that shows how much results have been achieved with respect to the amount of labor input, and is calculated using the following formula.

In general, labor productivity indicates the amount of production output by an individual employee against the input labor resources, such as the number of employees and total working hours. treated as a generic concept. Therefore , labor productivity is often used as an index to evaluate labor efficiency . On the other hand, man-hour productivity indicates the gross profit per employee per hour, and can be said to be a more limited indicator than labor productivity .

Difference from man-hour sales

Person-hour sales is a numerical value that indicates how much sales each employee made in one hour , and is calculated using the following formula.

Although it is a similar term to man-hour productivity, man-hour productivity uses “gross profit” to calculate the productivity of one hour per employee, whereas man-hour sales is the cost of sales. Calculated using “sales” including Both are important indicators when a company conducts management analysis, and it will be required to make a comprehensive judgment while considering other factors.

Background of attention paid to man-hour productivity

Man-hour productivity is attracting attention in many companies, but what is the reason? I will explain from the perspective of recent social problems such as “declining working population” and “low labor productivity” .

working population is declining

One of the reasons why man-hour productivity is attracting attention is the “decrease in the working population”. The declining birthrate and aging population, which has been a problem in the past, has accelerated in recent years, and Japan is now entering an era of population decline. According to the Cabinet Office’s calculations, the working-age population aged 15 to 64, which is the center of production activities, has been declining since its peak in 1995, and is expected to decrease to 52.75 million by 2050. . This is a 29.2% decrease from the 2021 figure of 74.5 million , and it will get worse in the future.

A decrease in the working population, which is thought to be inevitable, will eventually cause a labor shortage at companies. When a labor shortage occurs, it causes a deterioration in the working environment, a decrease in the motivation of employees, an increase in the number of turnover, and in the worst case, there is also the risk of business shrinkage and bankruptcy. In order to prevent such a situation from occurring, it is important to create a system that enables management with a small number of employees . As such, it is essential to improve the productivity of each and every employee. By utilizing man-hour productivity, productivity improvement is expected .

Demand for higher productivity

The “low labor productivity” in Japan is also one of the reasons why man-hour productivity is attracting attention . According to the data released by the Japan Productivity Center in 2022, in terms of labor productivity per hour in 2021, Japan is ranked 27th out of 38 ODEC member countries, It is shown to be the lowest among them. In terms of per capita labor productivity, Japan ranks 29th out of 38 ODEC member countries and the lowest among the 7 major ODEC member countries.

If the current situation continues, there will be no way to beat the international competition, and the government also regards the improvement of productivity as a major issue. In the private sector as well, an increasing number of companies are working to improve productivity in light of the promotion of work style reforms. A work style that increases productivity is required after achieving operational efficiency and cost reduction .

3 ways to improve man-hour productivity

In order to improve man-hour productivity, let’s first focus on the calculation method of man-hour productivity. Since man-hour productivity is calculated as “gross profit / total working hours”, it can be seen that it can be improved by increasing gross profit and reducing total working hours . Based on this point, I will explain three ways to improve man-hour productivity.

Review personnel allocation

An effective way to reduce total working hours is to review personnel allocation. Employees also have strengths and weaknesses in their work content, and productivity can be expected to improve by assigning personnel according to their respective aptitudes . For example, in the work of creating materials, there will be a big difference in work efficiency and work quality between employees who are not good at PC operation and those who are good at it.

Optimizing human resource allocation is an important initiative from the perspective of productivity, but it also has a significant impact on employee motivation . We can expect to reduce working hours by clarifying the entire work and putting the right people in the right jobs.

On the other hand, in order to promote employee growth and the accumulation of internal knowledge, it is not recommended to allocate personnel only by considering the reduction of working hours. It may also fail to address retirement risk. It is a good idea to set clear goals for man-hour productivity and to allocate them in a way that leads to improved performance to achieve them .

Operational efficiency

Operational efficiency can also be linked to reduced working hours. In order to make operations more efficient, it is important to first identify every detail of the operations and identify and eliminate bottlenecks . A bottleneck is likened to an event that impedes the flow of water due to the narrow neck of a bottle, and refers to a hindrance factor that causes problems such as stagnation of work and a decrease in productivity.

If the work is not going well or it is taking a lot of time, it is rare that there is a problem in all work processes, and in most cases there is a problem somewhere. For example, “a certain process is taking a long time” or “work is concentrated on a specific employee”.

By understanding and improving such bottlenecks, you can expect to improve operational efficiency. Eliminating the bottlenecks in various operations that an organization has will lead to a reduction in working hours .

use the tool

Introducing systems and IT tools is effective in reducing working hours. By entrusting tasks that have been done manually until now to systems and IT tools, you can expect a reduction in work time .

For example, if paper-based or other analogue methods are used for document management, measures such as introducing IT tools to improve efficiency, or replacing standardized work with RPA can be considered. By introducing these systems, human error can be suppressed and the trouble of making corrections can be reduced.

In addition, by introducing the same IT tools such as chat tools between departments and departments, communication and information sharing will be facilitated . It will not only reduce working hours for a single task, but will also have a significant effect on improving man-hour productivity throughout the company .

summary

In this article, I explained an overview of man-hour productivity, how to calculate it, and points to improve man-hour productivity.

Man-hour productivity is understood in a more limited sense than labor productivity because it represents the output per hour of an employee. The background to the focus on man-hour productivity is the decline in the working population due to the declining birthrate and aging population, as well as the low level of productivity in Japan compared to the rest of the world. In order for companies to improve productivity, it is necessary to focus on man-hour productivity and take measures such as reviewing personnel allocation, improving work efficiency, and introducing tools.

By creating a work manual and standardizing work, you can expect to improve work efficiency, improve productivity, and prevent personalization. Realization of these will reduce working hours, which will lead to an improvement in man-hour productivity.