4 big factors affecting productivity← Back to blog
Productivity is one of the most renowned concepts within the field of business administration. Because of that a lot of the management strategies are designed attending the factors that affect it. Nevertheless, it could be difficult to identify them all because of the diversity of circumstances they come from. Following this direction, it’s very useful to present a clear and general model to help us classify and Identify them.
As it name suggests, productivity obeys to production, but always referred to efficiency. From a wide point of view, increasing the productivity means the capacity of producing more with the same use (and consumption) of resources. That’s to say to be able to produce the same at lower cost, investing the same in materials, labour force, time, and so on.
For example, one of the key factors affecting the productivity and usually understood as the most determinant of all is the application of new production technologies, brand new and more efficient machines. But there are many other factors as important as technology. If we want to order in a more advisable way everything surrounding productivity and the relationship between the factors it is recommended to follow this classification:
It would seem that the internal and own factors are the same and the external and foreign factors too. But if we consider the company as a universe, as a system, as a tribe, it will be clear how all they are different from each other. Some are inside of the company but don’t belong to it.
In everyday life these 4 factors never come alone; so that it’s necessary to underline that they are interacting all the time and show up combined. It is the mix of all factors which influences the productivity. In that order of ideas, let’s identify these couples: internal-own factors, internal-foreign factors, external-own factors, and external-foreign factors.
- Internal-own factors: they are, for example, the inner organization of the company, the business model or the labour force. Although it is very common that workers are looked as the most deciding internal-own factor affecting productivity, the truth is that management is even more because of its influence over the work teams.
- Internal-foreign factors: these factors work internally but depend on a third foreign service. For example, the Internet service and installation in the physical space of the company or the sewer system of the city.
- External-own factors: they are outside of the company but are closely related and can affect the productivity. For example, raw materials used in the production chain and bought from an external supplier.
- External-foreign factors:they are far from the production chain and only influence the productivity indirectly. Between the most far away factors we find the government policies, the international currency market, security national conditions, and some others at the same level.
|Internal-own.Example: business administration or R+D lab inside the company.
|Internal-foreign.Example: the Internet physical installation made by the provider of the service.
|External-own.Example: raw materials bougth from a provider.
|External-foreign.Example: the working policies of the country.
In any case, all the internal factors are easier to modify by the company. A flexible schedule, the duration of the workday and video conferences instead of unnecessary trips are examples of internal factors that we can rapidly change.
On the other side, the external-foreign factors are more difficult to change, let’s consider, for example, the holydays in a country and their effect on productivity. They are fixed by law. But the size of the company matters if there’s any intention to influence over these contextual factors. For example, the big companies working with public services like gas, water, oil or electricity have an important influence on government and natural resources policies.
Small and medium companies are not able to play at such levels but, on the contrary, the smaller the company the easier to change work methodologies, hierarchies or schedule flexibility.
In summary, to increase productivity it is necessary to start identifying where all the factors affecting it come from. To place them on a dashboard or a chart really helps to follow a strategy. Therefore, it is useful to have it at the bottom of the analysis of causes and control of resources and productivity.