Factors Affecting Productivity in an Organization


Every organization is it small or big aims to raise its overall productivity. It is the organizational productivity that determines how fast the pre-determined goals are going to be attained by the company. This productivity is a calculation of the efficiency of people, machines, systems,s or units utilized for transforming inputs into expected outcomes. It is a critical parameter that shows performance related to the production of a workplace. Productivity assists in enhancing the revenue of business as with the increase in productivity, the profitability also rises. Managers while handling business projects use a process called productivity for optimum utilization of resources in order to attain desired outcomes timely. Productivity of the workplace is composed of distinct components like human resources, machines, and equipment, financial resources, working conditions, etc.   

Factors Affecting Productivity in an Organization

The factors influencing the productivity of an organization are as explained in the points given below: – 


Manpower (labor) is regarded as a key asset for every business organization which directly influences their overall productivity. Businesses should practice the right talent management as it reflects the productive face of organizations. It is a must to select the right man for the right job and provide them all relevant training for deriving the best possible outcomes. In addition to this, the delegation of work should also be appropriate such that there is no work overload, delays in work, or laxity at work. All these factors would eventually lead to enhancing the performance of workers within the organization.


Technology is another major factor that determines the productivity ratio of an organization. It represents tools, equipment, machinery, plants, and other technical know-how. The more modern the technology of the company more will be the level of production. In absence of the right technology, an organization can attain its goals even by deploying the right skilled employees. An organization should always take steps to ensure that its state of technology is up to date by doing required modifications from time to time.

Input materials

Input materials refer to the raw materials utilized by a company in producing its range of products or offering services. The availability of the right materials in the right amount at right time is critical for a business for ensuring the continuity of its operations. A company must focus on the right planning of required materials, inspecting their quality, cost, and proper handling for enhancing the overall productivity of its activities.  


Finance means the capital needed for running day-to-day operations and bearing other long-term expenses of a business. It is also referred to as the heart of a business organization that support all ongoing activities. In absence of the right amount of funds, it is not possible for the firm to run comfortably. Management should always practice optimum utilization of financial resources for avoiding any shortage which hampers the operations and productivity of the business enterprise.

Work environment

Work environment reflects the location within which employees of business perform their assigned roles or duties. It is composed of distinct components like employee safety and comfort, training facilities, communication networks, lighting, ventilation, and health facilities. The work environment is the critical factor that influences the mood, drive, and overall performance level of workers. The idea is simple- if an organization aims to improve its employee’s productivity, then provide them a supportive work environment. 

Managerial skills

Managerial skills refer to skills and abilities possessed by managers/supervisors of firms engaged in the overall management of business activities. Right monitoring, supervision, leadership, and management are all critical factors for organizational productivity. If employees do not get the right guidance from their managers, then even with rights skills their performance level cannot be overall good. Therefore, managers must focus on practicing effective management and providing the right direction to their subordinates for deriving optimum productivity. 

Product demand

The demand for a company’s product greatly determines its productivity ratio. Market forces such as demand and supply are one which helps in deciding the scale of production by the business enterprise. With the increase in the scale of production activities, the profit margin of the organization also increases leading to higher productivity. 

Employee’s knowledge and skills

The knowledge and skills level of employees play a vital role in deciding organizational productivity. Companies with highly skilled employees are easily able to derive maximum productivity from their workforce. Such employees perform their roles and duties with accuracy, attention, and zeal resulting in a higher level of performance. 

Government regulations

Government regulation means restrictions imposed by law affecting the operations of the business. The control and regulations from the government affect organizational productivity to great extent. Management should therefore have proper knowledge of prevalent government laws before making any policies or making decisions. In addition to this, the focus should also be made by managers in maintaining good relations with the government.


The productivity of the company varies as per the location of its key business units. If an organization carries on its major activities from locations having good facilities for supporting business operations, then it is quite easy for raising productivity. These facilities include proper infrastructure, law and order situation, availability of skilled labor, proximity to raw materials sources, and many more.