Work out labour productivity instantly with clear inputs, formula shown and shareable results.
Labour productivity is output divided by labour input. Measuring it per hour removes the distortion caused by overtime and part-time working, while output per employee is the figure normally compared across sites. The reciprocal, hours per unit, is what standard costing uses.
Productivity
Output per hour = Output / Labour hours
Unit labour content
Hours per unit = Labour hours / Output
Units for a single-product line; revenue or gross value added for a mixed one, so a change in product mix does not masquerade as a productivity change.
Include indirect hours only if you also want an all-in figure. Report direct and total separately so improvements are traceable.