Total Productive Management, otherwise known as TPM, is a systematic approach to eliminate waste associated with production equipment and machinery. Through the adoption of TPM, and by calculating total factor productivity, organisations can benefit greatly in a number of areas.

In this article, we will take a look at total factor productivity, production rate, the TFP model, productivity index, the labour productivity formula and how Sinnaps project management software can support the productivity of your project team and to complete a productivity analysis.


total factor productivity


Total Factor Productivity


Single-factor productivity is the measurement of productivity that is a ratio of output and one input factor. So then what is total factor productivity anyway? The total factor productivity definition describes it as the portion of output not explained by the amount of inputs used in production. Therefore, the quality and productivity levels are determined by how efficiently and intensely the inputs are used in production. Besides, it’s important to know some factors affecting productivity if we want to measure our productivity.

In TFP economics, total-factor productivity (TFP), which is also called multifactor productivity, is the part of output not explained by traditionally measured inputs of labour and capital used in production. The total factor productivity formula calculates TFP by dividing output by the weighted average of labour and capital input, with a standard weighting of 0.7 for labour and 0.3 for capital, always in the multifactor productivity calculator.

Total factor productivity can experience both TFP growth and TFP decline. Total factor productivity is a measure of economic efficiency and accounts for part of the differences in cross-country per-capita income. The total factor productivity calculation of the rate of TFP growth is done by subtracting growth rates of labour and capital inputs from the growth rate of output.


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Production Rate


The production rate is derived from the productivity equation that breaks down the ratio of the number of goods or services produced, and the time spent to produce them. Production rates help to measure the efficiency of production processes. Production rates can rise or fall depending on different variables. Sinnaps project management app can help to carry out these measurements for you with the KPI indicators part of the easy-to-use and efficient software. Managers can complete a productivity analysis on how production rates can fluctuate, boost parts of the process that contribute to higher rates and address problems that are causing lower rates.




A firm that is being successful and efficient can be said to have achieved capital productivity. The capital productivity formula is the total output in a given time period divided by the quantity or value of capital employed, which will give you the output per capital input.


TFP Model


Total factor productivity data shows that TFP plays a critical role on economic fluctuations, economic growth and per capita income differences across countries. In terms of business cycle frequencies, the multifactor productivity ratio is closely linked to and correlated with output and hours worked.

Multifactor productivity formula operations management work is essential as operations management looks closely at the efficiency and effectiveness of the operations of an organisation and therefore, the TFP model can greatly help to measure productivity.

A multifactor productivity example is one where the ratio of output to labour, materials, and capital is measured. This method is a more comprehensive measure than partial or single factor productivity, but it is more complex to calculate.


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Productivity Index


The efficiency with which output is produced by a given set of inputs. The productivity measurement formula measures the ratio of output to input. An increase in the ratio indicates an increase in productivity. Conversely, a decrease in the output/input ratio will act as one of the productivity indicators of a decline.


Labour Productivity Formula


Labour is the work that the employees of your organisation or team produce. Employee productivity can be measured by using the labour productivity equation, which is total output divided by total input.

For example, if your company generated $60,000 of goods or services, which would be the output, using 1000 hours of labour, which would be the input, the labour productivity formula for your organisation would divide 60,000 by 1000 which equals 60. This means that your organisation is generating $60 per hour of labour.

Another way of looking at labour productivity would be to look at the average productivity of individual employees. Instead of using hours for input here, you would use number of employees.  

This means that if your organisation generates $60,000 worth of goods or services in one week with 40 employees, your labour productivity formula would divide 60,000 by 40 which equals 1500. This means that each employee produced $1,500 for your organisation each week.

Sinnaps project management software offers specific tools with which you can monitor and control the output of team members, including a calculation of their workload so that you can ensure they are not being overloaded with work.

Overall, productivity is essential for organisation and the economy in general. In this article we covered a number of productivity aspects including how to calculate multifactor productivity, the labour productivity formula and total factor productivity growth. It is important to know how to measure it and monitor its rates, something with which Sinnaps project management tool can help you with! Try it out for yourself and leave us a comment telling us what you think! 😊


What is a critical path and how does it help us to meet deadlines? If you don’t want to risk your project’s deadline, you can find out how Sinnaps detects the critical paths of you work flows so that your objectives can be met on time 😀



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