Improve Labor Productivity for Greater Profit in 5 Steps

RhumbixJuly 28, 2021 • 5 min read

Do more in less time. More revenue with fewer resources. Leverage digital tools with a proven positive impact on productivity. These are important ways organizations seek to calculate and improve productivity.

Let’s focus on labor because it is a significant part, if not the largest part, of a construction company’s value and project budget. Labor productivity compares how much work an employee is getting done every hour versus how much money that employee is getting paid to do their job.

First, you want to understand what fuels workplace productivity. Then, you can explore effective ways to improve labor productivity.

Here are 5 proven ways to improve labor productivity in the construction industry.

1. Investigate responsibility for the low labor productivity of your employees

Did you just find out that your employees have low labor productivity overall? Your first instinct might be to put all the blame on them for it.

You might say things like:

  • “If they didn’t take so many coffee breaks, they would be more productive!”
  • “If they would always show up on time, they would be more productive!”
  • “If they weren’t always just standing around, they would be more productive!”

You may have some employees who truly lack the effort required for optimal productivity and warrant thoughts and comments like those. 

Yet, it’s more likely that most of your employees are probably hard-working people who want to do a great job every day. Perhaps those you feel are not meeting expectations are simply not in the right position to succeed.

It’s worth taking a look at a person’s performance from different perspectives. For instance, take a look at your management team to see what role they play in your company’s low productivity. Could they improve the efficiency, communication, and management of those working under them? Do they need additional support or resources to do so? In some cases, the solution could be as easy as establishing scheduled breaks and concrete start and stop times for workdays, so the rest of your employees know what is and isn’t acceptable.

2. Identify the true source of wasted time

In a perfect world, all your employees would be working all the time when on a job site. That kind of productivity would give you the most bang for your buck and earn you the most profits.

But more often than not, you’ll see a bunch of construction workers standing around on the job not doing much of anything. In most cases, they’re:

  • Waiting for a piece of heavy equipment to start up
  • Waiting for materials to arrive in their work area
  • Waiting for their work area to be prepared for a task
  • Waiting for instructions from a foreman about what they should do next

That’s a lot of waiting! And all that waiting is what you want to try and avoid whenever possible.

Ideally, you want your employees to be actively engaged in tasks that need to be done, not waiting around for them to start for whatever reason.

If you’re able to limit the waiting and encourage your foremen to keep their teams actively involved in tasks, it’ll improve labor productivity in no time.

But before you can do it, you need to take time to figure out why so much time is being wasted and what can be done about it.

3. Set goals for employees and provide performance-based incentives

It can be a real struggle for those in the construction industry to stay motivated. As soon as they finish one project, another one pops up and forces them to start their process all over again.

Do you suspect your company’s low productivity might be directly tied to a lack of motivation? If so, setting goals for your employees and offering them performance-based incentives if they reach those goals might not be a bad idea.

Goals get people working harder. They also provide them with something to look forward to in the construction industry.

Just make sure the goals you set are realistic enough for workers to reach. Otherwise, they could end up harming your labor productivity as opposed to having a positive impact.

4. Manage overtime hours more effectively

You might be thrilled to see so many of your employees offering to work overtime on certain jobs. It helps you complete jobs quicker and seems to improve productivity.

Yet, working too many overtime hours in the construction industry can hurt individuals and companies. Overworked employees in construction can lead to:

  • Excessive fatigue
  • Increased accident rates
  • Higher worker turnover
  • And more

These things could actually hinder your labor productivity in the long run. So it’s best to limit the number of overtime hours you offer to your employees.

Instead, plan out projects properly and give your employees enough time to complete them during normal business hours. Your employees will be working less time daily, but they’ll be more productive overall.

5. Use technology to your advantage

It used to be difficult, if not impossible, to track productivity out in the field. But today, there are apps and web interfaces that are designed to make it easy to do.

Rhumbix is a great example of this. It’s an app and web interface that works by collecting and analyzing labor productivity so that construction company owners, general contractors, and others can monitor and improve productivity in real-time.

It allows construction companies access to tools and data that will ultimately make them more productive and more profitable.

Start improving your company’s labor productivity today

Have you been searching for ways to improve the labor productivity of your construction company’s employees?

Try some of the suggestions listed here. They should produce real results and highlight some of the things your company could be doing better.

You can also learn tips to calculate construction labor cost for a correct path to profitability.


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