People are motivated by money, says the very famous Economic Man theory. Obviously, living in a world where you can buy technically everything from comfort to safety, it is important to have not just a reliable source of income, but also a reliable amount of income. You work hard every day, but are you productive enough to dream of a better income? Let’s find out.
Productivity, in business terms, refers to the output that one employee (or resource unit) produces in a given period of time. This is basically a measure of how efficiently the inputs are turning into outputs. For example, a writer’s productivity maybe how many words they can write in an hour, while still maintaining the quality standards of the output.
What is the relation between productivity and income?
According to the Economic Man theory, people are motivated to work more i.e. have higher productivities when they are offered more money. Similarly, the more productive you are at work, the better the income you are likely to receive. For instance, if you are at a Sales job working for commissions, you will get the most benefits when you sell the most. Being a highly productive worker makes you the company’s asset, that the company will want to keep with them at higher costs, while being a slow, lazy worker makes you a liability, which the company would not want to pay more.
According to a survey called ‘Trends in Global Employee Engagement’, there are five factors that lead to happier and more productive employees. The five factors are:
- Career Opportunities: People want to grow. A company that offers professional growth and helps the employees build a career is more likely to attract productive employees.
- Brand Reputation: Workers at Google are more likely to have higher productivity rates than workers at a local digital agency in your city.
- Pay: As mentioned earlier, money buys everything – even employee motivation and happiness. The more pay you are offered by your employer, the more responsible you feel towards your work so that you can say that you deserve the high income, and that it is a reward for your hard work.
- Employee Value Proposition: When a company offers benefits (other than their deserved salary) to the employees in return for their valuable skills, they automatically feel ‘valued’ and serve better.
- Innovation: The more unique the nature of the work is, the better the performance an employee is able to deliver.
Given these findings, it is evident that higher income leads to increased productivity, but does higher productivity leads to increased income? Definitely! But how? Read on to find out:
How does productivity affect income?
Look at it this way: you are an employer, and a new employee at your company seems to be more productive than all your other older employees. Your company has a senior position vacant, and you can recommend someone from the employees to fill that position… who would you promote? The answer is simple: The best-performing, most productive employee.
Therefore, it is obvious that how you perform results in monetary and non-monetary benefits for you. Regardless, to define exactly how productivity can increase your income, below are three explanations:
- Increased productivity means increased value: Adding value to your work or your product increases its monetary value. Let’s assume that you run a business. Now, while you can easily just keep earning like you are by producing goods as everyone else does, you decide to become more productive. How? You might add modern machinery to manufacture more goods in lesser time, which adds value to your product by ensuring that no human errors are made and demand is met, which lets you increase the selling price, and hence your profits.
- The better your productivity rates, the higher your revenues: If the productivity rates of your retailing business’s sales team rise, you are likely selling more items and hence, earning more sales revenue. Similarly, your sales team members are making more commissions!
- A productive business wastes lesser time: As you already know, better productivity means efficient production which can be explained as maximum output using minimum resources (and time is a resource). Hence, time wastage is minimized when your business (or you) are highly productive.
There are a number of ways to boost your productivity rates. However, identifying your motive is very important to determine why you want what you want i.e. are you working harder to earn more money? If increased income is what drives your motivation to be more productive, it is likely that your productivity may hit a slump once you reach the desired income level. Therefore, it is a bonus tip for you as we conclude this article: don’t work harder just for the money – find another motivation, too, like earning doing something you are passionate about.