The Connection Between Productivity and Profitability

Group of productive and engaged employees
December 19, 2017

For many years now, a variety of occupational studies have proven that there is a strong connection between productivity and profitability in the workplace. Simply earning a profit does not necessarily mean that a company is productive, and management plays a significant role in sustaining profitable outcomes and high-quality output.

This article will explain why more engaged and productive workers help a company grow its profits more than disengaged ones. We will also provide some practical and actionable tips for how to increase productivity and profitability through employee engagement strategies.

Comparing Productivity and Profitability

Productivity is defined as the relationship between output and input needed to create a product. Meanwhile, profitability is determined by how much money is left over after a product is produced and all expenses have been paid. Positive organizational psychology has shown us that high-pressure, cut-throat work environments harm productivity over time and that workers respond better to environments that make them feel valued, supported, and secure.

Why Is Employee Engagement Important?

Some people wonder why is employee engagement important as long as profits are up and money is coming in the door. The answer to this question is that profitability is not sustainable in the long-term without sufficient employee engagement and commitment.

Employees who do not feel a vested interest in the companies they work for will not put their full hearts and souls into their work. They will be less likely to go the extra mile to complete an assignment on time or share ideas for improvement with their superiors. On the other hand, employees who are made to feel like valued partners in a business are more inclined to contribute to the company in meaningful ways.

Of course, some personality types are more suited to heightened levels of engagement than others. But employers increase their odds at long-term success when they include their employees in big-picture conversations and request input on a regular basis.

Studies on Employee Engagement and Performance

The Queens School of Business and the Gallup Organization have conducted some very interesting studies that show exactly how costly employee disengagement can be. Statistics show that workers who are not engaged in their jobs are about 37 percent more likely to miss work, 49 percent more like to have accidents, and 60 percent more likely to make errors. The studies also revealed that companies with low levels of engagement experience at least 16 percent lower profitability and 65 percent lower share price over a period of time.

How to Increase Productivity in the Office

Now that we’ve established that employee engagement is a key factor for greater productivity, let’s look at some practical ways of how to increase productivity at work. This means honestly being interested in the lives and welfare of your employees and providing support and kindness every day. It also means forgiving mistakes (within reason) and providing a sense of passion and inspiration for employees so they can model their work after your own.

Make a point to emphasize how meaningful the work is that your employees are doing, and go out of your way to guide employees who need a little extra mentoring. Transparency and visibility are key qualities for managers to adopt to encourage an open and accessible workplace. It’s also a good idea to engage your employees outside of the office by volunteering together for a charitable cause, organizing an office sports team, or going out for an occasional happy hour.

But with more and more businesses going the virtual route and employing work-at-home employees, face-to-face time in an office is less common. Remote working arrangements are wonderful for cutting overhead costs and giving employees the flexibility they need and want. But to bridge the communication gaps and keep everyone on the same page, many business owners and entrepreneurs are renting temporary and occasional office spaces to host in-person meetings and collaborate on new ideas.

At NYC Office Suites, we offer meeting rooms by the day or hour in Midtown Manhattan, as well as a selection of one- to three-desk private offices that are available hourly, daily, and on a subscription basis. Contact us to learn more and start your new year off in the most engaged and productive way possible!


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