Loss Of Employee Productivity – Definition
Loss of Employee Productivity in terms of HR is the loss of revenue to an organization due to absenteeism, medical treatment, training, etc of its employees.
In simple terms, the loss of work/revenue/production caused due to unavailability of an employee for any reason is called the loss of employee productivity. Loss of productivity is always calculated in terms of dollars.
That is if you lost production of about 15 units the amount in dollar equivalent to the value of 15 units per employee will be his loss of productivity per day or whatever time you calculate it for.
Formula To Calculate Loss of Employee Productivity
To calculate the lost productivity you first need to calculate the employee productivity per day/week/month as and whichever is required then multiply it by the number of days/weeks/month.
The second step will be to multiply the productivity into the number of days or hours not worked by the employee due to training, absenteeism, medical treatment etc.
If there are multiple employees you need to calculate LOEP (Loss of Employee Productivity) for each employee and sum up the total cost.
Thus, the formula for calculating the loss of employee productivity will be as follows:
Let us understand it with a simple example.
Example
Company A has arranged training sessions which will be conducted for 3 days for its 25 employees to learn a operation of a new equipment. These 25 employees produce 523 units in one week. The worth of these goods is $ 57,400.
Applying the formula:
$ 57,400 / 25 = $2,284 per week per employee.
$ 2,284 / 5 = # 456.8 = $ 457 is the employe productivity per day per employee.
So if they are absent for training for 3 days, the LOEP = $ 457 X 25 X 3 = $ 34,275.
Reasons For Increased Loss Of Employee Productivity
- Lack of vision
- Poor Supervision
- Poor Internal Communication
- Lack of Delegation
- Insecurity and Inconsistency
- lack of Adequate Technology at the workplace
- Lack of appreciation by the superiors
- Harassment by coworkers at the workplace
An excel template with predefined formula for the calculating the LOEP will be soon published on our website for calculating the Loss of Employee Productivity.
You can find definitions of other HR related terms in our HR Glossary Section like Full-TIme Equivalent (FTE), Revenue Per Employee (RPE), Employee Retention etc.
You can also download other useful HR templates like Revenue Per Employee Calculator, Monthly Attrition Report, Cost Per Hire Calculator, Employee Resignation Schedule and many more from our website.
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