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Why productivity matters and what you can do about it.

According to Xero’s “Small Business Productivity: Industry and Regional Trends 2023” report, wholesale trade led Australian industries in productivity at $214.20 per hour, while hospitality lagged at $40.20 per hour. Ten sectors, including manufacturing, agriculture, and construction, exceeded the national average productivity of $100.30 per hour. Western Australia was the most productive state at $102.50 per hour, 15% higher than Tasmania’s $89.00 per hour, the least productive state.

Understanding and Importance of Productivity

Productivity measures how efficiently a business converts inputs like labour, capital, and materials into outputs. Higher productivity means better resource utilisation, leading to greater profitability, resilience to economic changes, and competitive pricing.

Key Productivity Areas:

  1. People Productivity: Efficiency of labour, measured as hours worked per dollar earned.
  2. Financial Productivity: Effectiveness of capital investments, measured by return on capital.
  3. Materials Productivity: Cost efficiency in using materials to generate sales.

Strategies to Boost Productivity

1. Better Tools

Invest in tools that amplify efforts, such as software for reducing double handling of information. Overcoming investment barriers involves prioritising opportunities, understanding potential ROI, and easing the adoption of new technology.

2. Smarter Methods

Regularly review and improve processes by:

  • Aligning work with customer needs
  • Documenting and refining workflows
  • Identifying and eliminating bottlenecks
  • Adopting digital tools for automation and information centralisation

3. Skilled Workers

Enhance productivity through:

  • Clear job descriptions
  • Comprehensive training
  • Regular feedback and communication of business values
  • Empowering employees to optimise work processes

4. Entrepreneurial Mindset

Optimise resource use by:

  • Scaling operations to reduce costs
  • Acquiring complementary businesses
  • Specialising in niche markets
  • Reevaluating supply chains for efficiency
  • Fostering a culture of innovation

Productivity Checklist

  • List and prioritise investments with expected ROI
  • Map and refine work processes to eliminate inefficiencies
  • Use software for repetitive tasks and consider outsourcing
  • Align processes with customer preferences
  • Provide clear roles, training, and feedback to employees
  • Seek opportunities to scale, acquire, specialise, and optimise


Small businesses can significantly improve productivity by refining processes, investing in better tools and skilled workers, and adopting an entrepreneurial mindset. This leads to greater efficiency, profitability, and satisfaction while reducing delays, miscommunication, and waste.

Graham Burfield
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