Productivity vs Utilization vs Capacity

Productivity, Utilization and Capacity are often used interchangeably however they are subtly different:

Productivity is Output/Input and is always a number less than 1. A team member may complete 30 hours of customer work in a 40 hour week making them 75% productive.

Utilization is Actual Output/Expected Output and can be a number greater than 1. It describes our expectation vs reality.

Capacity is a future measure that describes our expected utilisation of a person. Although it can be greater than one (when we overbook people) we typically plan for a number less than one.

A team member may complete 40 hours of customer work in a week in a total of 50 hours. Their productivity is 40/50 being 80%. We

From the same team member we may expect 40 hours of total work at a 75% capacity. We have an expected output of 30 hours of customer work (40 hours x 75%). If they actually work 50 hours and complete 40 hours of customer work (as above) their utilisation is 40/40 being 100%. Their productivity remains at 80%.

Although a person can be highly utilised, they can still achieve this with a low productivity ie working long vs being focussed.

Let's look now at an example with leave:

Moana Maniapoto:

75% expected productivity

40 hour expected total hours

= 30 hour expected customer hours

Actual customer hours = 32

Actual internal hours = 10

Actual leave = 8

Actual total hours = 50

Productivity = 32 / (50-8) = 76%

Utilisation = 32 / (40-8)*0.75 = 133%

As you can see in the example above, leave is excluded from both the productivity and utilisation calculations. When we go on leave, our output decreases but our productivity and utilisation does not. The team member above worked longer hours than expected but achieved their productivity and utilisation expectations.