Teams & projects
Efficiency percentage calculator
Enter the standard hours the work should take and the hours it actually took; get the efficiency percentage and the gap in hours.
Standard hours = units completed × standard time per unit. Leave the cost at 0 to skip the money line.
How efficiency percentage is calculated
Labor efficiency compares the time the work should have taken with the time it did take: efficiency % = standard hours ÷ actual hours × 100. Standard hours, also called earned hours, come from multiplying the units completed by an engineered or agreed time per unit. Above 100% means the job beat the standard; below 100% means it ran over.
Example: a crew assembles 120 units with a standard of 18 minutes each, which earns 120 × 18 ÷ 60 = 36 standard hours. The crew booked 40 hours, so efficiency is 36 ÷ 40 = 90%. The job ran 4 hours, or 11.1%, over standard; at a labor cost of $30 an hour those 4 hours cost $120.
| Standard hours | Actual hours | Efficiency | Hours over (+) or under (−) |
|---|---|---|---|
| 36 | 30 | 120.0% | −6 |
| 36 | 36 | 100.0% | 0 |
| 36 | 40 | 90.0% | +4 |
| 36 | 45 | 80.0% | +9 |
| 36 | 48 | 75.0% | +12 |
Note that the scale is not symmetrical: running 25% over standard gives 80%, not 75%, because efficiency divides by the actual hours.
Interpreting labor efficiency
Efficiency is only as good as the standard behind it. Standards set years ago, before a new fixture or a design change, make teams look either brilliant or slow for reasons that have nothing to do with how they work. Review standards when the method changes, and treat results above about 130% as a sign that the standard needs checking rather than as a record.
Keep efficiency separate from utilization. Utilization asks how much of the paid time was spent on productive work at all; efficiency asks how well that productive time was used against the standard. A team can be fully booked and still run at 80% because of rework or waiting for parts within the job.
Measure at the level where decisions are made: per work order, per line or per week. Daily figures for one person swing with the job mix, and using them to rank individuals tends to push people to book hours to easy jobs instead of fixing the causes of lost time.
Frequently asked questions
How do I calculate efficiency percentage?
Divide the standard hours for the work completed by the actual hours worked, then multiply by 100. 36 standard hours done in 40 actual hours is 90% efficiency.
Can efficiency be more than 100%?
Yes. If the work took less time than the standard allows, efficiency is above 100%. Very high figures, above roughly 130%, usually mean the standard is out of date or some hours were not booked.
What is the difference between efficiency and productivity?
Efficiency compares actual time with a standard time for the same work. Productivity is output per hour with no standard involved, so it is mainly useful for comparing one period with another.