While productivity may seem simple on the surface, there are many elements to consider to track and increase productivity over time effectively.

One important consideration when starting with productivity tracking is the law of diminishing marginal productivity, which states that as more units of something (be it employees or machines) are added, they will become less productive as a whole unit – no matter how each unit performs.

To increase output to the highest level possible while maximizing limited resources, it is imperative to closely track productivity and make adjustments.

In this blog, you will explore the law of diminishing productivity and its relation to productivity tracking.

What Is The Law of Diminishing Marginal Productivity? 

The law of diminishing marginal productivity is the principle that states that as additional units of input are added to a production process, the marginal (additional) output from each extra unit will eventually decline. 

This principle is based on the basic economic concept of diminishing returns, which asserts that as more and more of a good or service is produced, the return from each additional unit will decrease.

The law of diminishing marginal productivity is slightly different because it focuses explicitly on production processes and asserts that diminishing returns will occur even when other factors remain constant.

Factors Affecting The Law of Diminishing Marginal Productivity

Factors Affecting Marginal Productivity

Various factors affect the law of diminishing marginal productivity, including changes in technology, changes in management and organization practices, and variations in demand for a given product. Some economists argue that this principle is more applicable to some industries than others.

For example, labor-intensive industries like agriculture may be particularly affected by diminishing returns due to the large number of workers needed at each stage of production. However, other industries do not follow this pattern – for instance, oil companies have been able to extract crude oil from deposits at an increasing rate. 

Thus, while the law of diminishing marginal productivity offers essential insights into how production processes function, caution should be exercised when considering specific situations or industries.

The factors that affect the law of diminishing productivity include:

  • Capital intensity
  • Primary resources
  • Business cycle stage 

Capital intensity means the amount of capital equipment used per labor hour in the manufacturing process. As more capital is used per worker, eventually, marginal returns diminish and may even become negative.

Primary resources are land, water, air, fossil fuels, and minerals. They are considered non-renewable resources because they cannot be replaced once they are gone, which can create a scarcity problem. This scarcity affects the law of diminishing marginal productivity. Companies will need to use more labor hours to extract these resources, which means marginal returns will diminish, and production costs may go up.

Different economic conditions affect productivity during each stage of the business cycle (expansion, stagnation, recession). For example, low unemployment means businesses need to compete for workers by offering higher wages, driving up costs, and reducing profit margins. In such a case, it may be crucial to use more capital per worker to stay competitive and maintain productivity.

It is clear that several factors can affect the law of diminishing productivity and its impact on businesses. If you are planning a new business, it is essential to consider these factors when making your business plan and setting growth goals.

Do You Find It Challenging To Manage Your Time?

Workstatus Simply Boost Your Team's Productivity

Law of Diminishing Marginal Productivity With Real-World Examples 

As workers produce more units of a good or service, their marginal productivity (the amount of additional output generated by each worker) typically declines. This is because workers become less and less effective as they produce more units.

For example, a farmer who harvests 100 bushels of corn in a day is likely to be less productive on the 101st bushel than on the first bushel. This is because he has already exhausted his most effective methods and must start using less efficient techniques to harvest additional bushels.

Another example is a factory where the assembly line reaches its maximum capacity. Adding more workers to the line will not increase output because there is no room for them to work effectively.

The law of diminishing returns is an essential concept in economics and business decision-making. It helps explain why businesses often experience declining profits as they expand their operations. Businesses must know this phenomenon to make sound decisions about growth and expansion.


Also Read: Work from office vs. Work from home vs. Hybrid: What’s Best for Your Workforce?


What Is Productivity Tracking? 

Productivity tracking is defined as ‌measuring and monitoring productivity to identify areas where you can improve. You can set goals and benchmarks to hit and track your progress over time by monitoring productivity. This can help you become more productive overall and identify any potential roadblocks that might impede your progress.

There are several ways to track productivity. Some people may choose traditional methods, such as diaries or planners, while others take advantage of tools, such as project management software or productivity tracking software. Whichever method you choose, the important thing is that you find a system that works for you and sticks with it. 

What is the Link Between Productivity Tracking and The Law Of Diminishing Marginal Productivity? 


As we already know, the law of diminishing marginal product is a fundamental law of economics that states that as you increase the amount of one factor of production (usually labor) while keeping all other factors constant, the output per unit will eventually ‌decline.

This is because, at a certain point, adding more workers will not increase productivity but ‌will cause things to happen less efficiently – for example, workers may compete for the same resources or crossing over into other areas of the production process.

Productivity tracking can help illustrate this principle; employers can make better decisions about allocating their resources by looking at how employee productivity decreases as hours worked increase (or as another variable like workload increases).

For example, suppose a company sees that some workers are no longer as efficient at their jobs and they are spending a lot of time on tasks that are not related to the business’s goals or otherwise don’t fit in with their job description. In that case, it might be a good idea to re-evaluate who should do what. 


Also Read: Employee Monitoring & Data Confidentiality Practices


Productivity Tracking Software- The Best Automated Way To Track Productivity


Productivity TrackingProductivity tracking software is a computer program that helps users track their productivity. It can track the ‌time spent on specific tasks, the number of tasks completed, or both. It can be used for personal or professional purposes. Many people use it to improve their workflows and increase their efficiency.

Productivity tracking software can help you set goals and track progress‌. It can also ‌compare personal productivity with that of others. There are many types of productivity tracking software available, and the features offered vary depending on the specific program. Some common features include task management, goal setting, and progress tracking.

Besides tracking their productivity, users can also use it to improve the efficiency of others. For example, managers and team leaders may use productivity tracking software to measure the performance of their employees. This information can then help employees improve their workflows and increase their output. Some companies even offer programs that allow individuals or teams to track each others’ progress in real time.

Benefits of Productivity Tracking Software-

1. Allows you to measure your work in small increments 

You might be surprised to know how little progress you make each day. When you track your work, you’ll see exactly how many minutes of billable time you spend on a particular project. That can help you finish projects faster and make adjustments if necessary.

For example, if it takes you 60 minutes per client file to bill for your services, productivity tracking software will alert you that this is a problem.

You’ll have enough data to figure out where time is wasted or which clients are worth more time. Then, just adjust your strategy accordingly and continue tracking until this issue resolves itself.

2. Helps you set realistic goals 

Productivity tracking software can help you identify how much time you spend on specific activities each day and set ‌goals for improvement.

For example, if you track how many hours you spend on a report each week, your goal might be to reduce that time by 20%.

If you only manage to cut it by 10%, for example, then maybe next week you’ll want to increase your goal to a 30% reduction. After a month or two of setting achievable goals, your overall efficiency will probably explode.

Helps you learn how to use your time more efficiently: If you’re unsure how you spend your time, look at your day in chunks.

For example, if you take an hour to finish a specific task, figure out the ‌time you spend on social media versus email.

Productivity tracking software can also help you see your weaknesses, allowing you to experiment with new systems for getting things done and scheduling time for tasks that take longer than usual.

3. Makes you more organized 

One of our favourite reasons to use productivity tracking software is how it helps you become more organized. It’s challenging to keep up with everything that’s going on in your day-to-day life, and productivity tracking software allows you to manage multiple projects at once and stay productive.

No longer will you forget essential tasks, such as updating your expense reports for work. Instead, all of your tasks will be right there before you, so that nothing slips through the cracks.

If you need ‌to boost your organizational skills, you need to look no further than productivity tracking software. Staying more organized and on top of tasks will help you get more done in less time, make you feel calmer, and keep your stress levels at bay. It is especially crucial if you have an active schedule or travel frequently for work.


Also Read: Get More Productive: 7 Golden Rules For Time Management


4. Keeps you on track with other projects 

Juggling multiple projects at once can be a recipe for distraction, especially if your projects require different skill sets. Productivity tracking software that organizes tasks into simple lists and flags tasks that are ready to be worked on is an excellent way to keep you on track.

Not only will this make sure you’re getting everything done, but it’ll ensure you’re working on what’s most important when it’s most important.

That way, if a project calls for specialized skills ‌you don’t have or can’t get at short notice, you can prioritize other tasks that ‌need to get done and deal with hiring someone for those specialized tasks later down the line.

5. Helps you become more focused 

Productivity is all about being more focused on what’s important. Tracking how you spend your time helps you become more aware of how you’re spending your time. Many people find ‌they make better choices about using their time once they track their activity.

When used regularly, tracking software can make you very aware of how much time you waste in a day, which makes it easier to take action to eliminate wasted time and increase productivity.

Tracking your activity also helps you gain more focus in your life by helping you build routines and systems that support good habits. You can also use a calendar to track when and where you spend time, then use that information to see what actions are causing specific outcomes and improve‌.

6. Helps you create a better routine

Tracking your productivity is a great way to see what you’re doing right, but even more importantly, it’s a way to gauge how effective your current methods are. Productivity tracking software can be an efficient and flexible tool to get a good idea of where your time is spent and whether those methods benefit you.

If not, try improving your current practices; if so, consider tweaking them for efficiency’s sake. Either way, tracking helps your company understand where its most valuable assets—its people—are spending their time to help make everyone more productive. 

What To Consider Before Investing In Any Productivity Tracking Software? 

Choosing the right productivity tracking software for your needs can sometimes be challenging, with several choices available. But there are some crucial factors that you can review when making your decision.

The first is the type of tasks that you need to track. A basic program will likely suffice if you only need to track simple tasks. However, if you need to track complex workflows or projects, you may need a more robust program.

The second factor to consider is the level of detail that you need in your reports. Some programs only provide basic reports, while others offer more detailed options. A basic report will likely be sufficient if you only need general information about your productivity.

However, if you need specific data points or want to generate custom reports, you may need a more sophisticated program.

The third factor to look for is the price. Productivity tracking software can range in price from free to hundreds of dollars. If you only need a basic program, then a free or low-cost option may be ideal. However, if you need a more robust program, you may need to spend more money.

When choosing productivity tracking software, it is essential to consider your needs and budget. It ensures that you select a program to help you meet your productivity goals.

Workstatus- No. #1 Productivity Tracking Software On The Market 

Workstatus is the No. 1 productivity tracking software on the market because it offers time tracking, activity level monitoring, payroll integration, client management, team management, and reporting all in one place. This makes it simple to keep a tab on your team’s progress and decide on projects.

There are a few reasons Workstatus is the No. #1 productivity tracking software on the market. Here are six key features:

  1. Time Tracking: Workstatus tracks time for you and your team to see exactly how much time is spent on each project. This information is valuable for managing projects and keeping track of workflow.
  2. Activity Level Monitoring: Workstatus also monitors activity levels besides tracking time. This feature lets you know if someone is slacking off or working hard, so you can adjust accordingly.
  3. Payroll Integration: Workstatus integrates with your existing payroll system, making it easy to pay your employees for their work. You can also use this feature to calculate billable hours for clients.
  4. Client Management: Workstatus makes it easy to keep track of your clients and projects. You can see which projects are behind schedule, how much money is spent on each project, and more. This information is valuable for client relations and project management.
  5. Team Management: Workstatus makes it easy to manage your team by tracking time, activity levels, and payroll all in one place. You can also use this feature to communicate with your team and keep track of their progress.
  6. Reporting: Workstatus provides detailed reports showing how your team is performing. This information is valuable for deciding about projects, scheduling work, and more. 

Closing Thoughts 

The law of diminishing marginal productivity is a fundamental law in economics that drives the production and distribution of goods and services. This law states that as additional input units are inserted to increase the output, after a certain point, the output eventually decreases.

While this may not sound like something good for businesses, understanding and applying the principle of diminishing marginal productivity can actually help companies optimize their resources and boost their overall productivity.

In fact, with careful tracking of employee productivity and using the right tools, you can ensure that your team is working at their best capacity and producing optimal results.

If you want to learn more about how productivity tracking software can help you overcome the law of diminishing marginal productivity or are looking for a reliable tool to help you do so, try Workstatus.

Workstatus is the leading productivity tracking software on the market and has helped countless businesses achieve their goals by monitoring employee productivity levels.

Sign up today to know more about how Workstatus can help your business thrive!

Thanks for reading!!

Revolutionize Your Team's Productivity Today!

Unlock Your Team's Full Potential.

Finding it hard to maintain team efficiency in today’s dynamic work environment?

Learn how to adapt and thrive with our actionable tips in this insightful video.