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Archives of Business Research – Vol. 9, No.2

Publication Date: February 25, 2021

DOI: 10.14738/abr.92.9682.

Arshad, S., & Fatima, S. Z. (2021). Exploring the Factors Affecting the Employees’ Productivity: A Case Study of Selected SMEs in Lahore.

Archives of Business Research, 9(2). 210-216.

Exploring the Factors Affecting the Employees’ Productivity: A Case

Study of Selected SMEs in Lahore

Sumaira Arshad

Master of Philosophy in Accounting and Finance

University of Centeral Pujanb

Syeda Zain Fatima

Master of Philosophy in Accounting and Finance

University of Centeral Punjab

ABSTRACT

Every company strives to improve the productivity of the employees

so that it can increase its revenues. Several studies have conducted to

find the factors that can influence the productivity of the employees.

This study explored the factors that that can affect the productivity of

the employees in selected SMEs of Lahore. Focus group interviews

were conducted to gather the data and open-ended questions were

asked of employees. Study finds that productivity is affected by

cooperation between colleagues, discrimination, and harassment.

Moreover, it is also affected by work-life imbalance. It has also been

explored that productivity is affected by financial rewards and

unbiased evaluations. It is important for the companies to focus on

these issues so that productivity of the employees can be improved.

Keywords: Employees’ productivity, Work-life balance, Rewards,

Performance evaluations

INTRODUCTION

During the past few years, there have been on-going debates over the organizational behavior,

employees’ motivation, employees’ productivity and factors affecting employees’ productivity.

These issues have been consistently overlooked by several researchers and organizations

particularly in South Asia i.e. Pakistan, India, and Bangladesh. However, low productivity has

affected several organizations and it enforced the management professionals to explore the

factors. Assessment of output produced by an employee during a particular time period is called

as employee’s productivity (Tangen, 2002, December). Output can be in the form of goods

produced or serviced offered depending upon the nature of the job. Small and medium enterprise

in Pakistan is defined as any organization whose annual sales is up to 250 million, paid up capital

of 25 million and employment size is up to 250 (Policy, S. M. E., 2007).

SMEs are playing the crucial role in the economic development of Pakistan as they are considered

as the backbone of the industry. It has been found that SMEs constitute ninety percent of the

enterprises in Pakistan. Moreover, the share of SMEs in GDP is around forty percent. It has also

been found that eighty percent of the non-agriculture labor force is employed by SMEs (Dar,

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Archives of Business Research (ABR) Vol 9, Issue 2, February-2021

2017). Despite the large share of SMEs in the economic growth and development, GDP and

employment, there is lack of research on the employees’ productivity in this area. Several

researchers have been conducted on the employees’ productivity in the public sector of Pakistan

(Ahmed, 2010).

Following factors have been identified that are affecting the productivity of the employees. It has

been found that poor clarity of job descriptions and job responsibilities are affecting the

employees’ productivity (Parvin, 2011). It is common in SMEs that employees are hired for a

particular job but they are asked to multitask. For example, if a person is hired as HR executive,

but, he is asked to do customer support as well, then, this factor can affect the productivity of the

employees. Managers put additional pressure on the employees in the form of these added

responsibilities and this reduces the performance of the employees. Similarly, it has also been

explored from the research that leadership style also has the direct impact on the employees’

productivity. Different types of leadership styles are expressed by different leaders sometimes

depending upon the job nature. If leadership style is not effective and encouraging for the

employees, then, there is higher chance that their productivity will be affected and they will

ponder upon career movements (Ailabouni, 2010).

Job security is another important factor that often affects the productivity. Jo security enhances

the energy and motivation of the employees to work effectively. If an employee is given a

permanent job in any organization, then, he will try to be more productive, so that, he can gain

proper growth in future as well. Alternatively, if an employee is not permanent in any

organization, then, he will not be sure about his future and this will affect his productivity

(Jarosch, 2014). Workplace environment also affects employees’ productivity. If workplace

environment is encouraging for the employees, then, they will be more productive. However, if

the employees are harassed or receive racial comments, then, their productivity will be lower

(Piotrowski, 2012). Similarly, there are several other factors that are affecting the productivity of

the employees in any organization.

The major aim of this paper is to explore the factors that are affecting the employees’ productivity

in the SMEs of Lahore. Different sectors of SMEs i.e. Retail, hotel, and restaurant, manufacturing,

and service sector has been targeted to find the leading factors affecting the productivity of the

employees. The research question for this paper is: what are the main factors that affect your

productivity in the workplace? This study is conducted because there weren’t sufficient

researchers conducted on the SMEs sector of Lahore regarding employees’ productivity. This

research will be helpful for the organizations to focus on the factors that are affecting the

employees’ productivity and in this way, they can improve their workplace. Similarly, it will also

be helpful for other researchers to find other unexplored areas in this domain.

LITERATURE REVIEW

There have been various factors that can affect the productivity of the employees. One of the

leading factors is the relationship of the employees with their leaders and supervisors. It has been

found that if there is a strong relationship between the employees and managers, then,

employees will be more satisfied and their productivity will increase (Naharuddin, 2013).

Therefore, it is necessary that supervisors and leaders should monitor their relationship with the

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Arshad, S., & Fatima, S. Z. (2021). Exploring the Factors Affecting the Employees’ Productivity: A Case Study of Selected SMEs in Lahore.

Archives of Business Research, 9(2). 210-216.

URL: http://dx.doi.org/10.14738/abr.9682. 212

employees. Proper guidance and support are needed by the employees from their supervisors

that can lead to increased productivity and job satisfaction.

Studies have shown that productivity of the employees is also affected by the different financial

matters as well. For example, a research has been found that most of the employees have

reported that their productivity is affected by delays in payments and salaries. It has also been

found that lower salaries also affect the productivity of the employees as well (Mahamid, 2013).

Moreover, it has also been found that conditions of the financial contract also influence the

productivity of the employees. There are different motivations and rewards program offered by

different organizations. However, poor financial rewards also affect the productivity of the

employees as well.

Another study finds that work-life balance is the major factor affecting the employees’

productivity. In high-pressure jobs i.e. trading employees have to work extra hours and they are

often mentally exhausted. Hence, they are unable to balance their work and life. This often

reduces the productivity of the employees. Moreover, it has also been found that job security and

safety also influence the productivity of the employees (Ailabouni, 2010). Managers have the

power to take their employees in confidence about the job progress and security. Hence, if the

employees are sure about their job growth and security, then, they will be more productive and

satisfied.

It has also been investigated that different work environment and work responsibilities related

factors play crucial roles in employees’ productivity. These are called as hygienic factors because

they don’t play any role in the motivation of the employees but they are effective in preventing

the dissatisfaction of the employees. For example, the policies of the company affect the

productivity of the employees. For example, fair, clean and non-overlapping nature of the job

improves the productivity of employees (Somsa-ard, 2016). Similarly, it has also been evaluated

that interaction and cooperation between the colleagues also affect the employees’ productivity.

The physical condition of the work i.e. noise also influences the productivity of the workers.

Similarly, it has also been evaluated that if the job is socially acceptable, then, the productivity of

the employees will be higher because they will feel dignified.

Stress is another significant factor that is affecting the employees’ productivity. There are

different types of stresses that can affect the employees’ productivity, however, professional and

work-related stress is one the leading factors that can affect the employee’s productivity (Alam,

2016). It has been found that overwork is affecting employees the most. Employees have to work

extra hours to complete the assigned work. Moreover, employees working in the highly stressed

environment are affected the most. For example, brokers have to engage with their clients on

phone for several hours a day and they are extremely exhausted. Moreover, there are certain

other stresses i.e. family stresses and emotional issues that reduce the productivity of the

employees. Hence, researchers agreed that a stress-free environment can increase the

productivity of the employees by manifold.

Researchers also found that evaluation of the employees also affects the employees’ productivity.

Justified evaluation can enhance the productivity of the employees. Similarly, unjust evaluation

can also decrease the productivity of the employees. It has also been found that comments of the