BUSINESS

ADMINISTRATION

NAME : Haripriya Kiran Gaikwad

CLASS : Second Year B. Com
DIVISION :C
ROLL NO : 438
TOPIC : Productivity
 DIFINITION
Productivity is the efficiency of production of goods
or services expressed by some measure. It is
typically measured by comparing the output to
input over a specific period of time. Increased
productivity indicates greater output from the
same amount of input, leading to higher efficiency
in transforming resources into goods and
services. Productivity is crucial for economic
growth and competitiveness, as it allows an
economy to produce and consume more goods and
services for the same amount of work. In an
organization, productivity refers to the efficiency of
converting inputs like capital and labor into
outputs such as services or products
 IMPORTANCE OF PRODUCTIVITY
Enhanced Customer Service : Increased productivity allows employees to focus on offering excellent service
to customers, leading to higher satisfaction levels.
Profitability and Competitiveness : Productivity is essential for a company's profitability and long-term
success, as it directly impacts competitiveness in the market by generating higher profits without adding
more resources.
Resource Utilisation : Productivity measures how efficiently resources like labor, capital, and raw materials
are converted into goods or services, highlighting the importance of optimising resource usage.
Business Advantages : Higher productivity leads to greater competitiveness, profitability, customer
satisfaction, better terms from suppliers, and more attractive wages for employee.
Employee Morale and Career Growth : Productivity boosts morale, creates a culture of excellence, motivates
employees, and can lead to career advancement as companies flourish.
Cost Reduction and Increased Profits : Improved productivity results in lower costs of production, reduced
time-to-market, better quality assurance, increased profits for stakeholders, and overall business growth.
Remote Work Productivity : Studies show that productivity in remote work settings can be higher than in
traditional office environments, emphasising the adaptability and importance of productivity management in
evolving work models.
 BENEFITS OF PRODUCTIVITY
Customer Benefit: Improved productivity leads to better customer service as
teams work more efficiently, have more time to engage with customers, and
provide a more satisfying experience, enhancing brand loyalty.

Employee Benefit : Increased productivity results in reduced stress, better

work-life balance, and a sense of fulfilment for employees, leading to
improved well-being and job satisfaction.

Optimum Utilisation of Resources: Productivity ensures efficient use of

resources like time, capital, and labor, maximising output with minimal
waste.

Cost Benefits : Enhanced productivity can lead to cost savings for businesses
by utilising resources effectively and increasing efficiency in operations.

Inter-Firm Comparison: Productivity allows for benchmarking and comparison

between firms, enabling organisations to assess their efficiency and
competitiveness in the market.

More Returns to Shareholders: Improved productivity often translates into

higher revenue generation and profitability, ultimately benefiting
shareholders through increased returns on their investments
 MEASURING PRODUCTIVITY
Productivity is the efficiency with which a company or
economy can transform resources into goods. If an
organization wants to improve productivity, it is necessary
that it must be measured. Following are the reasons why
productivity should be measured.
1. Measurement of Productivity gives information about
weaknesses in the organization and improves upon the
overall efficiency of the organization.
2. By measuring productivity, management can identify
potential threats and act upon them before they go out of
control.
3. Measurement of productivity helps to manage policies.
4. By measuring productivity, the firm can identify potential
threats and can act upon them before they go out of control
5. Productivity of different units under the same
management can be compared.
6. Measurement of productivity assists in conducting
efficient operations
 PRODUCTIVITY MEASURES
A. Output Measures
Physical Quantity : This measure of productivity quantifies the physical output of goods or services produced
within a specific timeframe
Financial Value : Productivity can also be measured in terms of the financial value generated by the output,
indicating the economic impact of the production process
Value Added : Value-added productivity measures the additional value created during the production process,
reflecting the increase in worth from inputs to output.
B. Input Measures
Labour Productivity Measures: Labor productivity assesses the economic output (revenue) per labor hour,
indicating how efficiently labor resources are utilised to generate output
Capital Productivity Measures: Capital productivity evaluates the efficiency with which capital resources, such as
machinery, are used to produce a specific output, highlighting the effectiveness of capital investments
Multi-Factor Productivity: Multi-factor productivity (MFP) indicates the overall productivity generated by all
factors combined, including labor, capital, and other resources involved in the production process
 INDICES OF PRODUCTIVITY
Indices of productivity encompass various
measurements that allow for the assessment of
efficiency in resource usage and economic
development. Key indices include:
Labor productivity : Calculated as output per worker or
output per worker per hour.
Capital productivity : Evaluates the efficiency with which
capital resources are used to produce a specific output.
Raw material and fuel input productivity : While not explicitly
mentioned in search results, raw material and fuel input
productivity would involve measuring output relative to the
consumption of raw materials and fuels.
Total factor productivity index (TFP) : This index measures
the overall productivity generated by all factors combined,
including labor, capital, and other resources involved in the
production process
 DIFFICULTIES IN MEASURING PRODUCTIVITY
1. Measurement of output : Determining the correct metrics
for output can be complex, especially when dealing with
services or intangibles.
2. Measurement of input : Accurately tracking and attributing
inputs, such as labor, capital, and other resources, presents
challenges due to variations in quality, pricing, and
classification issues.
3. Productivity of different factors that cannot be easily
measured : Intangible factors like creativity, motivation,
and collaboration are difficult to quantify and incorporate
into productivity calculations.
4. Difficulty measuring value of service : Assigning values to
services can be subjective and prone to errors, affecting the
accuracy of productivity measurements.
5. Inter-firm comparison : Directly comparing productivity
across firms can be misleading due to differences in
methodologies, reporting standards, and data availability.
6. Complexity of multi-factor productivity (MFP) : Deriving MFP
requires careful consideration of multiple inputs and their
interactions, which can introduce complexity and potential
errors.
 FACTORS AFFECTING PRODUCTIVITY
1. Location Factor : The geographical location of a
workplace can affect factors such as access to talent,
market reach, and operational costs, influencing
overall productivity.
2. Government Factors : Government policies,
regulations, and compliance requirements can impact
productivity, particularly in highly regulated industries,
requiring organisations to allocate resources to ensure
compliance
3. Personnel Factors : Employee skills, motivation,
engagement, and well-being play a crucial role in
determining productivity levels within an organization
4. Management Factors : Effective leadership practices,
communication strategies, and organisational culture
can significantly influence employee engagement and
productivity.
1. Finance Factors : Financial stability, budget allocation,
investment decisions, and resource management
practices can impact the financial health of an
organization and its productivity levels.
2. Organisational Factors : The structure, processes,
policies, and work environment within an organization
can either facilitate or hinder productivity among
employees.
3. Production Factors : Efficiency in production processes,
utilisation of resources, quality control measures, and
innovation capabilities can affect overall productivity
levels within a workplace.
4. Technical Factors : Technology adoption, automation,
tools utilisation, and technical infrastructure play a
vital role in enhancing productivity by streamlining
processes and improving efficiency.