Productivity of an organization is defined as the ratio of outputs produced by the organization and the resources consumed in the process.
Here the output refers to the quantity of goods and services produced by the company, and inputs refers to the quantities of resources such as labor, material, physical facilities, and energy consumed for producing the same.
Productivity is used to assess the extent to which certain outputs can be extracted from a given input. We can measure productivity for a single input resource such as manpower used, or for multiple resources. There can be many different types of productivity measurement depending on the type of resources considered.
Measures of productivity describe how well the resources of an organization are being used to produce input. They are very useful in achieving and maintaining high level of performance in any organization, particularly in improving the efficiency of various operations within the organization as well as for the total organization. Productivity measures are also used for planning, monitoring, and improving performance at national levels.
Productivity can be improved by increasing the outputs keeping the inputs constant, or by giving the same quantity of outputs with reduced inputs, or by increasing outputs and at the same time reducing inputs. We can do this by several methods such as:
- Improving systems and methods of operations. Among other measures this includes use of automation.
- Improving planning and scheduling.
- Improving control.
- Improving motivation of people.