Productivity is an important tool for managers as it helps them to track progress toward the more efficient use of resources in producing goods and services. Explain.
Productivity can be defined as a measure of how much a firm makes with a given amount of resources. For example, a firm that produces $100 worth of goods and services per employee per hour is more productive than one that produces $50 worth of goods and services per employee. In a sense, then, productivity is a measure of efficiency. It measures how efficiently a firm uses the resources that it has. Therefore, productivity is a useful measure for managers. The higher the productivity, the more efficient the firm. This means that productivity can be used to measure increases or decreases in efficiency.