Productivity is the volume of goods and services produced by an employee. It is a performance measure of both efficiency (doing things right) and effectiveness (doing the right things).
Efficiency is getting the most output from the least amount of inputs-men, materials, money, machines, and time- (not wasting resources). Effectiveness involves the activities that help an organization to achieve its desired goals (producing the desired result).
Productivity is expressed as: Total output of goods or services produced divided by the inputs required to generate that output.
From the foregoing, it can be seen as a useful tool in ensuring that resources are used efficiently in the production of goods and services.
In a manufacturing company, efficient manufacturing techniques such as cutting inventory levels, decreasing the time required tp manufacture goods and services, lowering product reject rates, etc will help to reduce manufacturing costs of goods and services.
Productivity can be a tool for finding out if we are using resources efficiently. Productivity is a measure of how much value we are creating for every unit of inputs. The higher the productivity, the more efficiently we are using our resources. We can therefore use measures of productivity to determine how efficiently we are using resources. If we find areas in which our productivity is low, we can look for ways to increase it, thus using resources more efficiently. Productivity can be a tool for efficient use of resources, then, because it can tell us which processes are and are not efficient so that we can improve upon those that are not.