How is productivity defined? How are productivity measures used? Why is producti
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Question
How is productivity defined? How are productivity measures used? Why is productivity important? What part of the organization has primary responsibility for productivity? How is efficiency different from productivity? How is productivity defined? How are productivity measures used? Why is productivity important? What part of the organization has primary responsibility for productivity? How is efficiency different from productivity? How is productivity defined? How are productivity measures used? Why is productivity important? What part of the organization has primary responsibility for productivity? How is efficiency different from productivity?Explanation / Answer
1) A measure of the efficiency of a person, machine, factory, system, etc. in converting inputs into useful outputs is known as productivity. Productivity is computed by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. Productivity is a critical determinant of cost efficiency.
2) Productivity is a required tool in evaluating and monitoring the performance of an organization, especially a business organization. When directed at specific issues and problems, productivity measures can be very powerful. In essence, productivity measures are the yardsticks of effective resource use.
Managers are concerned with productivity as it relates to making improvements in their firm. Proper use of productivity measures can give the manager an indication of how to improve productivity: either increase the numerator of the measure, decrease the denominator, or both.
Managers are also concerned with how productivity measures relate to competitiveness. If two firms have the same level of output, but one requires less input thanks to a higher level of productivity, that firm will be able to charge a lower price and increase its market share or charge the same price as the competitor and enjoy a larger profit margin.
Within a time period, productivity measures can be used to compare the firm's performance against industry-wide data, compare its performance with similar firms and competitors, compare performance among different departments within the firm, or compare the performance of the firm or individual departments within the firm with the measures obtained at an earlier time i.e., is performance improving or decreasing over time?.
Productivity measures can also be used to evaluate the performance of an entire industry or the productivity of a country as a whole. These are aggregate measures determined by combining productivity measures of various companies, industries, or segments of the economy.
3) Business Productivity is the ability of an organization to utilize its available resources in order to produce profitable goods or services as desired by customers or clients. It is the productivity that measures the performance of an organization, and it can also be used for companies themselves in order to assess their own progress. The importance of productivity in business can be summarized as follows.
Productiveness increases the overall efficiency of an organization. When the efficiency of the organization increases, the production capacity of the company is utilized to the optimum level. Thus, all resources are used in an effective and efficient manner to get the best possible results. As is often indicated by business, the more products you make, the lower your overhead, and the higher your profits.
Enhanced production lowers the cost per unit of a product which in turn, results in lower prices for better quality, which enhances a business’ competitiveness in the market. In the current turbulent world, every organization faces stiff competition from their counterparts. Hence, lower prices as a result of enhanced production give an edge to businesses to sell products at more competitive prices.
Increased production due to efficient utilization of organizational resources leads to a lower cost production resulting in better sales and profits. If the profits of an organization shoot up, it increases the confidence of investors in the organization. Moreover the share value of the company increases. Due to this, the reputation and goodwill of the organization increases.
So this the reason of importance of productivity.
4) Usually management is responsible for maintaining a productive work force. Productivity is a relative term that used in different ways by different industries. Operation manager is primary responsible to achieve the productive use of organizational resources.
5) Efficiency relates to the quality of your work, which might include creating output with less waste, using fewer resources or spending less money. Eg- If Bob sold $10,000 in May but spent $3,000 on travel expenses, while Joe sold $9,000 in May but did so over the phone, Joe is more efficient and creates a larger profit. This is a case in which increased efficiency justifies decreased productivity.
Businesses often measure productivity by output during comparable time periods. For example, if you produce 1,000 units one week and 1,100 units the next, you are more productive the second week. In other cases, businesses measure productivity by comparing employees, locations or distribution methods.
Eg- If Bob sells $10,000 worth of business during the month while Joe sells $9,000, Bob is more productive. If Bob sold $12,000 the month before, he’s still more productive than Joe this month, but less productive this month than he was last month.