Economics
Expert: Dr.VSR.Subramaniam
Date: 11/8/2006
Subject: Productivity concept in current millennium
Question
Dedicated improvement of organizations and the national governments all over the world alone
could provide a better future with all the necessities of life available at affordable costs. The scale
to measure such an improvement is the “productivity”. In the current millennium, dominated by
globalization of business and Internet media, the productivity concept has assumed a vicious
dimension. Can you suggest a conceivable dimension of productivity under these conditions for
the nations to thrive and progress ? I need this for a prime research project in global management
upgradation methodology, sponsored by UNDP
Get the answer below
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Answer
You have asked a question of importance on a concept which has drastically changed and no
researchers in Economic Science has taken notice of it so far.
A. PRODUCTIVITY – EARLY VERSIONS
Productivity, from 1940s (just after the 2nd World war), was considered as a domain of the
Engineering faculty to analyse the relationships of the output that can be produced in a specified
period of time. It was related to the concept of efficiency, which is the amount of output produced
relative to the amount of resources (time and money) that go into the production. Improved
productivity, benefits a business by lowering the cost and increases the leverage to compete
better and make profit.
World labour and manufacturing organizations standardised the concept of Productivity as the
ratio between the Physical output (Products) to the Physical input (Labour, material, power
etc…) More output quantum with less input quantum, provides a higher and favourable
Productivity index.
B. PRODUCTIVITY MOTIVATORS.
More productivity index has a direct impact on lowering the Cost per unit of the Output product,
indirectly improves the profit of that product at a constant price and universally assists the
continued existence and growth of the companies. Hence, the companies made attempts to
increase the productivity in a variety of ways. The most obvious methods involve automation and
computerisation which minimise the tasks that must be performed by employees. Recently, less
obvious techniques are being employed that involve ergonomic design and worker comfort. It was
found that a comfortable employee, can produce more than a counterpart who struggles
throughout the day. In fact, some studies claim that measures such as raising workplace
temperature can have a drastic effect on office productivity. Experiments done by the Japanese
Shiseido corporation also suggested that productivity could be increased by means of perfuming
or deodorising the air conditioning system of the workplaces.

Till 1990, the productivity motivators were constrained to the methodology, performance and
profitability of individual corporate sectors.
C. PRODUCTIVITY DEPLOYMENT
During the post-2nd world war period (1947 to 1991) there was a Cold war situation in the world. It
was a geopolitical (Territorial superiority), ideological (Ruling startegy superiority), and economic
(International superiority) struggle between the capitalistic United States and its allies (West), and
the communistic Soviet Union and its allies (East). It lasted from about 1947 to the period leading
to the collapse of the Soviet Union on December 25, 1991.
During this period, both the Eastern and Western nations in cold war, drastically increased
aggregate supply of various goods to prove their superiority. The deployed various productivity
optimisation techniques to get drastically more output with a possibly less input.
This inducted an increases in the aggregate demand for these goods in the international market,
covering the neutral, developing and under developed nations. These in turn, not only decreased
the unemployment situation in both the Eastern and Western nations, but attracted a large scale
immigration of labour from the developing and under developed world. As a result, the
international inflation remained stable.
D. PRODUCTIVITY TAKE-OFF
Just after the end of cold war, during 1990s (from 1990 to 1999 inclusive) there was an economic
expansion in the United States leading to a massive increase in worker productivity and
globalisation (complex series of economic, social, technological, cultural and political changes with
increasing interdependence, integration and interaction between people and companies in
disparate locations). Key forces shaping this decade were the a global recession, due to the shift
in the manufacturing process as well as the product delivery to remote locations, popularisation of
personal computers, boom of the dot-com and the drastic rise in the Internet activities, particularly
beginning from the early 1990s.
The productivity in this period assumed a new dimension of a small physical output creating a
large value, while a large physical output creating only a small value. As a result, everything
which were big or maxy prior to 1990s, started assuming the dimension of mini. (Automobile,
Camera, Computers, Mobile, TV etc…)
It was atake-off period for a Globalised productivty. Increases in productivity also started
influencing the society more broadly, by improving living standards, creating income, and
generating economic growth. Because of this there were drastic changes in patterns of social
behaviour, resulting from new communication technologies and changed/broadened male-female
relationships.
This situation closed the gap between the Productivity and Management Decision process.
E. MANAGEMENT DECISION INTEGRATION.
Productivity is an output emerging from the basic management decision, which prefixes the
quantum output as well as the selected quantum inputs. Productivity is hence preceded by the
Input management decisions and the output management decisions. When the term productivity is
globalised, then implicitly the term Management Decision is also gets globalised. Hence both
Productivity and Management Decision should be measured with reference to a common
globalised unit.
C. CURRENT PRODUCTIVITY DIMENSION
As a result of globalization and internet links, the scope and the concept of Productivity has

broadened to a two dimensional unit, integrating the quantum productive needs of the corporate
sectors as well as the socio-economic status of the nation. Similarly the Management Decision
methodology is also broadened to the same dual units.
Corporate survival now greatly depends on the National socio-economic survival, through the
broadened E-business scattered globally, appealing and attracting international social groups.
Also the intangible factors of Psychological, Social, International and Universal dimensions have
assumed a priority influence on the productivity as well as the management decision of all the
government and private sectors. Hence, productivity along with management decision has to be
measured through both the Quantum and Socio-economic development units (SED).
01. Productivity = SED goals/Input > 1 &
SED goals/Output > 1
subject to Quantum (Output/Input) > 1.
02. Social rate of return is important than Quantum rate of return.
03. Intangible elements are important than tangible elements. (Psychological, Social, Inter
national, and Universal).
04. Management decisions are optimum when
SED goals/Input decisions > 1 &
SED goals/Output decisions > 1,
Subject to Output decisions/Input decisions > 1 .
05. This is universally applicable to all developed, developing and under-developed nations.
06. This proved through an Algebraic Model.
More details and the mathematical derivations on this new concept is available in “A Redefined
Productivity and Socio-economic Development oriented Management Decisions\" at
http://www.drvsrs.com/mgmtfull.htm
With Regards
DR.VSRS.
Website - http://www.drvsrs.com
Book Store - http://www.lulu.com/drvsrs
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