2. A general definition is that productivity is the
relationship between the output generated by a
production or service system and the input provided
to create this output.
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3. 3
Productivity Variables
• Labour - contributes about 1/6 of the
annual increase
• Capital - contributes about 1/6 of the
annual increase
• Management - contributes about 4/6 of
the annual increase
5. important for productivity improvement.
effective tool for decision-making at all
economic levels.
to evaluate the impact of national
development programmes.
to help analyse effectiveness and efficiency.
(enterprises productivity)
stimulate operational improvement.(labour
Productivity)
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6. Three of the most common purposes are:
comparing an enterprise with its competitors;
determining the relative performance of
departments and workers;
comparing relative benefits of various types
of input for collective bargaining and gains
sharing.
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7. Two types of productivity ratio can be used to
measure productivity at all economic levels.
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8. Productivity measurement and evaluation system (ProMES)
Deterministic productivity accounting (DPA)
The National Productivity Institute (NPI)
Theory of constraints (ToC)
The total productivity model (TPM)
Alan Lawlor's approach (Lawlor)
Applied productivity - Gold's approach (Gold)
Operation function analysis (OF A)
International Labour Organisation- (ILO)
Quick productivity appraisal (QP A)
Kurosawa and Goshi - Japan Productivity Center (Kurosawa)
Multifactor productivity measurement model (MFPMM)
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9. Lawlor's (1985:22) approach addresses three
questions:
Where are you now?(how efficiently resources are
currently being used)
How much better could you be?(improvements
in performance are still possible.)
Where should you be?(alterations in the way
organisations function will be necessary)
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11. Five aims of a productivity measurement approach are
provided by the ILO and Lawlor,
Objectives: the degree to which principal objectives
are achieved;
Efficiency: how efficiently resources (inputs of labour
materials, purchased services and capital) are used to
generate useful outputs, useful in the sense that
goods made or services provided are actually needed;
Effectiveness: what is achieved in output and input
terms compared to what is potentially possible;
Comparability: how productivity compares with other
organisations, industries and countries;
Trends: the productivity performance record over
time, that is, the decline, static or growth aspects.
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12. Step 1: Achievement of objectives
Step 2: Measurement of efficiency
Step 3: Effectiveness potential
Step 4: Comparability of performance
Step 5: Trends
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13. Objectives can be met when the total fund is
adequate to meet the demands of the
organisation.
TE = sales — materials = S — M
The key objective will normally relate to
maximisation of profit.
paying satisfactory wages to employees,
meeting the payments to outside suppliers
setting aside a fund for wear and tear of plant for
later replacement.
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14. Efficiency is a measurement of the way an
enterprise is currently using the resources at
its disposal.
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15. Effectiveness and efficiency are related, but are
different aspects of productivity measurement.
Effectiveness compares what could be done with
the enterprise's resources, while efficiency
determines the existing state of affairs.
This concept includes an output target
achieving a new standard of performance, or
potential.
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16. Productivity measurement means comparisons at
three levels:
comparison of present performance with a
historical base performance;
comparison of performance between units: such
a measure indicates relative achievement; and
comparison of actual performance with a target:
this is best, because it concentrates attention on
objectives.
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17. Trends, that is the aim of achieving progressive
trends, must be associated with a comparison
between current performance and a historical
base in order to identify whether enterprise
performance is moving up or down and how
fast.
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