This document discusses productivity management. It defines productivity as the ratio of output to inputs. Productivity can be measured using trend, horizontal, vertical and budgetary analysis. Productivity involves measurement, evaluation, planning and improvement. Increased productivity benefits workers through higher pay and standards of living, and benefits organizations through higher production and profits. Factors affecting productivity include inputs, technology, management and external factors. Productivity can be improved through technology, employees, materials, processes and tasks. Common challenges in measuring productivity include measuring outputs and inputs accurately. Productivity models include partial, total factor, multi-factor and total productivity.

1. SUBJECT-
UNIT-III
CHAPTER- 1 PRODUCTIVITY MANAGEMENT
KEERTI PILLAI

2. MEANING:-
IN GENERAL SENSE, PRODUCTIVITY IS SOME SORT OF RELATIONSHIP
BETWEEN INPUTS AND OUTPUTS OF AN ENTERPRISE. IT IS THE
QUANTITATIVE RELATIONSHIP BETWEEN WHAT WE PRODUCE AND THE
RESOURCES USED. THE CONCEPT OF PRODUCTIVITY HAS MANY
DIMENSIONS. IT CAN RELATE TO EVERY ITEM/ACTIVITY ON WHICH
MONEY IS SPENT TO GET THE FINAL PRODUCT.

3. DEFINITIONS:- “PRODUCTIVITYIS A MEASURE OF HOW MUCH INPUT IS
REQUIRED TO PRODUCE A GIVEN OUTPUT I.E. IT IS RATIO OF OUTPUT
TO INPUT.”
-N.CHARRY

4. Productivity can be evaluated with the help of the
following analysis:
• Trend Analysis:
• Horizontal Analysis:
• Vertical Analysis:
• Budgetary Analysis:

5. THE PRODUCTIVITY CYCLE
Productivity
Measurement
Productivity
Evaluation
Productivity
Planning
Productivity
Improvement

6. BENEFITS OF INCREASED
PODUCTIVITY
TO WORKERS:
1. THE GAINS FROM INCREASED PRODUCTIVITY CAN BE SHARED WITH WORKERS OR
EMPLOYEES BY PAYING THEM AT HIGHER RATE.
2. BETTER STANDARD OF LIVING.
3. IMPROVED MORALE.
4. SATISFIED WORKER.
TO THE ORGANIZATION:
1. HIGHER PRODUCTION OF GOODS AND SERVICES.
2. REDUCTION IN COSTS.
3. MORE OUTPUT IS PRODUCED WITH LESSER INPUT.
4. HIGH TURNOVER, MORE PROFITS AND DIVIDENDS.

7. TO THE NATION:
1. HIGH EMPLOYMENT OPPORTUNITIES.
2. INCREASED GROSS NATIONAL PRODUCT.
3. IMPROVED UTILIZATION OF RESOURCES.
4. EXPANSION IN INTERNATIONAL MARKETS.
TO CONSUMERS AND SOCIETY IN GENERAL:
1. INCREASE IN SUPPLY OF BETTER QUALITY GOODS AND SERVICES.
2. GREATER CUSTOMER SATISFACTION.

8. FACTORS AFFECTING PRODUCTIVITY
CATEGORY-I : INPUT RELATED FACTORS
a) PRIMARY FACTORS:
b) ORGANISATIONAL FACTORS:
c) CONVENTIONS AND TRADITIONS OF ORGANIZATION:
CATEGORY-II : OUTPUT RELATED FACTORS
a) R&D TECHNIQUES.
b) EFFICIENT USE OF RESOURCES.
c) QUALITY IMPROVEMENT PROCESS.
d) EXTERNAL FACTORS.
e) TECHNOLOGICAL
f) MANAGERIAL

9. WAYTO IMPROVE PRODUCTIVITY
1. TECHNOLOGY BASED
2. EMPLOYEE BASED
3. MATERIAL BASED
4. PROCESS BASED
5. PRODUCT BASED
6. TASK BASED

10. IMPORTANT CHALLENGES OR DIFFICULTIES
IN MEASURING PRODUCTIVITY
1. DIFFICULTY IN MEASURING OUTPUT
2. DIFFICULTY IN MEASURING INPUTS
3. PARTIAL PRODUCTIVITY
4. CHANGING CONDITIONS
5. SERVICE SECTOR
6. DIFFERENT PERIODS
7. DIFFICULTY IN MEASURING MAN-HOURS
8. TECHNOLOGICAL CHANGES

11. WAY AND MODELS OF CALCULATING
PRODUCTIVITY
TYPES OF PRODUCTIVITY
1. PARTIAL PRODUCTIVITY
2. TOTAL FACTOR PRODUCTIVITY
3. MULTY-FACTOR PRODUCTIVITY (MFP)
4. TOTAL PRODUCTIVITY

12. PARTIAL PRODUCTIVITY MEASUREMENT:
ADVANTAGES :-
1. EASY TO UNDERSTAND
2. EASY TO OBTAIN THE DATA
3. EASY TO COMPUTE THE PRODUCTIVITY INDICES
4. SOME PARTIAL PRODUCTIVITY INDICATOR DATA IS AVAILABLE INDUSTRY
WIDE
DISADVANTAGE :-
1. PROFIT CONTROL THROUGH PARTIAL CAN BE A HIT AND MISS
APPROACH
2. TEND TO SHIFT THE BLAME TO THE WRONG AREAS OF MANAGEMENT
CONTROL
3. DO NOT HAVE ABILITY TO EXPLAIN OVERALL COST INCREASE

13. TOTAL FACTOR PRODUCTIVITY:
ADVANTAGES:-
1. SIMPLE TO USE
2. DATA NEEDED IS EASY TO OBTAIN IN TFP
DISADVANTAGES:-
1. IT DOES NOT CONSIDER THE IMPACT OF MATERIAL AND
ENERGY INPUT, EVEN THOUGH MATERIALS CONSTITUTE
CONSTITUTE ON AN AVERAGE 40% TO 60% OF THE COST.
2. IT DOES NOT CONSIDER MACHINE PRODUCTIVITY AND
THEREFORE IT CAN NOT PROVIDE ACCURATE MEASURE OF
TECHNICAL CHANGE.
TFP:-
1) Capital-Labour productivity=
Quantity index of value added
Quantity index of combined
labour and capital input
2) Capital-Labour productivity=
Quantity index of gross output
Quantity index of combined
labour and capital input

14. MULTY-FACTOR PRODUCTIVITY (MFP)
ADVANTAGES :-
1. IT IS THE MOST APPROPRIATE TOOL TO MEASURE TECHNICAL
CHANGE BY INDUSTRY AS THE ROLE OF INTERMEDIATE INPUTS
IN PRODUCTION IS FULLY ACKNOWLEDGED.
2. DOMAR AGGREGATION OF KLMES MFP ACROSS INDUSTRIES
PROVIDES AN ACCURATE PICTURE OF THE CONTRIBUTION OF
INDUSTRIES TO AGGREGATE MFP CHANGE
DISADVANTAGES:-
1. SIGNIFICANT DATA REQUIREMENTS.
2. INTER INDUSTRY LINKS AND AGGREGATION ACROSS
INDUSTRIES MORE DIFFICULT TO COMMUNICATE THAN IN THE
CASE OF VALUE ADDED BASED MFP MEASURES
MFP = Outputs
Inputs of (labour + Energy + Material)

15. TOTAL PRODUCTIVITY
ADVANTAGES:-
1. ALL QUANTIFIABLE INPUTS ARE CONSIDERED
2. PROVIDES FIRM LEVEL AND OPERATIONAL UNIT LEVEL
PRODUCTIVITY
DISADVANTAGES:-
1. DATA IS DIFFICULT TO COMPUTE
2. DOES NOT CONSIDER INTANGIBLE INPUTS AND
OUTPUTS.
Total Productivity =
Total Output = OT
(L+C+R+Q) (L+C+R+Q)