Productivity is defined as the relationship between the output generated by a production or service system and the input provided to create that output. Management contributes the most to annual productivity increases at around 4/6, while capital and labor each contribute around 1/6. Productivity measurement is important for improvement, decision-making, and evaluating development programs. There are multiple approaches to measuring productivity at different economic levels. Effective productivity measurement addresses objectives, efficiency, effectiveness potential, comparability, and trends.

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Presented By:
Amit Verma
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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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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

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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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