Presented by:

Manjari Agrawal Geeta Jagwani

Productivity in economic position is defined as the relation between output and input. Input element in an organization consists of resources used in the product creation process, such as labor, materials, energy. Output consists of a given product, service and the amount of both. Productivity = output input

Productivity measures amount of output produced relative to the amount of inputs. Intangible nature of many service elements makes it hard to measure productivity of service firms, especially for information-based services
Difficult in most services because both input and output are

hard to define Relatively simpler in possession-processing services, as compared to information- and people-processing services

Productivity shows whether the activity of an organization is efficient and effective. The terms like productivity, efficiency and effectiveness are used together therefore Productivity requires both efficiency and effectiveness, because a certain activity will not be productive if it is only efficient, but not effective, or effective, but not efficient.

Efficiency: Involves comparison to a standard, usually time-based (for example: how long employee takes to perform specific task) Problem: focus on inputs rather than outcomes. May ignore variations in service quality/value

 Productivity:

Involves financial valuation of outputs to inputs.

Consistent delivery of outcomes desired by

customers should command higher prices

Effectiveness:

Degree to which firm

meets goals
Cannot divorce productivity from quality

and customer satisfaction

Traditional measures of service output tend to ignore variations in quality or value of service.
Focus on outputs rather than outcomes Stress efficiency but not effectiveness

Firms that consistently deliver outcomes desired by customers can command higher prices; loyal customers are more profitable.

Measures with customers as denominator include:

Profitability by customer Capital employed per customer Shareholder equity per customer

Service productivity

quantity

quality

output

input

output

input

Service volume

Labor Raw material capital

Customer perceived quality

Tangible elements Intangible elements