PRODUCTIVITY

BY:-
RITIKA BHATIA
DEFINITIONS OF
PRODUCTIVITY
 Productivity is measure of how much
input is required to produce a given
output i.e. it is ratio of output to input.
 ACCORDING TO PETER DRUCKER,
”Productivity means balance between all
factors of production that will give the
maximum output with the smallest effort.”
 MEASURE OF OUTPUT
PRODUCTIVITY= MEASURE OF INPUT

Total productivity of the firm:

QT
P T=
L+C+R+M
(PT=Total productivity, L=labour input,
C=Capital input, R=Raw material and
purchased parts input, M=Other
miscellaneous goods and services input
factors, QT= Total output)
IMPORTANCE OF
PRODUCTIVITY
 It is of great significance for underdeveloped and
developing countries.
 The aim should be optimum use of resource so as to
provide maximum satisfaction with minimum efforts
and expenditure.
 Productivity analysis and measures indicate the stages
and situations where improvement in the working of
inputs is possible to increase the output.
 Productivity indicators can be used for different
purposes viz. comparison of performances for various
organizations, contribution of different input factors,
bargaining with trade unions etc.
TECHNIQUES TO
IMPROVE PRODUCTIVITY
 Better planning and training of employees, improved jobs and communication
and effective management through CPM/PERT methods.
 Use of time and motion studies to study and improve work performance. It
enables to assess the quantum of work, which can be used for planning and
control.
 Better transportation and material handling system.
 By providing work incentives and other benefits to workers.
 Workers involvement in decision making and working of organizations.
 Improvement in technology of production process and nature of raw-material
and its quality.
 Simplification, standardization and specialization technique.
 Better and efficient utilization of resources at the disposal of the enterprises.
 Use of linear programming and other quantitative techniques for better
decision making.
 ABC analysis to identify more important items and then apply inventory control
to reduce capital investment.
 Value engineering to reduce material content by good design.
Factors affecting
productivity
1) Primary factors:- they are related to the effort and working
capacity of an individual.
2) Organizational factors:- they are related to the design and
transformation process required to produce some item, the
nature of training and other skill imparted to workers to
perform certain operations in a production process, control
and various other incentives.
3) Convections and traditions of the organizations e.g.
activities of labor unions, medical facilities, workers and
executive understanding etc.
4) Technological factors:- it can increase the output per unit
of input substantially. They are defined in terms of
technology employed, tools and raw material used etc.
5) Managerial factors:- they are located in organizational
structure, scheduling of work, financial management
layout, innovations, personnel policies and practices, work
environment, material management etc.
6) Labor factors:- they are characterized by the degree of
skills of the works force, health, attitude towards
management, training and development. Greater the
congruence between the skills of work force and
technology employed better would be productivity.
7) External factors:- they are innumerable and identifiable in
the environment with which an organization has to interact
have important bearing on the levels of productivity.
Measurement of
productivity
Q1(I-A1)’P0
INDEX OF PRODUCTIVITY=
Q0(I-A0)’PO
WHERE POQO= The value of output in base year
Q1P0= The output value in current year base on
based year prices
(I-A1)=technology matrix in the current year
(I-A0)= technology matrix in the base year