You are on page 1of 4

Difference between Productivity and Efficiency

Productivity is very often confused with the term efficiency. Though related, these two terms carry different meanings.

Efficiency (): It is the ratio of actual output attained to the standard expected output. Therefore, efficiency indicates a measure of how well the resources are utilized to accomplish a target or result. Productivity is an integration of both efficiency and effectiveness. It indicates a combined effect of resource utilization (i.e., efficiency) and performance (i.e., effectiveness).

The combine effect of efficiency and effectiveness is used in defining a term called productivity index. Productivity Index = Performance achieved/Input resources consumed= Effectiveness/Efficiency

The difference between productivity and efficiency Productivity is a ratio of outputs to inputs, and can be measured not just in terms of volume, but also in terms of quality. For example, the NHS could treat fewer patients per year, but be regarded as more productive if survival rates improved.

Efficiency is a different, but related, concept. It is measured as the ratio of outputs to inputs relative to a maximum feasible output (given the inputs). So the NHS could improve its productivity year-on-year, but potentially become less efficient if there was an increase in what could be produced with the same input due to, for example, technological changes.

Factors Affecting Industrial Productivity:

a) Technological Development: Technological factors including the degree of mechanization, how raw materials, layout and the method and techniques of work determine the level of technological development in any industry. The principal factor in technological development affecting productivity is b) The Size of the Plant: The size of the plant and the capacity utilization has direct bearing on productivity. Production below or above the optimum level will be uneconomical and will tend towards lower level of productivity. b) Research and Development: Investment in research and development may yield better method of work and better design and quality of products. c) Plant and Job Layout: The arrangement of machines and position in the plant and the setup of the wore-bench of an individual worked will determine how economically and efficiently production will be ferried out. d) Machine and Equipment Design: Whether design of machinery and equipments is modern and in keeping with the limitations and capacities of the workers will also determine the production efficiently and level of productivity. e) Production Processes: Advanced Production processes involving the use of modern integrated and automatic machinery and semi processed material have been known to help in raising levels of productivity. f) Power Raw Materials: Improved quality of raw materials and increased use of power have a favorable effect on productivity. g) Scientific Management: Scientific management techniques such as better planning of work simplifications of methods time and modern study emphasis for reduced wastage and spillage have positive effects on productivity.

2. Individual Factors: Individual factor such as knowledge skill and attitude also affect the productivity of industry. Knowledge is required or acquired through training education and interest on the part of lecturer. Skill is affected by aptitude, personality, education, experience, training etc.

a) Organization Factors: Organization factor include various steps taken by the organization towards maintaining better industrial relations such as delegation and decentralization of authority. These factors also influence motivation likewise the existence of group, with higher productivity as their goal is likely to contribute to the organization objectives. Article Source:


In case of a job which is repetitive in nature and the working time is not scheduled by the speed of machinery, an individual is likely to become more confident and knowledgeable about his work as he gains more experience. As a consequence of his learning effect he can do the job in less time than when he initially commenced the first job. Ultimately when he has acquired more experience the learning process will lend to stop. The speeding up of a job with repeated performance is known as learning effect or learning curve effect. The reduction in the required labour time thus can be quantified.

Learning curve theory was first developed in the United States aircraft industry. It has been extended to other labour-oriented industries and has been extended to no production activities such as marketing efforts. Learning curve effect is not only restricted to individual but it also applies to a group of workers. However the learning effect is not an automatic natural phenomenon. All production process win not show rate of increased efficiency and there may be cases where the differences in the learning rates will be substantial. The quantitative average time per unit produced is normally considered to be reduced by a constant percentage every time total output of the product is doubled. The following table the working of which is based on 80% learning effect can exemplify this.

Number of Units Cumulative Total (Cumulative) average time per unit in hr Time Time for additional

Incremental time

1 -2 60 4 96 8 1536

100 80 64 51.2

100 160 256 409.6

Thus Learning curve can be expressed as y=axb