Productivity and its

role
in the economy

Productivity and Productivity

Improvement : Concept
In economics, productivity is the ratio of what is produced to
what is required to produce. Productivity is the ratio between
output and input. It is quantitative relationship between what
we produce and what we have spent to produce. It is the
measurement of production efficiency.
Improving productivity means increasing or raising productivity
with the help of using same amount of materials, machine time,
land, labour or technology.
The following examples of each type of productivity may
make improved or higher productivity meaning clearer.

Improved productivity of land

Improved productivity of materials:

Improved productivity of machines

Improved productivity of Men (Labour)

Productivity and Productivity

Improvement
by using better seed, better methods of cultivation

If
and more
fertilizer, the yield of corn from a particular hectare of land can be
increased from 4 quintals to 6 quintals, the productivity of that
land, in the agricultural sense is increased (improved) by 50
percent.
A skilled tailor is able to cut 12 suits from a bale of cloth where
an unskilled labor is able to cut only 10 suits from a bale of cloth,
then the productivity of the bale used by skilled worker is 16.6
percent greater than unskilled labor.
A machine tool is producing 90 pieces per working day (i.e. 8
hours). Considering that through the use of improved cutting tools,
the output is increased to 120 pieces, then the productivity of that
machine will be increased by 33.33 percent.
The worker is producing 32 plates per hour. Considering that
with the improved methods of work, he will be able to produce 42
plates per hour, then productivity of worker will be improved by

Productivity as an Factor concept

Partial Factor Productivity
1. Considers a single input in the ratio
2. Partial-factor productivity would be the ratio of total output to a
single input
3. Output/labor, output/machine, output/capital, or output/energy
Multi Factor Productivity
1. Utilizes more than a single factor
2. Multifactor productivity is the ratio of total output to a subset of
inputs:
3. A subset of inputs might consist of only labor and materials or it
could include capital
Total Factor productivity
1. Measured by combining the effects of all the resources used in the
production of goods and services (labor, capital, raw material,

Techniques for Measurement of Productivity

Productivity may be measured either on an aggregate basis or
individual basis. On aggregate basis, output is compared with all
inputs taken (added) together. This is called as total productivity.
On individual basis, output is compared with any one of the input
factor and this is called as partial productivity or factor productivity.
Total productivity index =Total output = Total production of goods
and services
Total inputs
Labour + Material+ Capital+
Energy

This index measures the productivity of the entire organization with

use of all resources

Productivity Improvement Indices or Factor productivi

A. Labour productivity:
Labour productivity can be higher or lower depending on factors like
availability of
work load, material, working tools, availability of power, work efficiency,
level of
motivation, level of training, level of working condition (comfortable or poor)
etc.
Labour productivity can be measured in terms of hours or money.
Labour productivity index = Total output
Total inputs
Labour productivity (hours) = Total quantity produced
Actual man hours required to produced that
quantity
Labour productivity (money) = Total cost (or sales value) of output
produced
Amount in terms of rupees spent on workers
The productivity of labor can be increased by increasing efficiency of labor

Material productivity

al productivity depends upon how material is effectively utilized in its conversion

nished product. Material productivity depends upon percentage of rejection,
on of scrap, level of spoilage, obsolescence, work wastage etc.
rial productivity = Total output
Material inputs
or
Number of units produced
Total material cost
al productivity can be increased by using skilled workers, adequate machine too
design of product etc.

Machine Productivity

ne productivity depends upon availability of raw material, power, skill of workers

ne layout etc.
ine Productivity = Total output
Machine inputs
or
Out put in standard hours
Actual machine hours

D. Capital productivity
For any production set-up, facilities of machines, tools, land etc. are
required which are assets of organization. Capital is needed for such
assets. Capital productivity depends on how effectively assets are
utilized.
Capital Productivity = Total output
Capital inputs or
Total output
Capital employed

2. Japanese Productivity Improvement

Techniques
A. JIDOKA
B. HEIJUNKA
C. KAIZEN Techniques

Techniques for Improving the Productivity of an

Organization
A. Task Based Techniques: Work study
1. Motion study/work simplification (Method study)
2. Work measurement (Time study)
3. Job analysis
4. Job evaluation and merit rating.
5. Ergonomics (related with human factors)
6. Production scheduling
B. Product Based Technique:
1. Product classification and coding
2. Research and development
3. Reliability and improvement in product design
4. Product standardization
5. Product simplification
6. Product diversification
7. Product specialization.

C. Technology Based Methods:

1. Computer aided design
2. Computer Aided process planning
3. Computer aided manufacturing
4. Computer integrated manufacturing (CIM)
5. Computer aided engineering analysis
6. Computer aided inspection
7. Group technology
8. Robotics & just in time (JIT)
9. Maintenance management
10.Reconditioning & life predicting of equipment technology.
D. Material Based Techniques:
1. Material requirement planning (MRP)
2. Inventory control
3. Just in Time concept of inventory management
4. Material management and quality control
5. Material handling systems.

E. Employee Based Methods:

Employees may be encouraged to improve productivity by adopting
following techniques:
1. Incentive schemes for individual employees
2. Incentive schemes for group of employees
3. Management by objectives
4. Fringe benefits for employees and job enlargement
5. Recognition and punishment of employees
6. Total quality management (TQM)
7. Zero defect benefits for employees.

WORK STUDY
Work study is the investigation by means of consistent
system to attain the best possible use of available men,
machine , materials, money and time.
Total concept of work study is concentrated upon the
answers of following two questions.
How should a job be done? METHOD STUDY
How much time a job should take for completion.
WORK MEASUREMENT AND TIME STUDY

Work Study as a Productivity Improvement

Technique

Work study is an important management tool to achieve

higher productivity. It is related to human work, method of
doing work and standard of performance. It divides work
into smaller elements, studies it, and rearranges it to get
same or greater efficiency at reduced cost.
Work Study is the systematic examination of the
methods of carrying on activities so as to improve the
effective use of resources and to set up standards of
performance for the activities being carried out.
On the other hand, work study aims to improve
productivity through the systematic analysis of existing
operations, processes and work methods so as to improve
their efficiency with little or no extra capital expenditure. To
achieve this improvement it is extremely important to apply

All objectives of the work study indicate that there is

positive (direct) relationship between work study and
productivity improvement. The objectives of the work study
are as follows:
i) It helps in the optimum use of plant, equipment,
manpower and material
ii) It helps in establishing the standard of performance
iii) It helps in developing efficient work methods
iv) It helps in establishing the most efficient and effective
utilization of human effort
v) It helps in synchronizing various resources like men and
machine
vi) It helps in the evaluation of human work
vii) It helps the elimination of wasteful efforts, useless
material handling etc.
v) It is helpful in developing plant safety schemes,

Techniques of Work Study

The amount of work in a given job is referred to as work content.
The work study consists of two techniques:
(a) Method Study/Motion study: Method study is the systematic
recording and critical examination of existing and proposed ways
of doing work. It is concerned with the reduction of work content of
a job or operation.
(b) Work Measurement/Time study: attained by selecting a worker
for each particular task and then training him soundly, essentially
by developing cooperation between workers and the management
Work measurement is defined as the application of a set of
techniques intended to establish quantum of work to be done by
an operator in a given time of a specified task, under specified
conditions and at defined level of performance

Benefits of work study

Increased productivity and operational efficiency

Reduced manufacturing costs
Improved work place layout
Better manpower planning and capacity planning
Fair wages to employees
Better working conditions to employees
Improved work flow
Reduced material handling costs
Provides a standard of performance to measure labor
efficiency
Better industrial relations and employee morale
Basis for sound incentive scheme
Provides better job satisfaction to employees

Method Study
Both time study and motion study resulted from the integration
of concepts and practices developed by F W Taylor and by Frank
and Lillian Gilbreth.
it is a systematic and scientific evaluation of existing and
proposed plans and performance of a work and evaluation of
improvement through analytical process of critical examination.
This

is

broad

investigation

for

improvement

of

total

department, layout of machines, equipment, flow of materials

and movement of men
A collection of techniques used to examine work what is done and how it is done - so that there is
systematic

analysis

of

all

the

elements,

factors,

resources and relationships affecting the efficiency and

Method Study Procedure

To Simplify the job and develop more economical methods of doing
it
Select

the job to be studied

Record

by collecting data or by direct observation

Examine by Challenging purpose, place, sequence, and method of

work
Develop new

methods

drawing

on

contributions

concerned
Evaluate results of different alternative solutions
Define
Install

new method and present it

new method and train persons in applying it

of

those

Objectives of method study

To study the existing proposed method of doing any
job,

operation or activity
To develop an improved method to improve

productivity and to reduce operating costs

To reduce excessive material handling or movement
and

thereby reduce fatigue to workmen

To improve utilization of resources

To eliminate wasteful and inefficient motions
To standardize work methods or processes, working
conditions , machinery, equipments and tools.

Work Measurement
Work

measurement

is

the

application

of

techniques

designed to establish the time for a qualified worker to

carry out a specific job at a defined level of performance.

Purpose of work measurement

o
o
o
o
o
o
o
o

To
To
To
To
To
To
To
To

find ineffective time in a process

set standard for output level
evaluate worker's performance
plan work force needs.
determine available capacity
compare work methods
facilitate operations scheduling
establish wage incentive schemes

Techniques of Work Measurement

ime study/ stop-watch

Attained by selecting a worker for each particular task and then
training him soundly, essentially by developing cooperation
between workers and the management. Basic time study
equipment consists of a stop-watch, a study- board and time
study forms. The time study procedure consist of steps such as
(i) Selection of Job
(ii) Standardization of Method
(iii) Select the operator for study
(iv) Recording of details
(v) Measure the duration of each element
(vi) Calculating representative time of each element
(vii)Convert observed time into normal time
(viii)Calculate relaxation and other allowances
(ix) Calculate Standard time.
Generally applied for continuous direct or indirect labor
studies.
Example : performing a time study on a machine to

Time study/ stop-watch

Attained by selecting a worker for each particular task and then
training him soundly, essentially by developing cooperation
between workers and the management. Basic time study
equipment consists of a stop-watch, a study- board and time
study forms. The time study procedure consist of steps such as
(i) Selection of Job
(ii) Standardization of Method
(iii) Select the operator for study
(iv) Recording of details
(v) Measure the duration of each element
(vi) Calculating representative time of each element
(vii)Convert observed time into normal time
(viii)Calculate relaxation and other allowances
(ix) Calculate Standard time.
Time study can be performed depending on the accuracy of
stopwatch method, time recording machine and motion picture

Taylors approach

Split up a work into small activities called elemental movements or simp

Elements

Eliminate all unnecessary elements

Add an allowances to actual time to over the time delays due to known o
forecasted or unforeseen reasons.

Standardize the tools and working conditions with more emphasis laid on

method improvement

Define task
Define time
Define method

Work Sampling
Work sampling was pioneered by L.H.C. Tippet in a British Textile
Mill. It is defined as The statically technique for determining the
proportions of time spent by subjects(eg. Workers, machines) in
various defined categories of activity (eg. Setup, cleaning, idle).
Generally applied to study non-repetitive task with long cycle
times.
Example: to determine the utilization of maintenance operator,
support personnel etc.
It is a method of finding the percentage occurrence of certain
activity by statistical sampling and random observations.
It is also known as Activity Sampling, Ratio-delay study,
Random observation method, Snap-reading method and
Observation ratio study.

Work sampling can be applied and used for

1. Work sampling data provides useful information on
delays and interruptions in work process which helps to
simply work process.
2. Allowances that cannot be measured using time
study method as they are small and infrequent can be
economically measured by work sampling method.
3. Work sampling is used to measure the work load of
heterogeneous work that involves long cycle jobs.
4. The information derived from work sampling can be
used to compare the efficiency of two departments, to
provide for a more equal distribution of work and
reasons behind ineffective time.

Method study and work measurement are closely linked to each other as both are
associated with work study. Method study reduces the content of job and work
measurement investigates and reduces ineffective time associated with job with
establishment of standard time. This results into efficient working operations
leading to increase in productivity of that process.