Evaluating the productivity concept
Productivity can be said to be the raison d'etre of management. Yet how well do managers, supervisors and indeed all employees fully understand the concept and consider all the components that it comprises? Many employees in organisations have lost their jobs, despite successfully achieving quality, cost and delivery objectives.
This section aims to improve your understanding of the concept by providing a framework in which productivity issues can be discussed and bring together some of the complex and diverse approaches to the measurement of productivity at the organizational level.
The overall message will be that there is no one 'best' method or perfect solution, but that the recognition of the need for improvement can be an important first step in problem diagnosis and the establishment of an appropriate measure of productivity.
Productivity has now become an everyday word. Since the Second World War, governments, politicians, academics and economists have all stressed the importance of productivity because of its relationship with the general economic health of a nation.
Corporate management globally is concerned with productivity because it is regarded as a main indicator of efficiency when comparisons are made with competitors in world markets. Governments stress the relationship between productivity, the standard of living, inflation and economic growth (Craig (1972)).
Over this period, whole careers have been spent addressing the problem of productivity and how it can be measured, without coming to any conclusions. Faraday (1971) comments "The calculation of productivity has long been a field of controversy when attempts are made, little value is placed on the results because they seem to contain so many imperfections".
Craig (1972) sums up the problem when he says 'productivity remains as one of the most elusive concepts in business and economic literature. It remains elusive because of a lack of definitive theoretical work - mainly at the firm level."