A method of indexing performance measures and calculating
an overall, multi-factor performance index
Office productivity is a major concern of managements. One factor is a mistaken view that changes in office productivity cannot be measured and that there is therefore no way of ensuring that action to improve performance achieves tangible results. However, the productivity of office work can be measured, and changes up and down can be detected allowing managerial action to be taken to ensure that improvement takes place.
Importance of improving office productivity
Productivity is the relationship between the inputs required to produce a product or service, and the value of the output produced. In a factory this is relatively easy to calculate. A certain amount of material and labor is required at an easily measured cost to produce an article at a known ex-factory price. The inputs and outputs in this case are simple and unambiguous. They can be measured and used as a management control, or as the basis of an incentive payment system.
Productivity in the office is not so clear-cut. Inputs are fairly self-evident: staff equipment, office costs, etc but what of the outputs? What exactly do departments produce - seldom a single simple item? A management accounts department, for instance, will produce a variety of reports, some regular and some 'ad hoc'. They will work on several tasks simultaneously, with constant interruptions, and it will be impossible to apportion the total input to each.
Additionally, in this sort of activity, volume - the number of reports produced - is only one factor in their output. Will the department be twice as useful to the company if it produces twice as many reports? It may be more effective by producing half as many, if it changed to exception reporting for instance, and the lesser number of reports was more useful and relevant. Productivity is also not increased if a report is completed by one person, instead of two, reducing the input, if it is either incorrect, or produced after the date it is required.
In measuring office work, volume measures are seldom sufficient on their own. Output measures must also take into account the quality of the output, its timeliness, and cost. The effectiveness of the outputs is what matters, rather than the efficiency with which they were produced. For this reason the choice of productivity measures must be related to the purpose and objectives of the department and organization, and the needs of customers.