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Tanima Dutta, Lovely Professional University Unit 6: Productivity

Unit 6: Productivity Notes

CONTENTS
Objectives
Introduction

6.1 The Organization and Productivity
6.2 Various Kinds of Productivity Measures
6.2.1 Labour Productivity

6.2.2 Multiple Factor Productivity
6.2.3 Total Factor Productivity
6.3 Productivity and Production
6.3.1 Enhancing Productivity
6.3.2 Productivity in Manufacturing versus Service Firms

6.4 Summary
6.5 Keywords
6.6 Review Questions

6.7 Further Readings
Objectives

After studying this unit, you will be able to:
 Recognize the meaning and scope of productivity;
 Describe the various kinds of productivity measures;

 Explain the different concepts associated with productivity and production.

Introduction

Productivity measurement has emerged as a distinct and separate branch of study in management.
A number of studies employing highly sophisticated mathematical and statistical techniques
and tools of analysis have been conducted to measure productivity. The importance given to
productivity and its measurements is because, in a larger sense, productivity impacts the
organization in all areas, and that is what Production and Operations Management is all about.

6.1 The Organization and Productivity

Frederick W. Taylor in his famous book, The Principles of Scientific Management, in the chapter on
‘Task Study’ said, “Human work can be made infinitely more productive not by ‘working
harder’ but by ‘working smarter’”.
Productivity – the amount of output per unit of input – is a basic yardstick of an organization’s
health. Productivity is said to be high when more output is derived from the same input, or the
same output is obtained from a less input. When productivity is growing, profits tend to rise.
When productivity is stagnating, so, generally, is the profit. Organizations, of all sizes and

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