Productivity refers to the efficiency of production of services or products expressed by any measure of output. Various measures of productivity may be used, e.g. as a ratio of a product's total production to its individual components, an aggregated output, usually over a given period of time, generally over one year. In business productivity also refers to the ratio of total sales to total assets over the course of a year.
Productivity measurement involves many elements, including availability of materials and labor, skill of workers, output per units produced, and so on. Output per units produced may be measured in terms of quantity or quality, expense on production and so on. Labor productivity is a function of expertise, training and skills of workers. These may either be direct or indirect labor; direct labor refers to skills, tools and materials possessed by workers whereas indirect labor is created by the existence of a structure that supports it, for instance, financial system, laws, corporate structures, etc., which, though not human, produces output.
Productivity measurement is also concerned with determining whether or not a production can be carried out at the lowest possible cost. Many businesses, for example, produce fewer products per unit of inputs if they can save a few pennies per product, then produce the same number of units at higher prices and still remain profitable. Many businesses also use productivity management systems to track costs, to avoid waste and to assure quality and productiveness. In industries that practice lean manufacturing principles, reducing wastes is also important to maintaining competitiveness and efficiency.
Efficiency refers to the level of real output per worker, or the level of total economic value added per unit of inputs. Productivity in industry refers to the ratio of costs of production to the value of output, or the ratio of total costs of production to total revenue. The concept of efficiency has been associated with social justice. For instance, a society that made everything people need and yet was unable to provide the basic necessities of life and even basic health care would soon collapse. Economic theorists argue that in a society based on efficient production, the vast real estate holdings of the wealthy would be seized by the working class and the quality and variety of goods that could be produced would decline.
One important area of debate in productivity studies is measuring productivity. The most common method of measuring productivity is measured by output per hour or job. This is called the labor productivity measure, since it involves the effort of the workforce per hour. Productivity measured by means of output per job has been gaining importance in recent years as new methods of measuring productivity have arisen. One such measure is measured by the amount of time workers spend on tasks, another by the amount of satisfaction they receive from their work, and yet another by the quality of that work.
Increasing productivity requires changes to both management practices and the way in which the business operates. Productivity improvements require that managers become more attentive to the tasks of their employees, that they evaluate the quality of their products, and that they pay attention to details. It also requires that businesses develop systems for organizing their production process so that the physical plant is organized around the needs of the various tasks and departments. Productivity improvements, then, need not simply mean getting more people to do the same tasks; they should include a rethinking of how they do things at the organizational level. By taking these basic steps toward productivity growth, any enterprise can increase its productivity gains. To familiarize yourself more with this topic, it is best that you check out this post: https://en.wikipedia.org/wiki/Productivity.
