What is Productivity?


Productivity is a relationship between input and output.

Productivity= (Output/Input)

Productivity denotes the productivness of the factors of production, labour and capital, in citation of wealth (BIMF 1976). It is concerned with the efficient utilization of resources (inputs) in producing goods (output). Efficiency is the ratio of actual output attained to the standard expected output. The concept of efficiency is closely related with productivity.

There are mainly two approaches to the measurement of productivity. These are partial and total productivity measurement. According to ILO Action Manual ‘ Improving working condition and Productivity in Garment Industry’ (Hiba 1998):-

Partial productivity is the ratio of output to one class of input. For example, Labour productivity (the ratio of output to labour input) is a partial measure. Similarly, materialproductivity (the ratio of output to material input) and machine productivity (the ratio of output to machine input) are example of partial productivity.”

Partial productivity measures are easy to understand and use. The data needed are both easy to obtain and easy to compute. Partial productivity is also a good diagonastic tool pinpointing improvement areas. However , it has some disadvantages. If used alone, it can be misleading and may lead to costly mistakes. Partial measures can not be ussed to explain overall cost increases. Studies shows that among industrial corporations partial productivity measures are the most commonly used at all organizational levels, particularly in the plant division level.”

Total productivity is the ratio of total output to the sum of all input factors. Thus, a total productivity measure reflects the joint impact of all inputs in producing the output. It is a kind of a higher level of productivity assesment combing several or many partial productivity measures. Total productivity measures considers all the quantifiable output and input factor; therefore it is a more accurate representation of  the real economic picture of an enterprise. However total productivity measures does not tell the management of a firm that which of its products or services is causing a declin or growth. Nor does it tell them which particular inputs – workers, material, capital, energy or other expenses – are being utilized inefficiently so that corrective action can be taken. Moreover, data for computation are relatively difficult to obtain unless data collection systems are designed for thr purpose.”

Measuring input and output

Manufacturers producing a standard product (five pocket jeans or dress shirt) tend to use physical unit method for measuring output i.e. the output is measured in terms of number of items (garments) produced. In case of manufacturers producing products with close similarity, the output is converted into ‘Standard equivalent product’ for physical measurement.

In the case of manufacturer with great amount of product variation, the output is measure in financial terms. It is often seen that productivity is often conveyed in terms of garment produced per sewing machine per shift or per operator per shift. “productivity of a factory is 20 pieces per operator” It is something very vague. It is vital to provide following information in productivity communication:-

  • The form of input and output.
  • Quantum of input and output.
  • Unit of measuring the input and output.

The productivity performance communication “20 pieces per operator” does not say anything about:-

  • The form output  –  Shirt or trouser or jacket etc.
  • Unit of measuring input – Time
  • Quantum of input – How much?

A better and easy to understand communication can be to mention that the productivity of organisation abc is 20 standard shirts per sewing operator per eight hour shift