▷ Productivity: Definition, Types, Formula and Importance

  • Aug 11, 2022
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There is currently no real consensus on the exact definition of productivity, but as we saw in the post “Difference Between Effectiveness and Efficiency there are certain parameters with which we can have a general idea of ​​the concept. generically the productivity It has to do with the input-output relationship, since the more products are manufactured with the same amount of input, the company is said to be more productive.

Productivity

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This relationship is given by the formula Outputs/Inputs=Productivity. Another important factor to consider is the quality, because more units of products can be produced with the same inputs but with a higher quality deficient, this brings catastrophic results in the effectiveness of the company and does not contribute anything to its increase.

It is for this reason that the productivity it has to be accompanied by quality so that the concept is well applied.

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According to the Business Dictionary it is:

A measure ofefficiency of aperson, machine, factory,system etc., in the conversion ofinputs into productstools.

Productivity iscalculate by dividingthe productionaverage perperiodfor the coststotals incurredor resources(capital,Energy,materials,staff)that are consumed inthat period.productivity isa critical determinant ofcost efficiency.

productivity

In this article you will find:

Definition of Productivity

Although there is no exact definition, one can define the productivity as a unit of economic measurement that allows determining the capacity that an entity has to produce, making efficient use of resources. supplies or resources of production in equilibrium with quality to generate goods or services during a certain period.

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For the author Harold Koontz (2012) “Successful companies create their added value through productive operations. Even when there is no absolute agreement on the true meaning of productivity, it can be defined as the production-input ratio within a period, considering quality.” (p.14)

Formula:

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productivity formula

Productivity Types

According to the inputs or production resources implemented, three types of productivity are described, which are:

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Labor productivity:

Labor productivity is one that measures the ability of the workforce to produce a quantity of products or services during a certain period of time, hours, in hours, days, etc.

Total Factor Productivity (TFP)

It is a unit of measurement of the production capacity of an entity in relation to the quantity total supplies (land, labor and capital), that is, the total amount of resources implemented to produce a certain amount of products in a certain period of time.

marginal productivity

Marginal productivity is that variation that is generated in a production by adding uone more unit to a productive factor, while the rest of the factors or inputs remain the same.

How to increase productivity, according to Harold Koontz

Productivity can be affected by different factors, however, Harold Koontz proposes three ways to increase it:

  1. Increase production with the same inputs.
  2. Reduce inputs while maintaining the same production.
  3. Increase output and reduce inputs to change the ratio favorably.

Of course, each company is unique, they use different types of inputs to produce a final product or service; reaching the right level of productivity for a long time was solely aimed at optimizing labor productivity, based on manual work.

However, productivity can be increased based on a efficient management of production processes, through the ability to generate and apply knowledge, under the term “knowledge worker,” characteristic of managerial work.

Hence, the famous phrase of one of the most influential administration philosophers, Peter F. Drucker, "Work productivity is not the responsibility of the worker, but of the boss."

Importance of productivity

Productivity is an extremely important factor for any organization, since this translates into an increase in profitability and economic growth, in turn affecting the country's economy.

For an organization to be more productive, it has a greater capacity to generate value added to the customer, to generate more sources of employment and can be more competitive increasing its market share.

In turn, productivity allows organizations to generate a saving both in time and cost. By improving the efficiency in the execution of tasks, the time for the completion of others is better optimized. activities, in addition, the use of unnecessary resources is reduced, which translates into a decrease in the costs of production.

Bibliographic references:

Harold Koontz, et al, (2012) "Management. A Global and Business perspective”; Mexico. McGraw-Hill/Interamericana Editores S.A. of C.V.

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