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Productivity, an Approach more than a Concept
Abstract
The term productivity remained under use with diverse concepts and
meanings during different periods. In the era of Scientific Management, the
major concern was to have more production with the same unit of labour and
in modern era when there is a lot of awareness about the environment,
productivity means how a company strives to save the planet by improving
Resource Productivity and reducing pollution level. In this article
contemporary concept of productivity, including Green Productivityalong
with earlier concepts of productivity e.g. labour productivity has been
discussed. This article will help understand the journey of productivity
covering definitions from its simplest meaning to Total Image Building.
Rationale of Studying Productivity
Before starting to comprehend the productivity and its related issues, one
should be satisfied with the rationale of understanding productivity concepts.
Productivity is probably the most widely discussed yet least understood
concept of the current management practices. There are six main reasons to
examine productivity:
1I warmly welcome [email protected]
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1. High competition bases on price, delivery time and product
differentiation;
2. Globalisation and distribution of industry through out the world
based upon low manufacturing cost and less stringent laws;
3. Awareness about the limited natural resources;
4. More funds required for social services;
5. Threat of undesirable effects of inflation;
6. High environmental sensitivity.
Gaynard (1997, p. 90) has pointed out another avenue of productivity by
pinpointing the unfulfilled needs of the people. These needs can only be
fulfilled with higher productivity. According to Gaynard (1997, p. 90):
There are still many unsatisfied needs in the world today, the fulfilment of
which depends ultimately on economic growth. The productivity
movement throughout the world means that many people are engaged in
the pursuit of greater effectiveness, improved efficiency and enabling
their communities to seek a fuller life with a better standard of living.
When James Henry Heinz founded the company in Britain in 1886, he
stressed that the key to success is in doing a common thing uncommonly
well.
Gaynard (1997, p. 90) further stated that:
It is insufficient to believe that we need only to address the notion of the
time and cost of a product or service at the moment of its inception
competition is a continuous fact in the lifetime of a company and there is
a need for continuous improvement. It is only by adopting the strategy
that there is always a better way of doing things that the organization
will survive and prosper.
Savery (1998, p. 68) has also pointed out the importance of productivity in
current era in the following words, increase your productivity has been the
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catch cry of the 80s and 90s and appears certain to continue into the
twenty-first century.
Stainer (1995, p. 04) has given his views about the significance productivity
in the following words, productivity management has, in the past, mainlybeen practised in an informal manner, yet, like any other decision-making
procedure, and there is the need for it to be formalized. Stainer (1995, p.
04) has further proposed guiding principles about productivity. According to
Stainer (1995, p. 04):
The Japan Productivity Center, the largest in the world of its kind, has
three guiding principles, based on the conviction that productivity
improvement cannot be achieved without positive labour participation as
well as sound and constructive labour management relations.
There is a need to change the traditional ways of business in the current era.
This is mainly due to vibrant business environment. Khan (2003) has urged
business community to make a change in the traditional practices due to
rapid changes in the business world. According to Khan (2003, p. 374):
Intense global competition and diminishing trade barriers are making it
more and more difficult for companies to maintain their market share.
Competition among companies operating in different markets has
increased, as advancements in telecommunications and information
technology have broken down traditional barriers to entry (e.g.
geographical and trade barriers).
Harrington (1980, p.169) has shown another face of productivity. Harrington
(1980, p.169) took it as synonymous of improvement. According to
Harrington (1980, p.169), Improvement is not a part of the game it is the
game today. Everyone wants things to change for the better. Top
management wants employees to stop making so many errors. Harrington
(1980, p.169) emphasis on improvement and view it as the ultimate target of
the organisation for survival in the current business age.
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Common Misunderstandings about Productivity
There are some common misunderstandings about productivity. Lawlor
(1985, p. 33) has pointed out the followings:
1. Increased output increased productivity;
2. Profit and productivity are synonymous;
3. Cutting cost improve productivity;
4. Profit today and tomorrow are possible;
5. Partial productivity improvement is worthwhile;
6. Productivity applies only to production.
Stainer (1997, p. 224) has differentiated terms production and productivity in
the following words:
The term productivity is often confused with the term production.
Although there is often a close relationship, production is concerned with
the activity of producing goods or services while productivity relates to
the efficient utilization of inputs in producing prescribed outputs of goods
or services.
Stainer (1997, p. 224) has further stated that:
Some managers have been so bold as to propound the rate of return on
capital employed as a partial measure, that of capital productivity. A
fundamental problem in using profitability ratios is that they are often
affected by external conditions, which may bear no relationship to the
efficient use of resources.
Chapman; Murray & Mellor (1996, p. 436) have identified a link between
productivity and profitability. They express their view in the following words:
In one of the more comprehensive examinations of the impact of qualityon business performance, Garvin (as cited by Chapman et al, 1996, p.
436) found that a strong association existed between productivity (both
labour and capital) and quality as well as between profitability (ROI) and
quality. Garvin found that the relationships between quality and
profitability were less established because of the many other variables
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affecting ROI measures. Other studies have found strong relationships
between productivity improvement and organizational success in such
factors as customer satisfaction programmes, product quality
improvement, reduction in waste and strategic quality improvement.
It is apparent from the above discussion that productivity is one of the
topics, which remained a core issue in the business world, yet there is much
confusion about its concept. In addition, like many other concepts, still this is
not well understandable and different people view it in different ways.
However, it is sure that productivity concern never remained out of focus
from human being. It was important in past, and is important in present and
will remain important in future; rather in the current scenario, it has become
more crucial. A list of productivity concepts and definitions will be given in
following pages. This list will help understand the theme of the productivity.
In addition, it shows a clear link between productivity understanding and
change in industrial practices.
Productivity Movement and Industrialisation
Mahoney (1998, p.13) has made a link between current industrial period and
productivity in the following words, every age has its slogans and energizing
concepts. Among other concepts, concern for productivity has characterised
much of the current decade.
Productivity, like many other concepts of business management has no
established definition. Different people view it from different angles.
Productivity concerns, concepts and definitions diverge considerably from
one analysis to another. In its simplest meanings, productivity is a relation
between inputs and outputs. No output is possible without inputs.
Significance of resources used for any output defines the behaviour
of the people towards its uses. This approach can be understood with the
following illustration. Labour is expensive in developed countries as
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compared to under developed countries. It is a part of planning in developed
countries to have more output with minimum workers. For this purpose,
every method and technique is used. Automation is one way to lessen the
number of working hands. On the other hand, more labour is used in
underdeveloped countries because labour is quite inexpensive and it does
not put a considerable effect on the cost when compared to developed
countries where labour is highly expensive but more productive. This
approach is supporting the theme mentioned above that; the productivity
becomes more crucial when the inputs are expensive or scarce. This
example makes a link between the importance of resources in terms of dollar
and its productivity. Following conclusion can be derived from the above-
mentioned example:
Productivity becomes a crucial issue when there is a scarcity of
resources.
This is one of the main reasons for different meanings of the productivity. In
1800s when raw material availability was not a big problem the main focus
was to improve labour output. Taylors Scientific Management theory is
focused to improve the labour productivity. This is supported by Andrews &
Brunner (1950, p. 09). They defined productivity in the following words, the
primary sense of productivity is that of output (quantity or value) per head in
a given period of time. In recent discussion productivity has also been used
in the sense of intensity of labour efforts. In this statement, major focus is
on output per head. In the modern times where there is a lot of awareness
about human rights, it is becoming quite complicated to emphasise on labour
productivity alone by just increasing wages. Hellerstein; Nuemark & Troske
(1999, p.410) have studied a relationship between wages and productivity.
According to their findings, wages, productivity and workers personal
characteristics have quite complex relationship. According to them, it is
difficult to determine whether wage differentials associated with workers
characteristics reflect productivity differentials or some other factors such as
discrimination. In past main concern was labour productivity but today
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many more factors are to be focused for higher productivity. In present
scenario, there is a great threat of the depletion of natural resources. Due to
this reason, management scientists are focusing on having maximum output
from minimum resources. This is clear from the Green Productivity concept
given by the Asian Productivity Organization in its conference held on 6
December 96, at Manila, in Philippines
The change in the concept of productivity is linked with the changes in the
industrial practices but it has never been ignored, since the first day of the
human life. It was equally significant for a cave man to have more hunting
from few stones and arrows and today it is a matter of survival for any
modern industry to produce more with less. Taira (1998, p. 40) has observed
productivity with reference to its industrialisation in Japan. According to Taira
(1998, p. 40), in Japan, productivity (seisansei) invaded public
consciousness in 55 and has since been perceived almost exclusively as the
physical productivity of direct labour in manufacturing and its auxiliary
industries.
This is the time when Japan started its activities in the industrial field after
WW II. They made a strong link between industrialisation and productivity. It
is a general belief that Japan could not have done such an amazing
performance without the concept of high productivity. In addition, main
concern was labour productivity since they were having greater number of
people as compared to the high tech machinery. Due to this reason, their
main emphasis was on labour productivity.
Arnold & Dennis (1999, p. 07) have discussed productivity growth. They
have identified following three factors in productivity growth:
1. Endowment of natural resources;
2. Capital accumulation;
3. Technological progress.
It is understandable from the above statements that above three factors are
the main contributors in productivity growth. Arnold & Dennis (1999, p. 11)
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have given example of USA in the favour of their assumption. It is true to
some extent. Nevertheless, there are certain examples where this does not
apply, like, Japan and Middle East. There was no natural endowment in Japan
but Japan is at the top in productivity and even better than USA. On the other
hand, Middle East is not among the list of highly productive countries; even
they have abundant resources of natural endowment. The basic thing in
productivity growth is the political leadership. It is the political leadership
that provides basic infrastructure to the individual and organisation which is
the fundamental requirement for productivity augmentation, like, long term
policies, security, educated work force, communication net work etc.
Murugesh; Devadasan & Natarajan (1997, p. 239) have given their views about
changes in business practices and requirement of industrial era in these
words:
From time to time, the industrial world has witnessed the emergence of
technologies and managerial philosophies due to increased competition.
Particularly, this trend has been phenomenal over the last 20 years. An
overview of literature regarding manufacturing status covering this
period indicates that there has been an upsurge in the emanation of
various concepts and philosophies since the 80s.
According to Mittal (2002, p. 27) use of most modern technologies in the
business to improve productivity is a vital factor in productivity phenomena.
According to Mittal (2002, p. 27), large productivity gains are possible if the
vast potential of all these technologies are combined cohesively.
Nevertheless, this is not true in every field, like, agriculture. Once it was
thought that green revolution will eliminate starvation from the world but
today scenario is totally different. Umetsu; Lekprichakul & Chakravorty
(2003, p. 943) have given their opinion on application of modern technology.
They have identified another aspect of productivity and scientific revolution.
Umetsu at al (2003, p. 943) have given their views in the following words:
In the 60s and 70s, the Green Revolution caused agricultural
intensification in many parts of the world. However, recent studies have
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suggested that intensification itself may have led to a decline in
agricultural productivity. Empirical evidence from the past Green
Revolution era has generally concluded that the Green Revolution led to
a plethora of problems. Most of high yielding varieties introduced at time
have quickly exhausted their yield potential (Haymi and Kikuchi).
Intensive monoculture production systems have contributed to declining
or stagnant productivity and farm incomes and have led to
environmental problems such as increased pest and disease incidences,
depletion of soil micronutrients, and changes in soil chemistry (Bouis and
Pingali et al).
From the above statement, it is clear that productivity does not mean
producing more. Rather there is a strong need to add some more concepts
while discussing productivity. It has been discussed in the early part of the
paper that once environment was not big issue but today it has become a
core issue and people are coming back to farming without any synthetic
fertilisers and pesticides. Savery (1998, p. 68) has pointed out the
significance of productivity in the current business environment in the
following words, The battle cry of the 80s and 90s has been the need to
increase the productivity of the organizations. This cry appears to be certain
to continue into at least the early part of the twenty-first century.
From the above discussion, it is understandable that significance of
productivity awareness has a direct link with industrial practices. It
becomes the point of focus when resources are limited, more concern about
environment, high competition, application of free trade agreements, latest
information technology and more factors associated with business practices.
Productivity Progression
As it has been discussed in previous pages, that productivity concern kept on
changing in different eras. It was mainly circumstances, which forced people
to change their behaviour towards productivity. Murugesh et al (1997, p. 239)
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have discussed in detail about the change in priorities of industry from
productivity to TQM. According to Murugesh et al (1997, p. 239):
Though productivity would have been mans concern as soon as he
became a manufacturer, its very formal presentation was noticed in the
literature only in the year 1766. Thereafter a lot of work emerged in this
area with various definitions and concepts.
They have further sated that:
During the early 00s, various models to improve productivity in complex
industrial enterprises were brought out. A comprehensive literature
survey on productivity studies in manufacturing systems over the last 20
years revealed two main aspects:
(1) The work on productivity in the initial days was biased towards only
its improvement and, later, slowly it shifted to its management;
(2) Its reception among the manufacturing community was moderate
during the early days of 70s.
They have pointed out another change in the behavior of people towards
productivity. They have expressed their views in the following words,
however, when the TQM movement gained momentum from the early 80s,
productivity concepts were pushed to the background. This resulted in the
declining trend of productivity literature over the years. They have surveyed
articles published on productivity in different eras. According to them:
From the 80s, the frequency of articles appearing in journals was reduced
by a very insignificant extent. Meanwhile, during the mid-80s, attempts
were made to implement TQM concepts either as a whole or in part (like
initiating quality circle programmes). However, during the late 80s and
early 90s sceptical observations emerged as the real benefits of TQM.
Particularly, a variety of articles such as Juran, Dale and Lightburn, and
Noci, dealing with the failures of quality improvement projects appeared.
More recently, Garvin claimed that the failure of TQM projects is reported
to the extent of 70 per cent. At the outset, a literature review has
indicated a disproportionate growth of quality and productivity studies,
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which has resulted in insignificant improvement in overall manufacturing
systems management.
According to their survey productivity article ratio was 66.5 % in 70, while it
is only .84 % in 84. Baily; Gordon; Nordhaus & Romer (1988, p. 347) have
studied growth rate change in US economy. Their observation confirms that
in last two decades productivity growth rate in US has passed through a
period of recession. Their research supports that in last two decades major
focus of firms was quality rather than productivity. They express their views
in following words:
Almost two decades have now passed since U.S. productivity growth first
showed signs of slowing, more than 15 years since the first paper on that
topic appeared in this journal. Overall, the process of slowdown continues
with little relief; in the non-farm business sector the annual growth rate
for both output per hour and multifactor productivity was more than 1.5
percentage points slower during 73-87 than during 48-73.
Nickless (1979, p. 907) has established the inappropriateness of the sex ratio
as a proxy for changing skill composition in the nineteenth century cotton
textile. Nickless (1979, p. 907) has further stated that:
After 1845, it was necessary to increase capital input to maintain a
steady rise in a labour productivity. In those years when the
capital/labour ratio fell, total factor productivity also fell. In order to
maintain a modest productivity advance it was necessary to substitute
capital for labour and in which such substitution was possible appears to
have been in the jobs of unskilled workers.
Lin; Kincade & Warfield (1994, p. 21) have made a link between productivity
and scientific management in the following words:Productivity is a measure of work with origins tied to the development of
scientific management. Definitions of productivity are numerous, but in
the simplest terms, productivity is measurement of output relative to an
input. The output for a production facility is often measured in units
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produced, and the input is some variation of numbers of workers or hours
worked.
It is clear from the above statement that in scientific management era
productivity was associated with input and output.
Productivity Concepts and Definitions
The word productivity first time appeared in literature in 1766. According to
Sumanth (1990, p. 01), the term productivity was probably first time used
by French mathematician in an article in 1766. In 1883, another French man,
Littre, defined productivity as the faculty to produce. Many organisations
have defined productivity in different ways. Hereinafter, diverse meanings of
productivity coined by different people and organisations in different periodswill be presented. Sumanth (1990, p. 04) has given a list of nine different
organisations and people who have given definition of productivity. A list of
different meanings has been prepared with the help of definitions proposed
by Sumanth (1990, p. 04), some more definitions have been added and
finally a conclusion is given based on research.
According to Sumanth (1990, p. 03), Quesnay (1766) used the word
productivity in an article and after that, Littre (1883) used this word as
faculty to produce. Fabricant defines productivity (as cited in Ali 1978, p. 55)
in the following words, always a ratio of output and input. This is the most
common definition of productivity. Kendrick and Creamer have proposed two
definitions of productivity (as cited in Afzal, 2004, p. 07). They expressed in
the following words, a-Functional definitions for partial, total factor and total
productivity, b-Loose description of relationship usually in ratio form,
between outputs and all of the associated inputs in real terms. In these
definitions, authors have differentiated partial productivity from total
productivity. Nevertheless, their focus is on relationship between the output
and input. Mali has proposed the similar concept of productivity (as cited in
Afzal, 2004. p. 06). According to Mali:
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Productivity is the measure of how well resources are brought together in
organisations and utilised for accomplishing a set of results. Productivity
is the name of reaching the higher level of performance with the least
expenditures of resources.
Sumanth (1990, p. 04) believes that productivity is a family of ratios of
output to input. The living standard of the country is measured by the
productivity. Productivity is measured by the goods and services produced
by per unit of national resources. Sink (1985, p. 15) has further clarified
productivity with reference to time and application of generic system of
calculation. According to Sink (1985, p. 15), the concept that productivity is
a relationship between outputs from a given system during or over a given
period in time, and inputs to that system during that same period, should be
generic and universal. Lawlor (1985, p. 33) has also given two concepts of
productivity. According to Lawlor (1985, p. 33), a- at its simplest meaning
productivity is the relationship between goods produced and sold or service
provided the out put, and the resources consumed in doing it
(Output/input= productivity). b- productivity is a comprehensive measure
about how efficiently and effectively organisations satisfy the following five
aims:
1. Objective achievements
2. Efficiency of the process
3. Effectiveness-
4. Comparability with other organisations
5. Trend- productivity measured over a period.
Campbell & Campbell (1998a, p. 01) have viewed this issue in a different
manner. According to them productivity is a concept that has captured the
imagination and energy of managers and behavioral scientist for decades. In
this statement, productivity looks a concept more than a definition.
Productivity is normally considered as the output of a worker. Moreover, the
factors affecting the productivity are taken into account like, cultural
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background, education but the level of technology is usually ignored.
Prokopenko & North (1996, p. 13) have expressed their views about
productivity in the subsequent words, productivity is about making the
most efficient use of all resources and gaining maximum added value from
them
Baig (2002, p. 08) has defined productivity in the following words, doing
things right at the least possible cost in least possible time with the highest
possible quality and to the maximum level of satisfaction of the customers
and employees. Chen; Liaw & Chen (2001, p. 378) defines productivity in the
following words, productivity is often used to evaluate the aggregate
performance of a business unit, generally defined as the ratio of outputs to
inputs. However, for different applications and research domains there are
different definitions of productivity. This definition supports the established
fact discussed in previous pages that productivity has different meanings in
different situations.
As it has been discussed in previous pages that there is no consensus about
the definition of productivity, it is the case of its impact on inflation. Initially
people were of the view that there is a negative relation but most recent
research has proved that no such relation is present. Papapetrou (2001, p.
214) has discussed this point in detail. Papapetrou (2001, p. 214) has listed
down names of many authors who have proved that there is a negative
inverse link between productivity and inflation but at the same time many
authors have given their view on the bases of their own research that there
is not a negative relationship between inflation and productivity and they
support the idea that the statistical correlation between inflation and
productivity growth.
Vittal (2002, p. 28) has attached another concept with productivity and that
is the objective of the organisation. Vittal (2002, p. 28) says that,
productivity, at a very element level can be defined as output by input. But
mere increase in output is of no value unless the output also has a bearing
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Psychologists, Economists, Politicians, Sociologists, Organisational
behaviourists and Managers all have different perception on the concept of
productivity. Baig (2002, p. 09) has defined productivity in another way.
According to Baig (2002, p. 09), Productivity has different meanings to
different people.
A summary of the Baigs (2002, p. 09) presentation is given hereunder:
For employers: Improve competitive position in the market
For Employees: An increase in compensation, development of skills
and other capabilities
For Customers: Lower price, high quality, timely delivery,
For Society: Low inflation, improvement in living standards,
environmental protection
For Government: More revenues, more resources for social services
As it has been discussed in previous pages, that productivity is mainly a
topic for the economists. However many industrial engineers have also
worked on this subject. Productivity is also a matter of concern for
government officials. Today other people are also discussing productivity
including environmental engineers, social scientists as well as industry itself.
The meaning of productivity is different for every sector of life. For example,
industrial engineers want more with less and on the other hand,
environmental engineers are focusing to save the environment by
attempting to lessen pollution. There is a subtle difference of understanding
of productivity among all the people concerned.
Productivity Meanings Diversification
Ali (1978, p. 55) has divided productivity definitions into following eight
groups. Ali (1978, p. 55) has given the names of different authors who are in
favour of these definitions. According to Ali (1978, p. 55) these are eight
different groups to describe productivity:
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Group # 01
Productivity is a ratio of output to input
Group # 02
Productivity is generally interpreted as efficiency in industrial production
measured by some relation of output to input.
Group # 03
Productivity is the relationship between the amount of goods or services
produced and one or more input used to produce that product.
Group # 04
Productivity is a measurement or the efficiency with which input can be
converted into output over some given period of time.
Group # 05
Productivity is the attainment of goals verses all relevant inputs.
Group # 06
Productivity is a management problem, involving how best to manage
excess capacity.
It is true that management is ultimately responsible for all of the functions of
any firm.
Group # 07
Productivity is primarily a function of companys effectiveness to meet the
need of the market.
Group # 08
Productivity is most conveniently expressed as an index number in current
period as compared to the performance in a base or reference period, which
is quoted to 100.
From the above-mentioned discussion, it is clear that there is a wide range of
productivity definitions available in the literature. In the next pages few more
concepts of productivity are being given.
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Performance and Innovation Unit (2001, p. 25) has defined productivity in
the following words, productivity is the efficient and effective use of
resources by the organisation.
This is a modified shape of the approaches mentioned under Group # 2 and
4. In this approach effectiveness has also been taken into account along with
efficiency. This approach seems more comprehensive when compared to
others. The main focus of this approach is on resource utilisation. It also
ignores other factors like, market satisfaction and environment. Overall, this
approach is more suitable to assess the productivity of the firms.
Nevertheless, this approach ignores the quality factor of products or
services. Productivity also covers the quality aspects of the production.
Industrial Engineers can use this approach to calculate the productivity
focused on resource utilisation. Environmental Engineers are more
concerned with depletion of natural resources. However, it does not mean
that other people are not concerned with the safety of nature. However,
environmental engineers are more concerned about the environment. This
approach is the most popular in the current age. In current period the major
point of discussion among the industrialists, economist and all other related
authorities is to save environment. Some decades back it was not that much
important as it is today. The main reason of such ignorance was slow pace of
industrial activities in the past. This approach seems to be one of the most
suitable approaches. On the other hand, industry is facing a tough situation
due to compliance on environmental issues. According to Porter and Linde
(1995, p. 134) companies can achieve higher productivity by adopting the
environmental protection laws. However, this approach is only a survival
point for the nature. Firms productivity should be judged with reference to
the loss it makes to the nature.
National Productivity Centre [NPC] (1999, p. 03) has defined productivity
more specifically according to NPC (1999, p. 03); productivity compares the
amount of output with the amount of input resources used to produce the
output at any given period of time.
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Lawlor (1985, p. 20) given a list of eight factors related to productivity.
According to Lawlor (1985, p. 20):
The productivity issue as now described is a complex one involving many
factors. Therefore, we can focus our attention on the following eight
factors that have been selected as having the greatest bearing on
productivity:
Economic climate
Markets
Change
Organisations
People Rewards
Information
Technology
According to Lawlor (1985, p. 20) productivity is a complex phenomenon.
According to Bernolak (1980, p. 03), productivity is the relationship
between the quantity of goods and services produced and the quantity of
one or all of the resources utilised in turning out these goods and services. Itis usually expressed as a ratio. It seems that Bernolak (1980, p. 03) is also
in favour of the general definition, which is about the ratio of output and
input.
Monga (2000, p. 13) comments on productivity in a changed manner.
According to Monga (2000, p. 13), productivity is a multidimensional and
dynamic concept. Bernolak has projected another view of the productivity
(as cited in Monga, 2000, p. 13) that most manager do not know (1) what
productivity really means (2) how much vital it is for them and for their
organization (3) that, it can be improved significantly (4) how to measure
and analyse it, (5) what factors affect it (6) how to improve it.
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Mahoney (1998, p. 18) gives his comments on productivity definition in the
following words, productivity is an efficiency concept generally cast as ratio
of output o input into some productive process. Mahoney (1998, p. 18) has
further explained productivity concept in these words, productivity is also a
performance variable and it is perhaps best illustrated in comparison with
other performance variables. There were many studies conducted to
evaluate productivity by comparison.
According to the above-mentioned statement, comparison of performance,
efficiency or effectiveness is the best way to illustrate productivity. It seems
that the best use of productivity is in its comparison, and for comparison
purpose, there should be some criteria with which comparison is done. This
may be the previous record, common industry output or any other
benchmark available.
Campbell & Campbell (1998b, p. 83) are of the view that efficiency and
productivity are interchangeable words. According to them, there is a clear
consensus that it is useful to reserve the term productivity for efficiency
indices. That is the indicator in question is a ratio of outcomes, measured in
some way, to inputs, also measured in some way.
This is a very narrow concept of productivity. One can have more efficient
system with bonded labour or making planet polluted. However, in some
particular situation this term is acceptable.
Gharneh (1997, p. 01) has widened the concept of productivity. According to
Gharneh (1997, p. 01), productivity is a road to competitive enterprises, the
economic development of countries and welfare and well being of nations.
In this statement, productivity is some thing else and it is other than ratio. It
is a way, method or technique to have more with less.
Brinkerhoff and Dressler (1990, p.16) have given their conclusion about
productivity in the subsequent words:
In a nutshell, productivity reflects results as a function of effort. If
productivity improves, it means that more results are being gained from
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a given amount of effort. In a classical sense, productivity is defined as a
ratio such that the output of an effort under investigation is divided by
the input required to produce the output.
In the above mentioned statement two major concepts have been
elaborated: a- productivity is a result of effort and b- ratio of output to input.
This definition is a modified shape of the previous given statements.
Wilson (1994, p. 50) has defined productivity more specifically in the
following words, productivity is the ratio of outputs produced to the
input resources utilized in their production. Typically, productivity is also
measured against a base period so as to facilitate trend analysis of the
productivity measure. Therefore, the dollar value of outputs and inputs are
adjusted for monetary inflation. Productivity for period i (with respect to base
period b) can then be represented as:
(Outputi/Inputi) / (Outputb/Inputb) *100.
Industry Commission (1997, p. 03) has defined productivity more precisely
in the following statement:
Productivity is a measure of the capacity of individuals, firms, industries
or entire economies to transform input into output. More specifically
productivity is a measure of the rate at which output (of goods and
service) are produced from given amount of input.
In this statement productivity is not the simple ratio rather it is capacity of
the organisation and individuals who take part in the production process.
Sink (1985, p.03) has advocated the term productivity in the following words,
productivity is simply the relationship between outputs generated from a
system and the input provided to create those outputs.
Traditionally productivity is considered as a ratio between input and output.
Productivity is often confused with efficiency and rationalisation or
profitability. In reality, the modern understanding of productivity is doing
things right at the least possible cost, in the least possible time with the
highest possible quality and to the maximum level of satisfaction of the
customers and employees. In this sense productivity is a total business
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concept rather than a rationalisation of production and the productivity
has social dimensions, not only economic ones (Prokopenko, 1999, p. 10).
Prokopenko (1999, p. 10) has added some other dimensions in the concept
of productivity. This looks a more comprehensive statement when compared
to all those mentioned above. Daniels (1997, p. 52) has indicated another
avenue of productivity in the following words, the approach and attitude to
productivity improvement is much more important than the type or nature of
any techniques. Nachum (1999, p. 943) has defined productivity in the
following words:
Productivity is defined as the level of output produced by per unit of
input. Changes in productivity reflect changes in the ratio between input
and output, e.g. increase/decrease in output produced from a given
input, or same output produced with more/less input.
In a scenario where product life cycle is becoming short every day,
significance of innovation is one of the fundamental requirements for high
productivity. Taylor; English & Graves (1994, p.13) have stated the
importance of new product development in the following words, as product
life cycles have decreased and manufacturers are facing with increasing
global competition, engineering designs play an increasingly important role
in the successful manufacture of products. This shows that survival of firms
mainly depends upon innovation.
Total Image Building
Marketing gurus are agree on one point that buying decisions are much
influenced by the perception of the brand or firm in the minds of buyers.
Every firm is trying to create a better image in the minds of customers and
buyers about their products and as
well as firms. All efforts are done to improve their images. One takes goods
and services from others to improve his or her productivity. Brand perception
is directly related with the contribution of service or goods in improving
buyers productivity. In the current scenario, every firm should try to be
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major contributor in the enhancement of buyers productivity. Furthermore,
firms have to be much careful in their operations. People are more
concerned with social practices of the firms. They will never prefer a firm,
which is using child labour, creating high-level pollution or involve in anti
social activities. It is the call of the day that firms should prove that their
operations are as per business ethics and they are contributing in up lifting
of the society as a whole. This is also part of productivity and ultimately this
would help in increasing the image of the firm and that is the major tool for
better profits.
All above discussion is to understand the meaning of productivity. Still there
is no precise meaning of the productivity. It is highly complicated and has
many dimensions. There is no chance that people would have a common
meaning of productivity. This is due to many factors (discussed above). After
in detail discussion, we have reached to the following conclusion:
Productivity is an approach, a mindset, and a way of thinking to do
more with less by observing the business ethics, caring the risk of
stakeholders and keeping the planet clean.
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