Productivity

The work study, inclusive of methods study and time study, job evaluation, merit rating, job redesign and financial incentives which were described have been known as Productivity Techniques since several decades. Productivity in this context means a measure of the quantity of output per unit of input. The input could be the man hours spent on producing that output or it could be the number of machine hours spent or the amount of materials consumed(in number, Kg, litre or Rs etc). Basically productivity is known as the ratio between the output and the input.

Productivity = Amount of output /Amount of input

Since, in the earlier days of industrial management, it was considered very critical to control the laborers, the term productivity generally meant labor productivity. The time study, method study, incentives schemes and the like were seen as ways of managing or controlling the labor. The emphasis was on labor or, more exactly, on the laborers. The managers could understand the machines and could always run faster or slower, for a longer period or a shorter period, of course within the capabilities of the particular machine or a set of machines. They thought that they could make the machine as productive as it could possibly be: Controlling the machines was easier-after all those were mechanical things; however humans could not always be trusted to give the desired output. These need to be monitored, standards to be established for them, prescribing a method, and sometimes being enticed to produce more by giving more money for more than the ‘standard’ output. After all, human being in all truthfulness was only an extension of the machine / equipment he was operating in the production shop. Nevertheless, this ‘human machine’ seemed to go berserk voluntarily. It was not a very honest machine. It needed standards of time, method and monetary compensation to put it (him/her) in place. These managerial control methods formed a major part of the techniques for productivity.

This is not to say that in the recent times human productivity has lost its importance. Human input is a major input into any business, management, government or society. Management is, after all, by the people and of the people; what is important is that now it is more and more recognized that management is primarily for the people.

Some of the ratios for labor productivity measurement are as follows:

Workers’ productivity = Workers’ output expressed in standard hours / Number of hours (man hours) worked by the workers

A Worker’s or a group of worker’s productivity = Number of units of output / Number of days taken

Another example of labor productivity = Number of toilets cleaned in a shift / Number of cleaners

A group of workers’ productivity = Tons (or Kg) of output/ Number of workers

Labor productivity = Workers’ Output expressed in Rupee Value / Workers’ Salaries and Wage in Rupees

Productivity, as measured above, represents the efficiency of the labor. These indices show how efficiently labor is being utilized. As indicated earlier, these are the engineering indices of labor productivity. That is, labor productivity would be looked at the same way the machinery productivity is viewed.

Though, there is nothing wrong conceptually with this viewpoint, it is a limited view. These are ‘partial measures’ of productivity. Further additions are required in order to get a complete picture of productivity. Before proceeding to a more comprehensive definition, let us look at the ‘engineering’ or ‘efficiency’ definition of productivity.

What is output?

While productivity is seen as the ratio of output to input, it needs to be understood as to what constitutes the numerator ‘output’. Take the case of a car tire manufacturing company. If during the financial years 1996-97 and 1997-98 its output has been as follows:

Output Year
1996-97 1997-98

No of Tyres produced 16,000 20,000
Life of a Tyre in Km 20,000 15,000
Price of a Tyre in Rupees 2,000 1,600

Has the productivity gone up or down during 1997-98?
Assume that the level of input has seen the same during both the years.
If one looks at the number of tyres produced, the year 1997-98 has shown a 25% [(20,000 – 16,000) ÷ 16,000] increase in productivity.. However, if the output is viewed as tyre-km, then the picture is reversed. The output in the year 1996-97 was 320 million tyre-km as against only 300 million tyre km in the year 1997-98 So, the productivity on this count, has gone down by

320 – 300 / 300 x 100 = 6.66%.

If the output is viewed in monetary terms, then there is no change in the output and it is constant at Rs. 32 million.