There are many different productivity measures. The choice between them depends on the purpose of productivity measurement and, in many instances, on the availability of data.
Broadly, productivity measures can be classified as single factor productivity measures (relating a measure of output to a single measure of input) or multifactor productivity measures (relating a measure of output to a bundle of inputs).
The most frequently used productivity are measures of labour and capital productivity, and multifactor productivity measures (MFP), either in the form of capital-labour MFP, based on a value-added concept of output, or in the form of capital-labour-energy-materials MFP (KLEMS), based on a concept of gross output.
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There are many different productivity measures. The choice between them depends on the purpose of productivity measurement and, in many instances, on the availability of data.
Broadly, productivity measures can be classified as single factor productivity measures (relating a measure of output to a single measure of input) or multifactor productivity measures (relating a measure of output to a bundle of inputs).
The most frequently used productivity are measures of labour and capital productivity, and multifactor productivity measures (MFP), either in the form of capital-labour MFP, based on a value-added concept of output, or in the form of capital-labour-energy-materials MFP (KLEMS), based on a concept of gross output.
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According to the Encyclopedia of Business and OECD Manual on Measuring Productivity the following can be stated about this important concept. Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input use. While there is no disagreement with this general notion, a look at the productivity literature and its various applications reveals very quickly that there is neither a unique purpose for, nor a single measure of, productivity. The objectives of productivity measurement include:
•Technology. A frequently stated objective of measuring productivity growth is to trace technical change. Technology has been described as “the currently known ways of converting resources into outputs desired by the economy” and appears either in its disembodied form (such as new blueprints, scientific results, new organizational techniques) or embodied in new products (advances in the design and quality of new vintages of capital goods and intermediate inputs). In spite of the frequent explicit or implicit association of productivity measures with technical change, the link is not straightforward.
•Efficiency. The quest for identifying changes in efficiency is conceptually different from identifying technical change. Full efficiency in an engineering sense means that a production process has achieved the maximum amount of output that is physically achievable with current technology, and given a fixed amount of inputs. Technical efficiency gains are thus a movement towards “best practice ”, or the elimination of technical and organizational inefficiencies. Not every form of technical efficiency makes, however, economic sense, and this is captured by the notion of allocative efficiency, which implies profit-maximizing behavior on the side of the firm. One note that when productivity measurement concerns the industry level, efficiency gains can either be due to improved efficiency in individual establishments that make up the industry or to a shift of production towards more efficient establishments.
• Real cost savings. A pragmatic way to describe the essence of measured productivity change.
Although it is conceptually possible to isolate different types of efficiency changes, technical change and economies of scale, this remains a difficult task in practice. Productivity is typically measured residually and this residual captures not only the above-mentioned factors, but also changes in capacity utilization, learning-by-doing and measurement errors of all kinds.
• Benchmarking production processes. In the field of business economics, comparisons of productivity measures for specific production processes can help to identify inefficiencies. Typically, the relevant productivity measures are expressed in physical units (e.g., cars per day, passenger-miles per person) and highly specific. This fulfills the purpose of factory-to-factory comparisons, but has the disadvantage that the resulting productivity measures are difficult to combine or aggregate.
•Living standards. Measurement of productivity is a key element towards assessing standards of living. A simple example is per capita income, probably the most common measure of living standards: income per person in an economy varies directly with one measure of labor productivity, value added per hour worked. In this sense, measuring labor productivity helps to better understand the development of living standards. Another Example is the long-term trend in multifactor productivity (MFP). This indicator is useful in assessing an economy ’s underlying productive capacity (“ potential output”), itself an important measure of the growth possibilities of economies and of inflationary pressures productivity is an overall measure of the ability to produce a good or service. More specifically, productivity is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity and quality. Productivity may also be defined as an index that measures output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the output)
It has been said that the challenge of productivity has become a challenge of measurement. Productivity is difficult to measure and can only be measured indirectly, that is, by measuring other variables and then calculating productivity from them. This difficulty in measurement stems from the fact that inputs and outputs are not only difficult to define but are also difficult to quantify.
Any productivity measurement system should produce some sort of overall index of productivity. A smart measurement program combines productivity measurements into an overall rating of performance. This type of system should be flexible in order to accommodate changes in goals and policies over time. It should also have the ability to aggregate the measurement systems of different units into a single system and be able to compare productivity across different units.
The ways in which input and output are measured can provide different productivity measures. Disadvantages of productivity measures have been the distortion of the measure by fixed expenses and also the inability of productivity measures to consider quality changes (e.g., output per hour might increase, but it may cause the defect rate to skyrocket). It is easier to conceive of outputs as tangible units such as number of items produced, but other factors such as quality should be considered.
Experts have cited a need for a measurement program that gives an equal weight to quality as well as productivity. If quality is included in the ratio, output may have to be defined as something like the number of defect-free units of production or the number of units which meet customer expectations or requirements.
The determination of when productivity measures are appropriate performance measures depends on two criteria. The first is the independence of the transformation process from other processes within the organization. Second is the correspondence between the inputs and outputs in the productivity measurement process. There are many different productivity measures. The choice between them depends on the purpose of productivity measurement and, in many instances, on the availability of data. Broadly, productivity measures can be classified as single factor productivity measures (relating a measure of output to a single measure of input) or multifactor productivity measures (relating a measure of output to a bundle of inputs). Another distinction, of particular relevance at the industry or firm level is between productivity measures that relate some measure of gross output to one or several inputs and those which use a value-added concept to capture movements of output.
Productivity is a required tool in evaluating and monitoring the performance of an organization, especially a business organization. When directed at specific issues and problems, productivity measures can be very powerful. In essence, productivity measures are the yardsticks of effective resource use.
Managers are concerned with productivity as it relates to making improvements in their firm. Proper use of productivity measures can give the manager an indication of how to improve productivity: either increase the numerator of the measure, decrease the denominator, or both.
Managers are also concerned with how productivity measures relate to competitiveness. If two firms have the same level of output, but one requires less input thanks to a higher level of productivity, that firm will be able to charge a lower price and increase its market share or charge the same price as the competitor and enjoy a larger profit margin.
Within a time period, productivity measures can be used to compare the firm's performance against industry-wide data, compare its performance with similar firms and competitors, compare performance among different departments within the firm, or compare the performance of the firm or individual departments within the firm with the measures obtained at an earlier time (i.e., is performance improving or decreasing over time?).
Productivity measures can also be used to evaluate the performance of an entire industry or the productivity of a country as a whole. These are aggregate measures determined by combining productivity measures of various companies, industries, or segments of the economy.
Since productivity is a relative measure, for it to be meaningful or useful it must be compared to something. For example, businesses can compare their productivity values to that of similar firms, other departments within the same firm, or against past productivity data for the same firm or department (or even one machine). This allows firms to measure productivity improvement over time, or measure the impact of certain decisions such as the introduction on new processes, equipment, and worker motivation techniques.
In order to have a value for comparison purposes, organizations compute their productivity index. A productivity index is the ratio of productivity measured in some time period to the productivity measured in a base period. For example, if the base period's productivity is calculated to be 1.75 and the following period's productivity is calculated to 1.93, the resulting productivity index would be 1.93/1.75 = 1.10. This would indicate that the firm's productivity had increased 10 percent. If the following period's productivity measurement fell to 1.66 the productivity index of 1.66/1.75 = 0.95 it would indicate that the organization's productivity has fallen to 95 percent of the productivity of the base period. By tracking productivity indexes over time, managers can evaluate the success, or lack thereof, of projects and decisions.
There are quite a variety of factors which can affect productivity, both positively and negatively. These include:
• Capital investments in production
• Capital investments in technology
• Capital investments in equipment
• Capital investments in facilities
• Economies of scale
• Workforce knowledge and skill resulting from training and experience
• Technological changes
• Work methods
• Procedures
• Systems
• Quality of products
• Quality of processes
• Quality of management
• Legislative and regulatory environment
• General levels of education
• Social environment
• Geographic factors
The most important criteria to measure the productivity of an organization are: the turnover which it gets from its activities, the genuine trust of the public in this organization, innovations in its outputs, and its continuous contribution to the progress of the country of origin & the world at large.
Productivity is a measure of how resources are managed. It can be calculated as an index that measures output (goods and services) relative to the input (labor, materials, power, etc.) used to produce the output. As such, it can be expressed as:
Productivity = Outputs / Inputs
In companies, who has potential to bring money. In academic settings, relation to senior bosses and gets to the top, IN REAL SCIENCE WORLD, citation index of your papers, not number of papers,
Productivity can best be measured by the satisfaction of all stakeholders.
Dear @Shafiq, good answers were already contributed. OECD Manual " Measuring Productivity" is fine resource for this thread.Definition, interpretation, purpose, advantages,drawbacks and limitations of some productivity measures are treated very seriously!
http://www.oecd.org/std/productivity-stats/2352458.pdf
Throughout this process, it is critical to communicate a story. For example, the pilot team will need to explain the benefits of use cases to the business units, which naturally will be sensitive to any changes in the way requirements are gathered. Perhaps more important, there will likely be some resistance from within the development teams, whose members may not enjoy having their productivity measured. What is critical for the ultimate acceptance of Use case points (UCP) is how the leadership uses them. Developers will understand the rationale for using metrics to identify projects that are at risk of going off track. They will also understand the benefits of more accurately determining resources and timelines for projects, without over or underscoping functional requirements. There is little that is more frustrating to application-development teams than pulling all to deliver what the business doesn’t want or doesn’t need, and then having to redo much of their hard work. If, however, UCPs are used merely as a means of rewarding or penalizing application developers, there is a much higher probability that there will be serious resistance.
http://www.mckinsey.com/insights/business_technology/enhancing_the_efficiency_and_effectiveness_of_application_development
If we speak for public organizations:
If we speak about private organizations:
Productivity =O/I, maybe defined as @Mahfuz Judeh pointed out already.
where O= output (goods and services) and I= input used to produce the output(labor, materials, energy, etc.).
If it defined as such, it can be expressed as: Output/Input
Accordingly, there are two major ways to increase productivity: increase the numerator (output) or decrease the denominator (input). Similar effect would be seen if both input and output increased, but output increased faster than input; or if input and output decreased, but input decreased faster than output.
N.B.:Productivity is not the same as efficiency. The later is generally seen as the ratio of the time needed to perform a task to some predetermined standard time, i.e., output-oriented, whereas the former is a measure of effectiveness (doing the right thing efficiently), i.e., outcome-oriented.
Productivity Measurement and Enhancement System (PromMes) Defines productivity indicators for each objective and measures each indicator by appropriate output and input.
ProMES is an approach to the measuring and improving of the productivity, effectiveness, and overall performance of people in organizations. To do this, a sophisticated system of measuring performance is developed by the people doing the work and then feedback on these measures is used to help these personnel improve their performance.
Some examples of outputs and inputs for the unit's objective:
The indicators for the unit’s objectives might look like the following. (In the case we are using for this example, the unit actually developed 5 objectives and 9 indicators, but to keep the example manageable, only a subset will be used.)
Objective 1: Maintain High Production.
- Indicator 1: Percent of Boards Completed. Number of boards completed, divided by the established goal for number completed.
Objective 2: Make Highest Quality Boards Possible.
- Indicator 2: Inspections Passed. Percentage of boards passing inspection.
Objective 3: Maintain High Attendance.
- Indicator 3: Percent Attendance. Total hours worked divided by the maximum hours possible.
Publications of ProMES
1. Naylor, J. C., Pritchard, R. D., & Ilgen, D. R. (1980). A theory of behavior in organizations. New York: Academic Press. Theoretical book which is the conceptual foundation of ProMES.
2. Pritchard, R. D. (1990). Measuring and improving organizational productivity: A practical guide. New York: Praeger, pp. 248. Most detailed description available on how ProMES is done.
http://promes.cos.ucf.edu/description.php
http://books.google.com/books/about/Measuring_and_Improving_Organizational_P.html?id=abIy-ewzrvMC
- Identify the areas where improved attention, knowledge, and education would lead to higher productivity
- Determine effective change management activities to support the realization of improved productivity
http://www.goldensegroupinc.com/R&DProductivityProposal.pdf
Productivity is generally defined as an index that measures output relative to the input. More specifically, productivity is the measure of how specified resources are managed to accomplish timely objectives as fixed in terms of quantity and quality. However measuring productivity is as challenging as productivity itself due to the fact that all tangible and intangible inputs and outputs are difficult to define and quantify. The ways in which input and output are measured can provide different productivity measures. As such, it may not be the same in different organizations. However, technological advancement, efficiency of production, quantitative and qualitative improvement in output, real cost savings, benchmarking production processes, and living standards are some of the major criteria used to measure the productivity.
Productivity has nothing to do with how busy you are! Very good quote and reading on how to have a productive day!
http://angelatella.com/how-to-have-a-productive-day/
Dear Roland,
I believe your answer above is a perfect answer to my question about stress!
https://www.researchgate.net/post/What_causes_the_modern_mans_pain_tension_trauma_anguish_distress_sickness_and_poor_health#view=545284c2d685cc3b378b4591
A small comment on the valuable ideas of dear professors Ljubomir & Roland : through my long academic career, I noticed some staff pretending to be very busy to impress their superiors & to keep their posts. A deeper look into their activities has shown that the university gained almost nothing from them. An over-stressed person (if not acting!) in a university must be kept away from laboratories because the probability of destruction becomes very high.
With due respect the original question asked by Dear Shafig was about "most criteria used to measure the productivity of the organizations" I think the last few answers have diverted us from the right track and made me confused on the purpose of original question and its relevance to present discussions.
Productivity is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity and quality.
Productivity may be defined as an index that measures output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the output).
There are two major ways to increase productivity: increase the output or decrease the input.
Organizations may like to work out labor productivity, machine productivity, capital productivity, energy productivity etc. A productivity ratio may be computed for a single operation, a department, a facility, an organization, or even an entire country.
Criteria for designing performance measurement systems.
A firm's performance measures should:
- Be simple and easy to use.
- Have a clear purpose.
- Provide fast feedback.
- Cover all the appropriate elements (internal, external, financial and nonfinancial).
- Relate to performance improvement, not just monitoring.
- Reinforce the firm's strategy.
- Relate to both long-term and short-term objectives of the organization.
- Match the firm's organization culture.
- Not conflict with one another.
- Be integrated both horizontally and vertically in the corporate structure.
- Be consistent with the firm's existing recognition and reward system.
- Focus on what is important to customers.
- Focus on what the competition is doing.
- Lead to identification and elimination of waste.
- Help accelerate organizational learning.
- Help build a consensus for change when customer expectations shift or strategies and priorities call for the organization to behave differently.
- Evaluate groups not individuals for performance to schedule.
- Establish specific numeric standards for most goals.
- Be available for constant review.
Other recommendations for organizations that are developing performance measures include:
- Data collection and methods of calculating the performance measure must be clearly defined.
- Objective performance criteria are preferable to subjective ones.
- Recognize that measures may vary between locations; avoid a "one size fits all" mentality.
Wisner and Fawcett provide a nine-step process for developing a performance measurement system:
- Clearly define the firm's mission statement.
- Identify the firm's strategic objectives using the mission statement as a guide (profitability, market share, quality, cost, flexibility, dependability, and innovation).
- Develop an understanding of each functional area's role in achieving the various strategic objectives.
- For each functional area, develop global performance measures capable of defining the firm's overall competitive position to top management.
- Communicate strategic objectives and performance goals to lower levels in the organization. Establish more specific performance criteria at each level.
- Assure consistency with strategic objectives among the performance criteria used at each level.
- Assure the compatibility of performance measures used in all functional areas.
- Use the performance measurement system to identify competition, locate problem areas, assist the firm in updating strategic objectives and making tactical decisions to achieve these objectives, and supply feedback after the decisions are implemented.
- Periodically reevaluate the appropriateness of the established performance measurement system in view of the current competitive environment.
Performance measurement systems used by managers must be continually reviewed and revised as the environment and economy changes. Failure to make the necessary modifications can inhibit the ability of the organization to be an effective and efficient global competitor.
The following article presents a good account of productivity measurement:
The Challenge of Productivity Measurement
http://netvalence.net/sites/default/files/resources/recom_read/TheChallengeofProductivityMeasurement.pdf
Dear Sir,
I agree with Mr.Jorge Morales Pedraza and Mr. Shanker Lal Shrivastava. They are explained in detail most factors and criteria which can affecting productivity (positively and negatively).
Acording to "OECD Manual MEASUREMENT OF AGGREGATE AND INDUSTRY-LEVEL PRODUCTIVITY GROWTH" and other sourcesbasic FACTORS which can affecting productivity include:
I would not like to reiterate my predecessors, and because of that I hope that following links would help you to find the answer for your research project.
Best regards,
Dragan Vuksanović
https://www.oecd.org/std/productivity-stats/2352458.pdf
http://www.referenceforbusiness.com/management/Pr-Sa/Productivity-Concepts-and-Measures.html
http://www.reser.net/materiali/priloge/slo/biege_et_al.pdf
https://www.universalclass.com/articles/business/the-top-8-methods-for-accurately-measuring-employee-productivity.htm
http://www.nap.edu/read/2135/chapter/6#117
http://www.compaid.com/caiinternet/ezine/card-prod.pdf
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/454172/20150318_-_Productivity_-_V3.0_FINAL.pdf
http://www.ejkm.com/issue/download.html?idArticle=196
http://www.pmsolutions.com/audio/PM_Performance_and_Value_List_of_Measures.pdf
Measured productivity is the ratio of a measure of total outputs to a measure of inputs used in the production of goods and services. Productivity growth is estimated by subtracting the growth in inputs from the growth in output — it is the residual. There are a number of ways to measure productivity
How about this approach?
Authorities in Xi Jinping’s former power base to measure industrial productivity by the acre
Authorities in an east China province once governed by President Xi Jinping have rolled out a new system for measuring the productivity and efficiency of industrial firms against six criteria, including how much revenue they generate per acre of land they occupy...
Fine article!
http://www.scmp.com/news/china/economy/article/2131797/authorities-xi-jinpings-former-power-base-measure-industrial
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