Lesson 1, Topic 1
In Progress

1.16. Debating the aspect: Productivity

ryanrori January 25, 2021

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Productivity can be defined as “the process of getting more out of what you put in. It’s doing better with what you have.”

Technically, productivity is a measure of how efficient a person or an operation is. It is determined by comparing the value of the output result with the cost of the input resource.

Productivity is usually expressed as a ratio (or rate):

Productivity = Output

Input

Productivity can be stated as the number of units produced in a certain time period, for example a factory produces five chairs per labour hour. The chairs are the output and the labour expended to produce the chairs is the input.

Both the above figures can be converted to Rands; for example, if the value added to each chair by the assembly operation is estimated at R3 each, or a total of R15 and the assembler is paid R5 an hour, then the productivity of the assembly operation would be R15 divided by R5, or 3:1.

Ratios can also be converted to percentages; for example the ratio 3:1 is 300% and a ratio of 2:1 is 200%. 

Often companies want to compare current productivity with past productivity. This is usually expressed as a percentage increase or decrease. For example, if your team’s productivity ratio was 2:1 last year and increased to 2.2:1 this year, you can say that your productivity has increased by 10%:

(current ratio – previous ratio) ÷ previous ratio x 100 = percentage improvement

∴ (2.2-2) ÷ 2 X 100 = 10% improvement in productivity

  • If your output remains the same but costs go up, productivity is falling
  • If output remains the same, but costs go down, productivity is rising 
  • If output goes up and costs remain the same, productivity is rising
  • If output goes down and costs remain the same, productivity is falling

The same principle applies to any profession:

  • A data capturer’s productivity would be the number of addresses captured per hour worked, for example
  • A supermarket cashier’s output would be the number of items scanned per day (or the amount in Rands taken per day)
  • A bank teller’s productivity can be measured by the number of transactions handled per labour hour, day, week or month

It is sometimes difficult to measure an output in a profession where quality of care is the measure of value, for example, nursing. 

Nursing care is measured in terms of patient acuity, i.e., nursing hours per patient which is based on the seriousness of their illness.  Thus, nursing hours per patient will be higher in an ICU than in a maternity ward, for example.  

We can also say that a nurse’s output is the number of patients s/he has seen per shift, but how do we measure the care and human touch that needs to be added to that interaction? 

The quality of a nurse’s care is also measured to some extent through ongoing clinical assessments, which are based on Nursing Council standards.  However, their care and compassion, i.e., the human touch remains an anomaly as far as measurement is concerned.

If quality requirements are raised, output will usually drop accordingly. If product specifications are relaxed, output may rise accordingly, but it will not represent a real rise in productivity.

All employees in different organisations render different services because they each come along with different skills needed by the organisation to achieve its objectives. The service level rendered, competency displayed and the amount of time spent on completing a task will determine an employee’s salary. 

If an employee is capable of completing an assigned task efficiently and effectively within the agreed service levels, that employee is regarded as productive and competent. But if a particular employee takes 5 days to complete a task that is estimated to take 2 days to complete, that employee might be regarded as unproductive.

Productivity can be defined as the relationship between input and output. 

  • Inputs can be measured in terms of human resources needed to complete a task, machinery to process the inputs, material, e.g. stationery, and money. 
  • Outputs can be regarded as the end products and services. Productivity can be expressed as a rate, for example the number of end products produced per employee or per unit of time.

Example:

Suppose Maria and John have been requested to process 5000 files over a period of two weeks. Each one was given 2500 files. The table below illustrates the number of files processed by each at the end of the period. (NB: Both Maria and John are both qualified to do this job)

MariaJohn
InputOutputInputOutput
2500150025003500
  • The productivity bonus would go to John, as his output is exceeding the input.

Maria’s Productivity Rate: 

= Individual’s output divided by Individual’s input 

= 1500 / 2500 = 0.6 = 60%

  • John’s Productivity  Rate 

= Individual’s output divided by Individual’s input 

= 3500 / 2500 = 1.4 = 140%

To calculate the productivity level of each worker, we divide the total number of outputs by the number of workers employed by the company, or in a department.

  • (Maria’s Output + John’s output) divided by 2 workers = (1500 + 3500) / 2 = 2500 This is how much they should be doing.