After reading this essay you will learn about:- 1. Meaning of Productivity 2. Importance of Productivity 3. Factors 4. Measures to Increase Productivity 5. Measurement 6. Main Contributors to Productivity Improvement 7. Management Tools 8. Techniques to Improve Productivity 9. Benefits from Increased Productivity.

Essay on the Meaning of Productivity:

‘Productivity’ is nothing but the reduction in wastage of resources. The resources may be men, machines, materials, power, space, time, building etc.

It may also be defined as human efforts to produce more and more with less and less inputs of resources as a result of which the benefits of production may be distributed more equally among maximum number of people.

According to V.K.R. Menon, productivity implies development of an attitude of mind and constant urge to find better, cheaper, easier, quicker and safer means of doing a job, manufacturing a product and providing service.


Output is obtained by the combined input of a number of factors such as men, materials, money, land, management, production method etc. The ratio between output and input of one of these factors is known as ‘Productivity’ of the factor concerned. The most common unit of input is Man-Hour of working time and ‘productivity’ due to this factor is known as ‘Labour productivity’.

The term productivity means different things to different people, and is stated as a ratio. It is defined as “a comparison between the quantity of goods and services produced (Output) and the quantity of resources used to produce these goods and services (Inputs)”.

Productivity is primarily an attitude of mind, welcoming a change for the better, exploring the scope for im­provement, making the optimum use of available resources towards the achievement of a speci­fied aim.

It can be represented by P = O/M


where P = Labour Productivity, O = Unit of output, and M = Man-hour or efforts input

For example, if a manufacturing concern is producing 150 items in 8 hours now compared with 120 items previously. Then its productivity is said to have increased by 25%.

Therefore, productivity can also be defined as, the ratio between output and input. Here output means the amount of production, and inputs are the various resources employed e.g., labour, machines, materials, equipment, land, building etc.

From the above we can say that productivity is an efficiency of the production system which is expressed by the ratio between the output and input. Productivity can also be called as a measure of how much input is required to produce a given output.


Productivity can also be defined as human efforts to produce more and more with less and less inputs of resources as a result of which the benefits of production are distributed among maximum number of people.

Essay on the Importance of Productivity:

In underdeveloped and developing countries, since resources are limited, it is necessary to use them in such a way so as to get the maximum output i.e. there should be attempts to perform a job by cheaper, safer and quicker ways. The objective should be optimum use of resources so as to provide maximum satisfaction with minimum efforts and expenditure.

In India there is an autonomous organisation known as National Productivity Council (N.P.C.). It was established in 1958 and has set up regional productivity directorates in the country managed by specialists for organising productivity programmes. It has also established local councils at various industrial centres in the country and they work as the spearhead of the productivity movement.

To increase productivity, these organisation supplies publications, utilises audio-visual me­dia films and exhibitions. In collaboration with local productivity councils and various institu­tions and organisations, it organise and conducts training programmes for various levels of management and provides assistance in other activities and difficulties.


Productivity is the key to prosperity. All the countries having higher standard of living are having higher productivity. Rise in productivity generates extra production, which has direct bearing on standard of living, as it reduces cost per unit and enables reduction in sales price, increased wages for workers and increased profit for the industry, this creates more demand and therefore create more employment.

The main reason of our country’s poverty is the low level of productivity in practically every sphere of economy say from management to the workers including Government. The minimum wages in the United States as established by a law is very high as compared to that of ours. There are few people in India who by their labour, even at very high position, get this much per day.

Despite of very high wages, their unit cost works out to a very low figure and inspite of our low wages our unit costs are high. The main reason is that their productivity is very high and our’s very low. In fact, Indian industries are surviving inspite of low productivity behind the rigid protective wall of exchange control. If this is removed our economy may be swamped by foreign goods.

Essay on the Factors Affecting Productivity:

The most important factors affecting productivity can be classified as:


(a) External Factors.

(b) Internal Factors.

(a) External Factors:

These may be:


(i) National resources and their mobility.

(ii) Availability of capital.

(iii) Taxation.

(iv) Govt. Laws and restrictions concern­ing business.


(v) Extent of market competition.

(vi) Technical and other training facilities.

(b) Internal Factors:

These may be:

(i) Plant layout.

(ii) Material handling.


(iii) Product design: R&D, simplification, standardisation etc.

(iv) Work study.

(v) Machinery and equipment.

(vi) Quality control.

(vii) Management techniques including—Human Resource Management.

Essay on the Measures to Increase Productivity:

To increase productivity, following major items need fullest control and should be minimised:


(a) Wastage of materials.

(b) Machine breakdown,

(c) Waiting on the part of men & equipment,

(d) Excessive handling.

(e) Poor management.

(f) Poor working conditions.


(g) Political effects.

Hence, considering the above factors, the wastage at each stage of production can be re­duced which ultimately provide consumers cheaper and better quality products.

In increasing productivity, management plays an important role. There cannot be high productivity without high quality management.

As, (i) it brings the resources together.

(ii) It directs and controls the workers.

(iii) It brings latest techniques and puts it in heart and soul to see that techniques get into the actual position.


The Supervisors, Foreman and Charge man etc. are in the front line of management, i.e. they constitute the main line of communication between the top management, middle manage­ment and the general body of operatives. Hence to have high productivity, it is necessary to see their level of education, attitude and technical ability accordingly.

In the same way actual op­eratives are also responsible in increasing the productivity. They are those who keep the shop running. Therefore, it is important that the management should make an investment in their education, training, human relation etc.

Productivity can also be raised by mechanisation, rationalisation and computerisation. Work- study also plays a create role to improve productivity

Essay on Measurement of Productivity:

Productivity must be measured in such a way that it clearly reflects the importance, and there must not be any ambiguities about the measurements of inputs and outputs.

Here the output and input may be of various kinds viz. cost, man-hours etc.


When output and input are measured in term of money, then

It may also be measured as follows:

Measurement of Productivity in Various Concerns:

1. In Manufacturing Concerns:

In these concerns, productivity can be measured by any of the above two methods.

2. In Service Industries:

In these concerns basic difficulty is to measure outputs and to convert various outputs to one common factor. One way to measure can be customers attended per man day or man week. The problem is that different customers require different types of services and the mix of customers changes from day-to-day. Therefore, revenue earned per

3. Office Work:

It is difficult to have any rational basis to measure productivity in the ad­ministrative offices. However outputs can be measured in terms of letters replied, pages typed, number of files referred to. Time spent on them can be measured by work sampling techniques. The problem in the measurement is that letters replied may cover different amount of labour involved in dealing them.

4. Indirect Labour in Manufacturing:

Productivity of indirect labour may be measured as follows:

Productivity Measurement:

(i) General Measure of Productivity:

(ii) Labour Productivity:

Production in Standard hours

(a) In terms of Hours:

(b) In terms of Money:

The productivity of labour can be increased by increasing efficiency of labour and reducing idle time.

(iii) Material Productivity:


Material productivity can be increased by using minimum materials with the help of skilled workers, adequate machine tools, and good design of product.

(iv) Machine Productivity:


(v) Selling, Distribution or Administrative Productivity:

(vi) Overall Productivity:

It is measured by —

Main Contributors to Productivity Improvement:

Following are the main contributors to productivity improvement in industries:

1. Incentives:

When incentive scheme is introduced in a concern, it results a considerable improvement in productivity. However, management must be careful about the correctness of the standards, limitations of the workers, short cut methods developed by workers, quality of work and overburdening of the equipment.

2. Human Relations:

Good human relations help in cooperative behaviour from workers which results increase in productivity. Human relations can be improved by labour participa­tion in goal setting, simplification of communication system, minimising the conflicts, encour­agement to get advantage of creative talents of employees and awarding reward etc.

3. Cost Control:

Productivity can be increased by reducing the cost of production. This can be done by keeping careful watch over expenditure, minimising wastage of material, reducing machine break-down period, reducing waiting time on the part of men and equipment, avoiding excessive handling, minimising overtime expenses.

4. Training about Productivity:

Workers and supervisors may be trained about the mea­surement and benefits of productivity, so that the workers may start thinking creatively. The training must include the practice of work simplification, method study, quality control, raw materials utility, productivity and its socio-economic effects.

5. Application of New Technology:

In order to remain in field and increase its business in the age of competition, industrialists must regularly adopt new services, new marketing meth­ods more and more automation and application of latest techniques in the field of material handling, storekeeping and inventory control, bottlenecks in the flow process and introducing good management information system and feedback reporting system.

6. Proper Planning and Scheduling:

Help to utilise men, machines and materials to in­crease productivity.

7. Design the Product:

A good design of a product helps in minimising wastages of scraps and increases its durability and attraction.

8. Management Skill:

Good supervision and management avoids production inefficiency, efficient maintenance and incorrect specifications for materials and machines. It provides good working conditions and better co-ordinations and good relations.

9. Standardisation and Work Simplification:

These increases production efficiency.

Management Tools for Productivity Improvement:

By adopting following managerial tools, productivity in the enterprise can be increased:

(i) ABC analysis for inventory control.

(ii) Budgeting for comparing output with expenditure.

(iii) Break-Even Analysis.

(iv) Brain Storming.

(v) Critical Path Method and PERT.

(vi) Costing.

(vii) Control charts i.e., statistical quality control techniques for anticipating defects.

(viii) Economic order quantity.

(ix) Equipment utilisation reports.

(x) Flow process charts.

(xi) Gantt charts.

(xii) Line Balancing.

(xiii) Managerial Economics be adopted.

(xiv) Method Study.

(xv) Management Information system for right data at right time.

(xvi) Operation analysis for study of operations performed, quality control, materials man­agement and materials handling.

(xvii) Operation Research techniques be applied.

(xviii) Performance standards be set as a periodic goals.

(xix) Preventive Maintenance.

(xx) Power consumption audit.

(xxi) Quality Assurance as a Total Quality Management.

(xxii) Replacement analysis for replacement of equipment.

(xxiii) Standardisation.

(xxiv) Value analysis.

(xxv) Workers Motivation.

(xxvi) Work Measurement Techniques.

(xxvii) Work Simplification.

Techniques to Improve Productivity:

Various techniques used for improving the productivity of an organisation can be classified as follows:

1. Technology Based Techniques:

(i) Computer Aided Design (CAD)

(ii) Computer Aided Process Planning (CAPP)

(iii) Computer Aided Inspection (CAI)

(iv) Computer Aided Manufacturing (CAM)

(v) Robotics

(vi) Energy Saving technology

(vii) Maintenance Techniques.

2. Product Based Techniques:

(i) Product Simplification

(ii) Product Standardisation

(iii) Research and Development

(iv) Reliability Improvement

3. Material Based Techniques:

(i) Materials Requirement Planning (MRP)

(ii) Materials Management

(iii) Inventory Control

(iv) Materials Quality Control

(v) Materials Handling System

(vi) Materials Reclamation and Recycling.

4. Task based Techniques:

(i) Work Study

(ii) Job Evaluation

(iii) Production Scheduling

(iv) Job Analysis

(v) Ergonomics

5. Employee-Based Techniques:

(i) Incentive schemes

(ii) Job enlargement

(iii) Total Quality Management.

(iv) Management principles

(v) Recognition, rewards and punishment

Benefits from Increased Productivity:

Higher productivity results in higher volume of production and hence sales at lower cost and higher profit.

It is beneficial to all as stated below:

(A) Benefit to Organisation:

1. More profit.

2. Higher productivity ensures stability of the concern.

3. Higher productivity and higher volume of sales provide opportunity for expansion of the concern and wide spread market.

4. It provides overall prosperity and reputation of the concern.

(B) Benefit to Workers:

(i) Higher productivity permits more wages.

(ii) More wages permit better standard of living of workers.

(iii) Thus more productivity means better working conditions for workers which also help in maintaining better health for workers.

(iv) Higher productivity yields improved moral and greater satisfaction for workers.

(C) Benefit to Consumers:

(i) More productivity ensures better quality of product.

(ii) It also enables reduction in prices.

(iii) It provides more satisfaction to consumers.

(D) Benefit to Nation:

(i) It provides greater national wealth.

(ii) It increases per capital income.

(iii) It helps expansion of international market with the help of standardised and good quality goods.

(iv) It improves standard of living.

(v) It helps in better utilisation of resources of the nation.