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Unformatted text preview: Productivity Measurement While measuring the Productivity in an organization, a different ways of Measurement can be followed. The different types of Productivity Measurement can be grouped into these categories. 1. Single Factor Productivity 2. Multifactor Productivity Single Factor Productivity is concerned about how efficiently one or more factors which has a major influence on the overall economic Productivity. This is selected on the basis of its overall influence on the cost of production or service provided and also Total Productivity. Hence, it becomes essential to identify the key resources for any production system and evaluate the Productivity Indices. For instances, the labour productivity is the single factor productivity which is mostly acknowledged in many sectors as that has a major influence all other single factor productivity measures such as Material Productivity, Plant Productivity, Energy Productivity, Land Productivity , etc. Output/Input Relation • Labour Productivity • Material Productivity • Capital Productivity • Energy Productivity • Value Added per Employee Labour productivity, based on gross output Definition Labour Productivity= Quantity index of gross output Quantity index of labour input This ratio shows how productively labour is used to generate gross output. Labour productivity changes reflect the joint influence of changes in capital, intermediate inputs, as well as technical, organisational and efficiency change within and between firms, the influence of economies of scale, varying degrees of capacity utilisation and measurement errors. Labour productivity only partially reflects the productivity of labour in terms of the personal capacities of workers or the intensity of their effort. The ratio between output and labour input depends to a large degree on the presence of other inputs, as indicated above. When measured as gross output per unit of labour input, labour productivity growth also depends on how the ratio of intermediate inputs to labour changes. A process of outsourcing, for example, implies substitution of primary factors of production, including labour, for intermediate inputs. Gross-output based labour productivity rises as a consequence of outsourcing and falls when in-house production replaces purchases of intermediate inputs. Obviously, this does not reflect a change in the individual characteristics of the workforce, nor does it necessarily reflect a shift in technology or efficiency. Although some efficiency gain should be expected as a consequence of input substitution, it cannot be captured by the measured change in labour productivity. Multi Factor Prouctivity(MFP) measures measured change in labour productivity....
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This note was uploaded on 07/29/2010 for the course ACCOUNTS 2332 taught by Professor Piyush during the Fall '10 term at Amity University.
- Fall '10