Factors Affecting Productivity Improvement 

As has already been stressed, productivity improvement is not simply concerned with finding ways of making people work harder, nor is it narrowly concerned with upgrading the way in which work is done. Since productivity is a ratio of outputs to inputs, then the wide range of factors which have to be considered can be seen - which inputs should the manager change, labour, raw material, capital or services?

And (equally importantly) which cannot be changed? Is there any way in which management can determine which input will result in the biggest productivity gain? Almost equally as important as this is that the manager can immediately identify factors over which he has no control and, therefore, will have no effect on his personal productivity improvement programme. These factors are divided into two major categories: 

• Internal factors which management may modify to improve organisational efficiency
• External factors which are those beyond the control of the organisation.

The set of internal and external factors facing organisations is different depending upon their role and position, for example, whilst private companies have little direct leverage upon the rate of taxation which is enforced upon them, government (as an organisational system) will consider it an internal factor which may be altered or amended as required. Although operations managers are unable to control external factors, this does not mean that they should be neglected. If anything, possibly the converse is true, since factors such as forthcoming government legislation must be taken into account in any long-term plans which the company may have. Internal and external factors may be sub-categorised as follows.