Productivity Challenge in Organisations

Productivity is the ratio of outputs (goods and services) divided by the inputs (resources: labour, capital and services). It is one of the prime functions of the operations manager to increase productivity. 

There are two ways to achieve and improve: 

• Decrease the inputs but maintain the outputs
• Increase outputs with the same inputs.

Productivity therefore tends to be used as a measure of the efficiency with which the resources employed by the organisation (ie human resources, materials or capital resources) are converted into the goods or services sold by the company. Increasing organisational efficiency, in terms of improving the output achieved for a similar input, is the most common way in which productivity will be raised.