Productivity

Chapter#3
 Concept of Productivity

 It is a measure of the rate at which output is produced per unit of

input.
 Depends on a number of factors such as availability of resources,
change in business cycle and government policies.
 Different industries measure productivity differently.
 Concept of Productivity

 In manufacturing sector, Number of hours taken by workers and

machines to produce output.
 In service sector, Total revenue generated by employees.
 Higher productivity leads to lower cost, improved competitiveness
and higher profit.
 Job analysis and work study are two methods for improving
productivity.
 How to measure productivity?
 Output can be total quantity produced or useful life or monetary value of machines.
 Input can be total labor and machine hours, the amount of money spent, the amount of raw
material consumed for producing the desired output.
 Labor productivity= Number of units of output/Number of people employed in production or
Number of man hours
 Labor productivity= Output at standard price/Total amount of wages paid for output
 Capital productivity= Total sales in/Depreciation of capital assets
 Material productivity= Standard material usage/Actual material usage
 Total factor productivity= Output at standard price/(Labor+materials+Overhead+Capital
invested)
 Factors affecting productivity

Internal Factors (Can be controlled by the organization)

 Type of product produced
 Effectiveness of manufacturing plant and equipment
 Type of technology used
 Amount of raw material
 Efficiency of human resource
 Work methods used and style of management followed
Factors affecting productivity

External factors( cannot be controlled)

 Economic factors such as shift in employment and industrial competitiveness
 Availability of natural resources such as land and raw material
 Government policies such as five year plan and fiscal policies
Ways to improve productivity

 Increasing the reserve funds that can be used for expansion and modernization
 Reducing overheads and other cost per unit of output
 Improving the quality of products
 Increasing the competitive strength of the organization
 Maintaining a fair compensation system
 Methods of improving productivity-Job
analysis
 Systematic process of collecting, evaluating the duties and responsibilities required to
perform a job.
 Can be used for recruitment and selection, training and development and performance
appraisal.
 Methods of data collection are observation ,interviews, questionnaire, logs/dairies
 Sources of data are managers, employees, supervisors
 Conducted by job analyst-HR , outside consultant and supervisor or manager.
 Process of job analysis
Organizational analysis
 Focus on maintaining capable employees
 Preparing a list of present job positions.
Preparing job analysis
 Recognizing representative positions and rationale for selection
 Assessing existing job documentation
 Communicating the procedure to respective managers or employees.
 HR analyst identify job position for evaluation , selected on priority basis with cost and
time restriction
 Collects information on current job design from JD, JS, procedural guides and flow charts
Process of job analysis

Conducting job analysis

 Assessing the data.
 Defines nature of the job and qualification, skills required to perform.
 Collected data is examined on accuracy, reliability basis
Preparing job description and job specification
 Developing outline of JD and JS
 Examine the outline with the help of managers and employees
Maintaining and updating job description and job specification
 According to the changes in organization’s business practices.
 Periodic assessment of all the jobs is necessary
Methods of improving productivity-Work study

 Finding out the better ways to perform different jobs.

Objectives
 Optimum utilization of labor and material
 Analyzing the existing work methods
 Determine the standard time to perform a particular job
 Increasing productivity of the organization
 Achieving desired quality at minimum cost of production
 Improving operational efficiency
 Process of work study

 Select a job to be studied

 Recording information related to selected job using various techniques such as operation
process chart, flow process chart etc
 Analyzing the recorded facts and determining the existing purpose, place, sequence and
existing method for performing the job
 Making a plan to develop new method for performing the job
 Measuring the work content to set a standard time for performing the job.
 Implementing the method
 Setting new method as standard for performing the job.
 Benefits of work study

 Increasing the production efficiency

 Maintains a uniform production flow
 Reducing manufacturing cost of the organization
 Improving the employee-employer relationship
 Providing better working conditions
 Measuring labor efficiency
 Method study

 Analyzing different methods for performing a job and selecting the best one.
Objectives
 Analyzing existing method for performing a job
 Formulating new method, increasing productivity and reducing production cost
 Reducing excessive movement of materials
 Making effective utilization of resources
 Standardizing work method and processes
 Process of method study

 Selecting a job that needs to be studied.

 Collecting information related to job as well as methods and working condition required
to perform it.
 Information can be gathered using various techniques.
 Analyze the recorded information by answering purpose, and sequence of work process.
 Formulating a new method to perform a particular job.
 Method study-Few Techniques

Operation Process Chart

It is also called outline process chart.
 Gives the bird’s eye view of the whole process by recording only the major activities and
inspections involved in the process.
 Uses only two symbols, i.e operation and inspection.
Flow Process Chart
Flow process chart gives the sequence of flow of work of a product or any part of it
through the work centre or the department recording the events using appropriate symbols.
 Method study-Few Techniques

 Two Handed Process Chart

Most detailed type of flow chart in which the activities of the workers hands are recorded
in relation to one another.
 Gives synchronized and graphical representation of the sequence of manual activities of
the worker.
 Multiple Activity Chart
It is a chart where activities of more than subject (worker or equipment) are each recorded
on a common time scale to show their inter-relationship.
 to study idle time of the man and machines,
 to determine number of machines handled by one operator, and
 to determine number of operators required in teamwork to perform the given job.
 Method study-Few Techniques

FLOW DIAGRAM
 Indicate relative position of a machine and materials to determine the path followed by
them to perform a job.
STRING DIAGRAM
 scale model on which a thread is used to trace the path or movements of man and
materials during a specified sequence of events. 
 Productivity measure

 An organization produces 1000 steel glasses and uses 200 square meters of steel sheet and 200 hours of labor. Calculate
productivity if the glasses are sold for 100 each, cost of steel sheet is 100 per square meter and labor cost is 10 per hour.
Solution
Input
200 square meters of steel sheet at 100 per square meter= 20,000
200 hours of labor at 10 per hour= 2,000
Output
1000 glasses are being sold 100 each =1,00,000
Productivity= 100000/22000=4.5