Lesson 03

Work System Design

Measurement of Productivity

Dr. Inderdeep Singh

Department of Mechanical and Industrial Engineering

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 Is Productivity Different from Performance?

Productivity Performance

 Output in relation to input  Considers output alone

Actual work done
 Productivity =  Performance index = expected∨standard work

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 Is Productivity Different from Performance?
Example:

It takes 3 meters cloth to make a coat. In a day a person is expected to make 50 coats.
He makes 40 coats.

Q. What is his Performance ?

Ans: 40 coats

Q.What is his Performance Index ?

Ans : (40/50) x 100 = 80%

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 Efficiency Vs Productivity
Efficiency Productivity
• It is the ability to do • It is the rate at which goods
something or produce are produced or the work is
something without wasting completed.
materials, time or energy. • It is the measure of output
• It is the measure of waste in produced by one unit of
a system. input.
• It depends on the quality. • It depends on production.

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Why Productivity is Important?

Higher standard of living

Higher GDP per capita

Higher Higher
Productivity Investment
Source: Lecture of T.M.JAYASEKERA , Managing Director -Innovative Skills (Pvt.) Ltd
 Benefits of Increased Productivity

 To workers
 To the organisation
 To the nation
 To consumers and society in general

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 Factors Affecting Productivity

Controllable or Uncontrollable or
internal factors external factors

 Plant and equipment: availability and

 Natural resources
reduction of idle time
 Government and
 Technology: Automation infrastructure

 Work methods : improvement in the

way of doing things
Source: Industrial Engineering and Production Management by M. Telsang, S. Chand Publication
 Measurement of Productivity

 Though productivity is an important factor leading to

success of all organizations but the productivity
measurement is difficult from practitioner’s point of view.

 There are number of reasons that make the accurate

measurement of productivity difficult.
 Criteria for Measurement of Productivity
 The measures should accurately reveal actual change in
productivity.

 Input and output must be considered in totality.

 Productivity of all activities must be measured individually

 Productivity data must be made available for managerial action.

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 Objectives of Productivity Measurement
 To compare an organization with its competitors in the market

 To find out the relative performance of different employees,

units and departments

 To compare relative benefits of different types of input according

to their output

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 Approaches in Productivity Measurement

• Traditional approaches
• The Kurosawa structural approach
• Lawlor’s approach
• Gold’s approach

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 Traditional Approaches
 Traditional methods: Based on quantitative operational
information, but in some cases, the traditional methods may
not be suitable and efficient.

 An alternative approach for the traditional methods is

subjective productivity measurement, which is based on
employee’s subjective assessments.

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 Kurosawa Structural Approach
 This approach states that productivity measurement enables to
analyze the past state of the company and, to plan new
operations.
 For the application point of view, this approach can be applied to
establish an information system for monitoring operational
activities of the company.
 Therefore, it is necessary to build the productivity measurement
systems according to the decision-making hierarchy of the
company.
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 Lawlor’s Approach
In accordance with this approach, productivity is a measure of
how efficiently and effectively organizations carry out the five
goals:
 Objectives
 Efficiency
 Effectiveness
 Comparability
 Progressive trends.

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 Gold’s Approach
This approach emphasizes on the rate of return, and attributes
profit to five major elements of performance which are:

 Price of the product

 Unit cost of the product
 Utilization of facilities available within the organization
 Productivity of these facilities
 Allocation of capital resources of the organization between
fixed and working capital
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 Productivity Measurement Problems
1.Technical Productivity Measurement Problems

 Different people such as suppliers, customers, users, sellers,

vendors, etc. use different sets of productivity measurements to
gauge the productivity of an organization.

 Hence there is no single universal measure of productivity

available

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 Productivity Measurement Problems
2. Organizational Productivity Measurement Problems

 Within an organization there is always a resistance offered by

the employees who may be both managers and workers.

 Apart from this, many organizational changes occur in an

organization which renders the productivity measurement
procedure more difficult
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