Productivity refers to the overall efficiency of production of specific goods or services rendered by any particular entity. Measures of productivity can be defined as the ratio of an individual output, usually over a given period of time, to an individual input, usually of a same nature. This ratio measures the productivity of a particular entity as a whole. It may either be measured directly as an index such as gross value-at-work or gross sales, or indirectly through the means of productivity indices, such as productivity indexes, cost-and-value analysis indicators, and production capacity determinations.
The productivity measurement of a business firm lies on the productivity of its workforce as a whole. Various elements should be considered to attain a reliable productivity measurement over a period of time, such as the skills, aptitudes, attributes and work experience of every employee of a firm. Among these, human capital is one of the most important factors as it directly affects the overall productivity of any entity. Therefore, the improvement of human capital is a pre-requisite if a firm is to improve its productivity as well as cut costs.
Another aspect that is important for a productivity analysis is the level of labour productivity. In economic terms, labour productivity is expressed as the number of units of output per hour of labour input that is produced by an entity. There are several measures of labour productivity used in business firms such as Gross Domestic Product (GDP), the level of output per capita, or the product as a whole (also referred to as gross value added or gross domestic product). These concepts are used to assess the productivity level of workers in different workplaces of a firm. The level of output in any given economy is typically associated with the size of the economy in terms of population, economic development and other variables.
Economic textbooks define productivity in terms of the ratio of the value created to the value of what is produced, as it is implied by the phrase 'value creation in free markets.' In economic terminology, productivity is also seen as the rate of return on investment, which is often referred to as the productivity curve. The slope of this curve, which can vary depending on the specific circumstances of a particular economy, indicates the extent to which labour can be invested. It is important to note that the definition of productivity is very fluid, since it can vary greatly between firms and industries and even between countries.
The productivity of a firm can also be affected by changes in technology. For example, the invention of the computer and the consequent rise in computer-related tasks have led to productivity increases in firms across the world. Similarly, technological unemployment has led to decreases in the productivity of workers, who are forced to adapt to newly designed tasks in order to retain their employment.
One aspect of productivity that is often undervalued is the process of time management. If properly managed, productivity levels increase as resources become available. Efficiency increases because there is less time spent doing unproductive tasks, allowing productivity to increase. Wasted time can be eliminated through a systematic approach to time management, including the elimination of non-priorities and the reduction of the amount of 'noise' -bothering activities. It is also important to consider how skills in one area can be improved to allow productivity in other areas. Finally, a firm should remember that a reduction in productivity does not necessarily imply a reduction in profitability. Check these healthy living tips from this website.
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