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AUSTRALIAN BUSINESS BLOGS – WHAT IS PRODUCTIVITY Part 2

If we remember that both the input and output are variables we have an even better understanding of productivity. So far we have looked at keeping the input the same, but increasing the output (the achievements). We need to also look at changing the input. If we find that increasing the input by 10% increases the output by 20%, then that looks to be a very healthy improvement. Alternately, we might find that decreasing input by 50% still allows us to supply 90% of the same services and product. This may or may not fit with some definitions of productivity, as it is actually producing less; yet it could well be good for some situations.

The complexities become greater if we factor in countless more variables. If two businesses produce the same amount of produce with the same number of workers all payed the same wage we might think they are equally productive. But if one company produces and delivers the same product in 24 hours while the other takes a week, then the first company is doing better. This difference might be that one company produces one product per day for 5 days. Another might produce 5 products at the end of each week. It’s the same total averaged over time, but the faster producer may have the edge in some circumstances.

This becomes more complex if we compare a company that produces one product per day to a company that produces 6 products per (5 day) week. If the resources and labour situation are the same the second company is more productive. But sometime the turnabout time is a limitation, especially if there is a deadline.

Changing the approach to business should be aimed at increasing production, preferably not at the expense of anybody’s career or sanity. This will be at an administrative or engineering level, often aimed at finding a better way for people to achieve the same goals in less time; sometime aimed at achieving different goals. Either way we come back to the same idea(s) – productivity is either achieving more with the same resources and effort, or changing the resources and effort to achieve a better goal.

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