1.0 INTRODUCTION
This note discusses
issues concerned with productivity. Productivity itself relates to how effective an organisation is
in the use of its resource. Here you
will learn how to differentiate between efficiency and productivity.
Other things to learn in this note
include the impact of human behaviour on
productivity, and how productivity can be measured as well as improved.
2.0 OBJECTIVES
By the end of this note, you should be able to;
i. Define the term
productivity
ii. Explain why it is important to organizations
iii. Determine partial, multi-factor and total productivity
iv. Explain how productivity can be improved.
3.0 MAIN CONTENT
3.1 Productivity and Human Behaviour
One of the primary responsibilities of an operations manager is to
achieve productive use of an
organisations resource. The term "productivity" is used to describe this. Productivity is actually an
index that measures output (i.e. goods
and services) relative to the input (e.g. labour, materials, energy,
cost of equipment, and other appropriate
resources) used to produce them. It is usually
expressed as the ratio of output to input
Productivity = Output
Input
The ratio can be computed for a single operation, a department,
an organisation, or even the whole
country productivity measures can be based on
single input (i.e. partial productivity) on more than one in (i.e.
multi-factor productivity), or on all
inputs (i e total productivity) some of these measures are given in Table 1.
The choice of particular measure depends primarily on the purpose
of the measurement. For example, if the
purpose is to track improvements in labour
productivity, then labour becomes the obvious input measurement. Table 1: Examples of different types of
measures of productivity.
TYPE FORMULAR
Partial Output
Output Output Output
Measures Labour
Machine Capital Energy
Multifactor Output
Output
Measures Labour +
Machine L abour + Capital + Energy
Total Goods
or Services Produced
Measures All inputs
used to produce them
Operations managers are more interested in partial measures of
productivity Examples of such measure
include the following;
( a ) Labour Productivity
Units of output per labour hour
Units of output per shift
Value-added per labour hour
Naira value of output per labour hour
(b ) Machine productivity
Units of output per machine hour
Naira value of output per machine hour
(c ) Capital Productivity
units of output per Naira input
Naira value of output per Naira input
(d) Energy
Productivity
units of output per kilowatt- hour
Naira value of output per kilowatt -hour
Productivity measures are of prime importance at different levels.
For instance, in the case of an
individual department or organization, such measures can be used to track performance over time this
provides opportunities for operations
managers to judge performance, and to decide where improvements are
needed.
Productivity can also be used to determine the performance of an
entire industry or even the national
productivity of country as a whole. In a nutshell, productivity measurements serve as scorecards
of the effective use of resources. Operations manager plays a key role in
determining productivity. Their
challenge is to increase the value of output, relative to the cost of
input.
For example, if they can
generate more output of better quality by using the same amount of input productivity will definitely
increase. Again if they can maintain the
same level of output while reducing the use resources productivity will also increase. At the national level, productivity is
usually measured as the naira value of
output per note of labour. This measure depends on the quality of the
products and services generated in a
nation, as well as the efficiency with which they are produced.
Productivity is actually the prime determinant of a nation's
standard of living. If the output per
work hour goes up, the nation benefits from higher income levels, since the productivity of human
resources determines employee wages.
On the other hand, lagging or declining productivity lowers the
standard of living. For instance, wage
or price increases not accompanied by productivity increases usually lead to inflationary
pressures rather real increases in the
standard of living.
Examples on the
Calculation of Productivity Calculate
the productivity for the following operations:
(a) Three employees processed 600 insurance policies last week.
They worked 8 hours per day, 5 days per
week.
(b) A team of workers made 400 notes of a product, which is valued
by its standard cost of 10 each (before
markups for other expenses and profit). The accounting department reported that for
this job, the actual costs were N400 for
labour, N1,000 for materials, and N 300 for overhead.
Solutions
(a) Labour productivity = Policies processed
Employee hours
= 600
(3 employees) (40
hours/Employee)
= 5 policies/hour
(b) Multi-factor productivity
= Quantity of standard cost
Labour Cost + material cost + overhead cost
(400 notes)( N10/note) =N4,000
N400+ N1,000+ N300 =N1,700
= N2.35
3.2 Labour
Productivity Many companies today
are pushing hard to improve their labour productivity. For man of these companies, direct labour
cost remains a significant cost. Some
manufacturing operations are not yet automated, and never will be
because either it is not cost effective
or insufficient capital is available. In addition, many services remain direct-labour-intensive.
For these reasons, the cost of labour
and the need to improve the productivity of labour continues to receive management attention. We are therefore going
to focus on labour productivity in this
section.
The major factors
that affect labour productivity are contained in Figure 15.1. The figure clearly shows that the causes of
labour productivity are many.
Unfortunately, there are currently no sets of formulars that precisely
predict human behaviour, in general and
productivity in particular. It is however
gratifying to note that we can have enough understanding of employee behaviour, so as to remove some of the
uncertainty about why employees are
productive.
Another look at Figure 15.1 should reveal to you that three
major factors affect labour
productivity. These are the physical work environment; employee job performance; and product quality. In this
realisation, various staff groups are
making efforts such as industrial, process product and systems
engineering to develop better
automation, machines, tools, and work methods to enhance labour productivity. The belief is their
increasing productivity through
technology development is at least as important as employee job
performance in increasing
productivity. The productivity of all factors of production can also be directly increased through reduction in
defects, scrap, and re-work.
You need to realise
that employee job performance is a complex topic because no two people are exactly the same. Hence,
their abilities, personalities,
interests, ambitions, energy levels, education, training, and experience
are bound to vary considerably.
Operations managers often consider these factors since blanket or common approaches to
improving job performances may not be
effective for all and sundry.
Figure 15.1 Variables Affecting Labour Productivity 
It is in recognition of these differences that efforts are
being made by personnel, departments to
select employees who have the desired abilities to develop training programmes for the
improvement of employee skills. There is
a growing importance of employee training and education all over the world. Many organisation are aggressively
increasing their employee training
programmes for competitive advantage, and this has been off in boosted production and morale.
Motivation has been discovered to be the most complex
variable in the equation of
productivity. As Berelson and Steiner (1964) have defined the term, a motive "is an inner state that
energises, activates, or moves (hence
'motivation'), and that directs or channels behaviour toward
goals". In other words,
"motivation" is a general term applying to the entire class of
drives, desires, needs, wishes, and
similar forces.
One of the widely referred-to theories of motivation is the
"hierarchy of needs" theory
developed by Abraham Maslow. He saw human needs in the form of a hierarchy, starting in an ascending order
from the lowest to the highest needs,
and concludes that when one set of needs was satisfied, this kind of
need ceased to be a motivator. In this
sense, therefore, only unsatisfied needs are
motivators, or cause people to act.
The basic human needs identified by Maslow in an ascending
order of importance are the
following:
1. Physiological needs
These are the basic needs for sustaining human life itself - food,
water, clothing, shelter, sleep, and
sexual satisfaction. Maslow took the
position that until these needs are satisfied to the degree necessary
to maintain life, other needs will not
motivate people.
2. Security or Safety needs These are the needs to be free from
physical danger, and the fear or loss of
a job property, food, clothing or shelter.
3. Affiliation or Acceptance needs Since people are social beings, they need
to belong and to be accepted by others.
In other words, this means sense of belonging and love.
4. Esteem needs According
to Maslow, once people begin to satisfy their need to belong, they tend to want to be held in esteem both
by themselves, and by others. This kind
of need produces such satisfactions as power, prestige, status, and self-confidence.
5. Self-Actualisation needs Maslow regards this as the highest need
in his hierarchy. It is the desire to
become what one is capable of becoming, i.e. to maximise one's potential and to accomplish something.
In Nigeria today, many employees' lower-level needs
(physiological and safety) have been
mostly taken care of by the recent minimum wage law. For all workers in the country, Thehigher-level needs
(social, esteem and selfactualisation)
may therefore hold more promise for managers in their attempt to motivate employees.
To what extent can we use the understanding of employees'
needs to design a work environment that
encourages productivity?. Using Maslow's theory, if we can determine what class of needs is
currently important to our employees, then
we can apply the following framework given by Graither (1996). If productivity is seen by employees as a
means of satisfying their needs, high
productivity is likely to result. Once employees have their needs
satisfied through rewards that have been
conditional upon productivity, the process is
likely to be repeated. Labour
unions and work groups can influence employees to be either productive or unproductive.
For instance, if employees think that their work groups may treat them as outcasts because
they have been productive, they may not
cooperate with management in this productivity-reward-productivity cycle. This is the reason why operations managers
should recognise the influence that work
groups have on labour productivity. They therefore need to develop cooperative work groups. The also need to
influence group norms through effective
cooperation and communication.
3.3 How Productivity can be Improved
An organisation or a department can take a number of key
steps toward improving productivity.
Here are some of them as suggested by Stevenson
(1996):
l. Develop productivity measures for all operations. This is
based on the premise that measurement is
the first step in managing and controlling
an operation.
2. Look at the system as a whole in deciding which
operations are most critical. This is
based on the fact that it is the overall productivity that is important. This concept is illustrated by
Figure 15.2, which shows several
operations feeding their output into a bottle neck operation. The capacity of the bottle neck operation is less
than the combined capacities of the
operations that provide input, so notes queue up waiting to be processed. Productivity improvements to any
non-bottleneck operation will not affect
the productivity of the system. However, improvement in the bottleneck operation will lead to increases
productivity, up to the point where the
output rate of the bottleneck equals the output of the operations feeding it.
Figure 15.2: 
Develop methods achieving productivity improvements, such
as soliciting ideas from workers (e.g.
organising teams of workers, engineers,
and managers) studying how similar firms have increased productivity, and re-examining the way work
is done.
4. Estimate reasonable goods for improvement
5. Make it clear that management supports and encourages
productivity improvement. It is also
important to consider incentive to reward
workers for contributions.
6. Measure improvement and publicise them.
7. Don't confuse productivity with efficiency. This is
because efficiency is a narrower concept
that pertains to getting the best out of a given set of resources. Productivity, on the other hand,
is a broader concept that pertains to
effective use of overall resources. For example, an efficiency perspective on mowing a lawn given a hand
mower would focus on the best way to use
the hand mower; a productivity perspective would include the possibility of using a power
mower.
4.0 CONCLUSION
In this note, you have learned what productivity is and why
it is important. You have also learned
how organisations can improve productivity. You should now be able to compute partial, multi-factor
and total measures of productivity.
5.0 SUMMARY
One basic fact you have learned in this note is that it is
necessary for organisations, especially
the operations managers to achieve productive use of resources. This note has taken you through a
general discussion on productivity and
human behaviour and labour productivity in particular. The note that follows is also in line with attempts to
increase the efficiency, as well as
productivity of organisations.
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