Hi everyone, I would be undertaking a project where I need to measure organisational productivity. I want to measure productivity for a few revenue generating or business critical positions... So, for example, in sales...revenue per person can be one of the metrics... Similarly I need to look at what other metrics can be used...
What more metrics do you think I can use?
It would be great if you could share your ideas on how to measure productivity, what metrics should be used and if you have any existing project plans/ documents/ proposals / format for capturing data regarding the same.

Dinesh Divekar
Business Mentor, Consultant And Trainer
Corporate Hr Manager

Dear Shilpa,

Are you a student of B-school or a professional? What is the nature of the industry? What is the product or service of the company?

Productivity norms differ from one industry to another and from one company to another. Take the case of IT industry. Productivity measures for the company that produces software for Apps are different from the company that provides SAAS.

Measures of productivity are based on human productivity as well as machine productivity. Therefore, output per person or per ton/quintal is one of the measures. Other measures are equipment utilisation, equipment availability, scrap generated, rejection %, time spent in settling quality issues etc.

In manufacturing units, measurement of following costs decide the productivity:

a) Inventory Carrying Cost of Raw Materials

b) Work in Progress (WIP) Inventory Costs

c) Inventory Carrying Cost of Finished Goods

d) Capital costs to run the operations

e) Capacity costs

f) Maintenance costs

g) Quality costs

h) Inspection costs

i) Ordering costs

Give specific information about your requirement.


Dinesh Divekar

From India, Bangalore
Thank you for your reply Dinesh. I am an HR professional. My message was probably truncated when I posted it. I work with an Indian IT company. We have IT/ telecom distribution businesses as well as software development and I would be measuring productivity separately for each Line of Business (LOB). I hope my reply helps in clarifying my situation.
Would you also be able to share any existing project plans/ documents/ proposals / format for capturing data regarding the same?

Dear Shilpa,

To evaluate the productivity, you need to study system and process of each department. Identify the costs associated with each department and then decide the measures of productivity.

Many companies just concentrate on the customer satisfaction. However, what is the cost of customer satisfaction? Take the case of Kingfisher Airlines (KFA). Quality of the service was good but their financial parameters were very bad. In case of manufacturing companies, quality of the product could be good but what if they were accumulating inventory of the raw materials at the stores? There were cases wherein burgeoning inventory took the monstrous size.

You need to identify similar challenges in your industry/company also. To do this, you have to institute Performance Management System (PMS) in your company. PMS will take care of productivity of the departments as well as individuals.

I provide consulting services to establishment comprehensive PMS in the company. You may click the following link to know more about my consulting services:


In the above link, you will get further links. In this links, you will get still further links. Please go through all the links in order to update yourself about the subject.

You may click hyperlink to have a look at the "Sample KPI and KRA Manual".

My Experience of Past Client: - Since you have asked about organisational productivity, let me share my experience with you. I provided PMS consulting services to my client. About eight years ago, they had purchased capital equipment worth of Rs 5 Crore. In the course of my consulting services, much to my horror I discovered that for the last three years they had been spending Rs 1 Crore per annum on maintenance. The company is a public limited company. They have everything well in place like values, vision, mission etc. But then why this big goof up escaped from everyone's attention.

Examples from Software Industry: - A very top notch IT company purchased UPS batteries worth of Rs 60 Lakh unnecessarily. In the second company, it was discovered that 85% operational indents did not adhere to the lead-time requirements.

If you wish then you may avail of my services. You may talk to your management and get back to me. Be assured that I will fix measures of productivity from MD to the down-most level.


Dinesh Divekar

From India, Bangalore

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