GINA,
HERE IS SOME USEFUL MATERIAL.
DISCUSS WITH YOUR BOSS,
REGARDS
LEO LINGHAM
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Productivity is a measure of how efficiently an organization transforms its labor, capital, and raw materials into goods and services.
A measure of the amount of output per unit of input.
Productivity measurement
If we cannot measure performance, we cannot manage and improve it. But measuring performance, is far from easy. Despite this, we should measure what is measurable; if something is not measurable, we should try to make it so. Efficiency measures based on the output/input ratio can be supplemented with effectiveness measures in index form.
Basically, there are two main approaches to productivity measurement:
1.partial factor productivity measurement and
2.multifactor productivity measurement.
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1.partial factor productivity measurement and
is a ratio of the output to one of the factor inputs, such as labor productivity or capital productivity. However, partial productivity measures are not comprehensive and, if used alone, can be misleading.
EXAMPLE.
A.SALES PRODUCTIVITY INDEX =
TOTAL SALES VALUE [ a year] / TOTAL AVERAGE NO. OF EMPLOYEES FOR THE YEAR
[this is to applied ''before'' and ''after'' the restructuring.]
before >>>$100 mill. / 100 employees= sales productivity index=1.00
after >>>$120mill. / 110 employees = sales productivity index =1.09
WHICH IS AN IMPROVEMENT.
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B.Labor Productivity index
labor productivity, which measures the output that an hour of labor produces. Often expressed as "output per hour" or "output per worker-hour," labor productivity tends to focus on manufacturing because manufacturing output is easier to quantify.
Measuring productivity at a manufacturing, for example, is fairly straightforward. It’s either,
a monetary measure — the total dollar value of produced in a given period of time divided by the total number of worker-hours needed to produce them.
LABOR PRODUCTIVITY INDEX =
TOTAL PRODUCTION VALUE [ a year] / TOTAL AVERAGE NO. OF EMPLOYEES FOR THE YEAR X 1840 hours.
[this is to applied ''before'' and ''after'' the restructuring.]
before >>>$70 mill. / 100 employees= labor productivity index=70 / 100x1840 = 380
after >>>$85mill. / 110 employees = labor productivity index = 85 / 110 x 1840 =420
WHICH IS AN IMPROVEMENT.
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THE SAME PROCEDURE CAN BE APPLIED TO THE PRODUCTION OF UNITS.
a physical measure — the total number of units produced in a given period of time ( a year) divided by the number of worker-hours needed to produce them,
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2.multifactor productivity measurement.
Multifactor productivity measurement, on the other hand, considers output in relation to multifactor inputs. A good example is total factor productivity, which measures the synergy and efficiency of utilizing both labor and capital inputs.
Whereas labor productivity measures the output per unit of labor input, multifactor productivity looks at a combination of production inputs (or factors): labor, materials, and capital. In theory, it’s a more comprehensive measure than labor productivity, but it’s also more difficult to calculate.
Multifactor Productivity=Output/(KLEMS)
"Multifactor productivity growth is the rate of growth in output relative to the rate of growth of all production inputs. In equation 2, KLEMS represents all production inputs: K is capital services; L is labor services; E, energy; M, materials; and S refers to purchased services — business services, for example. It is a complicated index number — the idea is to get a measure of the change in output relative to the change in all of the inputs.
MULTIFACTOR PRODUCTIVITY INDEX =
PRODUCTION OUTPUT / [inputs of capital +labor +energy+purchase of services ]
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THE MULTIFACTOR PRODUCTIVITY INDEX IS THE BEST
BUT IT WOULD NEED THE HELP OF YOUR FINANCE MANAGER
TO SET IT UP /TO MONITOR.
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