Productivity—Target or Conceptual Tool?

Abstract

The standard definition of “productivity” is shown to be deliberately ambiguous, and to conceal a number of difficulties in selecting an “output” for numerator and an “input” for denominator. The attempt to choose appropriate ones in a given situation leads to better understanding of the working of the organization.

A distinction is drawn between effectiveness, efficiency and “profit” (in a rather general sense), and the circumstances in which it is desirable to study one or other of these are examined.

Measures of any of these may be of value as a stimulus to better performance (at the risk of leading to attempts to improve the measure rather than the real situation). Alternatively, if they are sound enough statistically, they may be useful tools for analysing the factors that affect the efficient working of the organization.