Accounting technicians scheme west africa
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- Measurement of Productivity Productivity
- Labour productivity
- Capital productivity
- 2.10.2 Effectiveness
| 2.9.1 Productivity Management of various organisations in the country are paying a lot of attention to productivity because of their desire to increase production and profits and minimise the cost of production. At the national level, productivity is important because high productivity increases profits of various business organisations, expands the tax base and employment avenues. Measurement of Productivity Productivity maybe defined as the relationship between the number of units produced and the quantity of inputs (human/materials) used to produce them. Mathematically, productivity is measured by the formula – Where Productivity = Output per dollar, naira or cedi of investment Output = product and services Inputs = Labour, energy, materials or capital Labour productivity refers to the total net output achieved by an organisation per worker. Mathematically, labour productivity could be measured by Labour productivity is said to be high when the ratio is high and low when the ratio is low. A high labour productivity indicates that the organisation is utilising its labour inputs efficiently and low labour productivity implies an inefficient labour utilisation. Capital productivity is the measure of how well physical capital is used in providing goods and services. Material productivity is the amount of output (Net sales) divided by the material input. The ratio reveals the output received inconstant prices per naira or cedi or CFA of material input. 70 2.10.2 Effectiveness Effectiveness is the ability to choose appropriate objectives or the appropriate means for achieving a given objective. In other words, an effective manager selects the right things to door the right method forgetting a particular thing done. For example, a manager who insists on producing only large cars when the demand for small cars is soaring is an ineffective manager, even if those large cars are produced with maximum efficiency. A manager’s responsibilities require performance that is both efficient and effective. Although efficiency is important, effectiveness is critical. For Drucker (1970), effectiveness is the key to the success of an organization. Managers need to make the most of opportunities. He further states that effectiveness rather than efficiency is essential to business. The pertinent question is not how to do things right, but how to find the right things to do, and to concentrate resources and efforts on them. Agbonifoh (2005) rightly summarizes that an organization can be effective only if it is doing those things that are relevant and crucial to its purposes. These are the right things to dob Efficiency Efficiency is the ability to get things done correctly and this is an input – output concept. An efficient manager is one who achieves outputs or results, that measure up to the input labour, material, and time) used to achieve them. In other words, if the manager is able to minimize the cost of the resources he or she uses to attain a given goal, that manager is acting efficiently. Griffin (1990) says that being efficient means you are using resources wisely and in a cost-effective way. Agbonifoh (2005) explains that great efficiency can arise by a) achieving more results with the same current levels of inputs b) achieving the same level of result with less than current levels of inputs c) achieving an increase in results with less than a proportionate increase in inputs d) achieving less output or results with a more than proportionate decrease in inputs We can rightly infer that a company that is effective is on abetter footing no matter how inefficient it maybe, than the one which produces the wrong products efficiently. Customer satisfaction is a very crucial reason for managing, because management must ensure that its organization satisfies the customers and other stakeholders. Download 3.37 Mb. Share with your friends:
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