Productivity measurement is the quantification of both the output and input resources of a productive system. The goal of productivity measurement is productivity improvement, which involves a combination of increased effectiveness and a better use of available resources. While productivity can be given the sort of short hand definition as the ratio between output and input USE OF PRODUCTIVITY MEASURES
Productivity is a required tool in evaluating and monitoring the performance of an organization, especially a business organization. When directed at specific issues and problems, productivity measures can be very powerful. In essence, productivity measures are the yardsticks of effective resource use. Managers are concerned with productivity as it relates to making improvements in their firm. Proper use of productivity measures can give the manager an indication of how to improve productivity: either increase the numerator of the measure, decrease the denominator, or both. Managers are also concerned with how productivity measures relate to competitiveness. If two firms have the same level of output, but one requires less input this is due to a higher level of productivity, that firm will be able to charge a lower price and increase its market share or charge the same price as the competitor and enjoy a larger profit margin. Within a time period, productivity measures can be used to compare the firm's performance against industry-wide data, compare its performance with similar firms and competitors, compare performance among different departments within the firm, or compare the performance of the firm or individual departments within the firm with the measures obtained at an earlier time. Productivity measures can also be used to evaluate the performance of an entire industry or the productivity of a country as a whole. These are aggregate measures...