Productivity

• Productivity is a measurement of efficiency with which a business turn inputs into output
• Productivity formula: Output (e.g number of products produced)/Inputs (e.g number of employees)
• Higher productivity can lead to higher profits and lower average costs
• However, a push to increase productivity can lead to staff being overworked which could lead to higher accident rates, Higher investment in the short term by owners in order to purchase up-to-date technology
• Efficiency: This is about making the best possible use of resources