Productivity and Efficiency

• Productivity


  The output per unit of input per time period
• Labour productivity


  The output per worker per period of time
• Factors affecting productivity


  • Capital productivity
  • Labour flexibility
  • Working practices
  • Specialisation
  • Division of labour
  • Education and training
  • Motivation of workers
• Capital productivity


  Productivity increases when new tech is introduced, therefore increasing efficiency
• Labour flexibility


  If staff are trained to do different jobs, this increases productivity as it allows more staff to cover busier periods
• Working practices


  The way labour is organised and managed can affect productivity e.g. different layouts may be needed so the staff don't have to move as much saving time
• Specialisation


  If a business specialised in the production of a limited range of goods they perfect the process having a highly focussed and trained workforce
• Division of labour


  Allows staff to concentrate on specialised tasks
• Education and training


  The government can improve the quality of labour by investing in education and businesses can provide training programmes
• Motivation of workers


  Motivated employees will be more productive
• Productivity has increased and a business is producing more with the same number of resources

  Cost per unit is lower and they can charge lower prices which will achieve an advantage over competitors so you can steal their customers increasing the market share
• Efficiency


  Making the best possible use of businesses resources e.g. labour, materials
• How to improve efficiency

  • Outsourcing
  • Training - produce more per hour, work faster
  • Relocating - larger customer base, costly to move
  • Motivation - more rewards
  • Invest in new tech
  • Lean production
• Factors influencing efficiency


  • Standardisation - can bulk buy
  • Outsource
  • Relocate - lower rent, lower wages
  • Downsizing - reduce capacity
  • Delayering
  • Invest in new tech
  • Lean production
  • Kaizen
• Difficulties in improving efficiency

  • Increased costs for business - training, motivation
  • Quality may suffer - employees encouraged to work faster
  • Employees may resist