Increasing Productivity of a Business
Productivity is the measurement of the level of efficiency within a
business. It measures the relationship between the level of inputs and
outputs of a business. There are two types of productivity, identified
as labour productivity and capital productivity. It is beneficial for
a business to have high productivity levels since the more produced by
a business the more it can sell therefore increasing the revenue for
the business. It is also beneficial because a higher productivity
means more products can be produced for the same cost (this is because
each unit cost is lower) thus making more profit on each product.
This view can be compromised as both a positive and negative view for
a manager to have. Generally you would expect managers with an
autonomous style of management to take this view. Many people have
looked in to management, Frederick Taylor developed methods in the
early part of the 20th century. Taylor used techniques to increase
production based on the view being discussed. Not everyone agrees with
Taylor though, another management theorist Abraham Maslow built on the
work of Elton Mayo creating the "Hierarchy of Needs", which states pay
is a basic requirement and other needs can not be satisfied if an
employee is not content with pay.
Financial methods have been proven to increase labour productivity.
Schemes such as the piece-rate system where the payment method
involves the employee receiving an amount of money per each unit that
he or she produces. This method is directly linked with productivity
levels of employees.
Financial methods used in the workplace are used to boost morale of
employees; motivation is strongly linked to increasing productivity.
Other financial techniques include commission, profit sharing,
performance related pay and share ownership. Along with the piece-rate
system all these methods encourage employees in to being more creative
This view can also be criticised because even though it has good
points it also has its bad points. One of the most important reasons
for disagreeing with this view that some managers have is that it is
very expensive for a business to run financial reward schemes. What's
more financial incentive formats can be hard to operate and group
schemes make individual rewards difficult to quantify.
Other ways of increasing labour productivity should be taken into
consideration so that a business can overcome...