Importance of Productivity

The term productivity is defined as the ability of an organization or company to convert available resources into profitable services or goods. Productivity in the work place allows you to apply your skills, technology and innovative ideas to achieve maximum output with the inputs and processes that are already in place. In other words productivity is all about exploring new ways to build an efficient environment.

The importance of productivity can be summed up below.

Productivity is important for ‘n’ number of reasons. Some of the tips listed here are but the tip of the iceberg of productivity.

Productivity increases the rate of low cost per unit and results in lower price. It helps in retaining whatever competitive advantage that you may have. It also increases the standard of living since more and more products can be purchased, if product production is more. This way, consumers will benefit from a higher productivity from your business.

Productivity increases profits for businesses and will lead to salary increases for laborers. For compassionate capitalists, increased profits mean that they can share more money and blessings with their employees.

Some companies used to say productivity reports are not important as long as their profit level is optimum, but it is wrong. Even though their product levels do not directly represent companies’ health, but they will help the company executives to improve the performance of the product. It is a way to reward the worthy employees, who excelled in the productivity.

Productivity is more important than revenues and profit. This is because profit determines only the end result, whereas productivity determines the efficiency of the business, as well as effectiveness of business processes and policies. Profit does not determine the individual and segment performances. Another important reason, “why revenue and profits are measured insufficient” is they are useful only if company has optimistic results. In case the company does not produce expected result, they go and check the productivity reports and not the profit report.

One reason why productivity is important for companies is that, it helps them in measuring their strengths and weaknesses alongside the threats and opportunities that the market brings. Once companies determine their weakness, they can work hard and produce expected results. Another reason is to control the output parameter of different departments. Even though productivity is important, over-productivity sometimes causes great collapse to the companies’ growth. At the end only profit reports are not enough, productivity reports also required to guarantee the smooth flow of financial problems.



Source by M Rasing

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