1

Productivity Concepts
and Definitions

By: Mushtaq Mangat

 2

Productivity Concepts And Definitions

By: Mushtaq Mangat
mushtaq.mangat@gmail.com

Abstract

Productivity is one of the most common terms under used of people. Particularly, business community is
more concerned about this term. Historically this term never remained out of the dictionary of the human
being. There are many definitions of productivity. But widely it is considered as ratio of output to input.
There is a constant change in the generic concept of productivity. There are many concept related to
productivity. In different periods, people focused on different facets of productivity. Some time labour
productivity is important and other time resource productivity becomes significant. In this article we have
systematically examined different definition and generic concepts of productivity and ultimately conclude
that productivity is a concept to do more with less by keeping all stake holders smiling and making this
planet safer for coming generations.
Keywords:

Productivity, labour productivity, resource productivity, green productivity

Productivity Concepts and Definitions

The word productivity first time appeared in literature in 1766. According to Sumanth (1990, p. 01), “the
term productivity was probably first time used by French mathematician in an article in 1766. In 1883,
another French man, Littre, defined productivity as the faculty to produce”. Many organisations have
defined productivity in different ways. Hereinafter, diverse meanings of productivity coined by different
people and organisations in different periods will be presented. Sumanth (1990, p. 04) has given a list of
nine different organisations and people who have given definition of productivity. A list of different
meanings has been prepared with the help of definitions proposed by Sumanth (1990, p. 04), some
more definitions have been added and eventually a conclusion is given based on research.

Fabricant defines productivity (as cited in Ali 1978, p. 55) in the following words, “always a ratio of output
and input”. This is the most common definition of productivity. Kendrick and Creamer have proposed two
definitions of productivity (as cited in Afzal, 2004, p. 07). They specifically expressed in the following
words, “a-Functional definitions for partial, total factor and total productivity, b-Loose description of
relationship usually in ratio form, between outputs and all of the associated inputs in real terms”. In these
definitions, authors have differentiated partial productivity from total productivity. Nevertheless, their
focus is on relationship between the output and input. Mali has proposed the similar concept of
productivity (as cited in Afzal, 2004. p. 06). According to Mali, “Productivity is the measure of how well
resources are brought together in organisations and utilised for accomplishing a set of results.
Productivity is the name of reaching the higher level of performance with the least expenditures of
resources”.

Sumanth (1990, p. 04) believes that productivity is a family of ratios of output to input. The living
standard of the country is measured by the productivity. Productivity is measured by the goods and
services produced by per unit of national resources. Sink (1985, p. 15) has further clarified productivity
with reference to time and application of generic system of calculation. According to Sink (1985, p. 15), “
the concept that productivity is a relationship between outputs from a given system during or over a
given period in time, and inputs to that system during that same period, should be generic and
universal”. Lawlor (1985, p. 33) has also given two concepts of productivity. According to Lawlor (1985,
p. 33), “a- at its simplest meaning productivity is the relationship between goods produced and sold or
service provided – the out put, and the resources consumed in doing it (Output/input= productivity). b-
Productivity is a comprehensive measure about how efficiently and effectively organisations satisfy the
following five aims:

• Objective achievements
• Efficiency of the process
• Effectiveness-
• Comparability with other organisations
• Trend- productivity measured over a period”.
 3
Campbell & Campbell (1998a, p. 01) have viewed this issue in a different manner. According to them
productivity is a concept that has captured the imagination and energy of managers and behavioural
scientist for decades. In this statement, productivity looks a concept more than a definition.

Baig (2002, p. 08) has defined productivity in the following words, “doing things right at the least possible
cost in least possible time with the highest possible quality and to the maximum level of satisfaction of
the customers and employees”. Chen; Liaw & Chen (2001, p. 378) defines productivity in the following
words, “productivity is often used to evaluate the aggregate performance of a business unit, generally
defined as the ratio of outputs to inputs. However, for different applications and research domains there
are different definitions of productivity”. This definition supports the established fact discussed in
previous pages that productivity has different meanings in different situations.

Vittal (2002, p. 28) has attached another concept with productivity and that is the objective of the
organisation. Vittal (2002, p. 28) says that, “productivity, at a very element level can be defined as output
by input. But mere increase in output is of no value unless the output also has a bearing on the
objectives of the organisation or the environment under which the transaction takes place”.

Srinivasan (2002, p. 74) is looking productivity with another angle. According to Srinivasan (2002, p. 74),
“the concept of productivity has undergone a sea change with the advent of the e-Age. In the new
business paradigm, the traditional definition has to be modified; in fact it has already been redefined in
this knowledge era”. Srinivasan (2002, p. 74) has further stated, “It has become to be recognized that
there are several intangible, nevertheless vital ingredients, that constitute the sum of productivity”. In the
above statement, it is clear that simple output and input ratio is not the true meaning of productivity,
firms produce some intangible things, which are also vital. In addition, there is a need to measure
intangible out put too while measuring productivity.

Productivity Meaning with Reference to Context

In previous paragraphs, the concept of productivity has been discussed with reference to the time. It has
been observed that meanings of productivity transformed over a period of time with the change in
business practices. Hereunder meanings and concepts of productivity will be discussed with reference
to the context. According to Sink (1985, p. 15), “Engineers, Psychologists, Economists, Politicians,
Sociologists, Organisational behaviourists and Managers all have different perception on the concept of
productivity”. Baig (2002, p. 09) has defined productivity in another way. According to Baig (2002, p.
09), “Productivity has different meanings to different people.

A summary of the Baig’s (2002, p. 09) presentation is given hereunder:

• For employers: Improve competitive position in the market
• For Employees: An increase in compensation, development of skills and other capabilities
• For Customers: Lower price, high quality, timely delivery,
• For Society: Low inflation, improvement in living standards, environmental protection
• For Government: More revenues, more resources for social services

As it has been widely discussed in previous pages, that productivity is primarily a topic for the
economists. However many industrial engineers have also worked on this subject. Productivity is also a
matter of concern for government officials. Today other people are also discussing productivity including
environmental engineers, social scientists as well as industry itself. The meaning of productivity is
different for every sector of life. For example, industrial engineers want more with less and on the other
hand, environmental engineers are focusing to save the environment by attempting to lessen pollution.
There is a subtle difference of understanding of productivity among all the people concerned.

Productivity Meanings Diversification

Ali (1978, p. 55) has divided productivity definitions into following eight groups. Ali (1978, p. 55) has
given the names of different authors who are in favour of these definitions. According to Ali (1978, p. 55)
these are eight different groups to describe productivity:

Group # 01
Productivity is a ratio of output to input

Group # 02
Productivity is generally interpreted as efficiency in industrial production measured by some relation of
output to input.
 4

Group # 03
Productivity is the relationship between the amount of goods or services produced and one or more
input used to produce that product.

Group # 04
Productivity is a measurement or the efficiency with which input can be converted into output over some
given period of time.

Group # 05
Productivity is the attainment of goals verses all relevant inputs.

Group # 06
Productivity is a management problem, involving how best to manage excess capacity.
It is true that management is ultimately responsible for all of the functions of any firm.

Group # 07
Productivity is primarily a function of company's effectiveness to meet the need of the market.

Group # 08
Productivity is most conveniently expressed as an index number in current period as compared to the
performance in a base or reference period, which is quoted to 100.

From the above-mentioned discussion, it is evident that there is a wide range of productivity definitions
available in the academic literature. In the next pages few more concepts of productivity are being given.
Performance and Innovation Unit (2001, p. 25) has defined productivity in the following words,
“productivity is the efficient and effective use of resources by the organisation”.

This is a modified shape of the approaches mentioned under Group # 2 and 4. In this approach
effectiveness has also been taken into account along with efficiency. This approach seems more
comprehensive when compared to others. The main focus of this approach is on resource utilisation. It
also ignores other factors like, market satisfaction and environment. Overall, this approach is more
suitable to assess the productivity of the firms. Nevertheless, this approach ignores the quality factor of
products or services. Productivity also covers the quality aspects of the production. Industrial Engineers
can use this approach to calculate the productivity focused on resource utilisation.

Environmental Engineers are more concerned with depletion of natural resources. However, it does not
mean that other people are not concerned with the safety of nature. However, environmental engineers
are more concerned about the environment. This approach is the most popular in the current age. In
current period the major point of discussion among the industrialists, economist and all other related
authorities is to save environment. Some decades back it was not that much important as it is today.
The main reason of such ignorance was slow pace of industrial activities in the past. This approach
seems to be one of the most suitable approaches.

On the other hand, industry is facing a tough situation due to compliance on environmental issues.
According to Porter and Linde (1995, p. 134) companies can achieve higher productivity by adopting the
environmental protection laws. However, this approach is only a survival point for the nature. Firm's
productivity should be judged with reference to the loss it makes to the nature.

National Productivity Centre [NPC] (1999, p. 03) has defined productivity more specifically. According to
NPC (1999, p. 03); “productivity compares the amount of output with the amount of input resources used
to produce the output at any given period of time”.

Lawlor (1985, p. 20) given a list of eight factors related to productivity. According to Lawlor (1985, p. 20):
The productivity issue as now described is a complex one involving many factors. Therefore, we can
focus our attention on the following eight factors that have been selected as having the greatest bearing
on productivity:

1. Economic climate
2. Markets
3. Change
4. Organisations
5. People
6. Rewards
7. Information
8. Technology
 5
According to Bernolak (1980, p. 03), “ productivity is the relationship between the quantity of
goods and services produced and the quantity of one or all of the resources utilised in turning
out these goods and services. It is usually expressed as a ratio”. It seems that Bernolak (1980, p.
03) is also in favour of the general definition, which is about the ratio of output and input.

Monga (2000) comments on productivity in a changed manner. According to Monga (2000, p.

13), “productivity is a multidimensional and dynamic concept”. Bernolak has projected another
view of the productivity (as cited in Monga, 2000, p. 13) that most manager do not know (1)
what productivity really means (2) how much vital it is for them and for their organization (3)
that, it can be improved significantly (4) how to measure and analyse it, (5) what factors affect
it (6) how to improve it.

Mahoney (1998, p. 18) gives his comments on productivity definition in the following words,
“productivity is an efficiency concept generally cast as ratio of output o input into some
productive process”. Mahoney (1998, p. 18) has further explained productivity concept in these
words, “productivity is also a performance variable and it is perhaps best illustrated in
comparison with other performance variables”. There were many studies conducted to evaluate
productivity by comparison.

According to the above-mentioned statement, comparison of performance, efficiency or

effectiveness is the best way to illustrate productivity. It seems that the best use of productivity
is in its comparison, and for comparison purpose, there should be some criteria with which
comparison is done. This may be the previous record, common industry output or any other
benchmark available.

Campbell & Campbell (1998b, p. 83) are of the view that efficiency and productivity are
interchangeable words. According to them, “there is a clear consensus that it is useful to reserve
the term productivity for efficiency indices. That is the indicator in question is a ratio of
outcomes, measured in some way, to inputs, also measured in some way”.

This is a very narrow concept of productivity. One can have more efficient system with bonded
labour or making planet polluted. However, in some particular situation this term is acceptable.
Gharneh (1997, p. 01) has widened the concept of productivity. According to Gharneh (1997, p.
01), “productivity is a road to competitive enterprises, the economic development of countries
and welfare and well being of nations”. In this statement, productivity is some thing else and it
is other than ratio. It is a way, method or technique to have more with less.

Brinkerhoff and Dressler (1990, p.16) have given their conclusion about productivity in the
subsequent words:

In a nutshell, productivity reflects results as a function of effort. If productivity improves, it

means that more results are being gained from a given amount of effort. In a classical sense,
productivity is defined as a ratio such that the output of an effort under investigation is divided
by the input required to produce the output.

In the above mentioned statement two major concepts have been elaborated: a- productivity is a
result of effort and b- ratio of output to input. This definition is a modified shape of the previous
given statements.

Wilson (1994, p. 50) has defined productivity more precisely in the following words,
“productivity is the ratio of outputs produced to the input resources utilized in their production.
Typically, productivity is also measured against a “base period” so as to facilitate trend analysis
of the productivity measure. Therefore, the dollar value of outputs and inputs are adjusted for
monetary inflation. Productivity for period i (with respect to base period b) can then be
represented as:
 6
Output i /Input i
Productivity=------------------------*100”.
Output b/Input b

Industry Commission (1997, p. 03) has defined productivity more precisely in the following
statement:

Productivity is a measure of the capacity of individuals, firms, industries or entire economies to

transform input into output. More specifically productivity is a measure of the rate at which
output (of goods and service) are produced from given amount of input.

In this statement productivity is not the simple ratio rather it is capacity of the organisation and
individuals who take part in the production process.

Sink (1985, p.03) has advocated the term productivity in the following words, “productivity is
simply the relationship between outputs generated from a system and the input provided to
create those outputs”.

Traditionally productivity is considered as a ratio between input and output. Productivity is

often confused with efficiency and rationalisation or profitability. In reality, the modern
understanding of productivity is doing things right at the least possible cost, in the least possible
time with the highest possible quality and to the maximum level of satisfaction of the customers
and employees. In this sense productivity is a total business concept rather than a
“rationalisation of production” and the productivity has social dimensions, not only economic
ones (Prokopenko, 1999, p. 10).

Prokopenko (1999, p. 10) has added some other dimensions in the concept of productivity. This
looks a more comprehensive statement when compared to all those mentioned above. Daniels
(1997, p. 52) has indicated another avenue of productivity in the following words, “the
approach and attitude to productivity improvement is much more important than the type or
nature of any techniques”. Nachum (1999, p. 943) has defined productivity in the following
words:

Productivity is defined as the level of output produced by per unit of input. Changes in
productivity reflect changes in the ratio between input and output, e.g. increase/decrease in
output produced from a given input, or same output produced with more/less input.

In a scenario where product life cycle is becoming short every day, significance of innovation is
one of the fundamental requirements for high productivity. Taylor; English & Graves (1994,
p.13) have stated the importance of new product development in the following words, “as
product life cycles have decreased and manufacturers are facing with increasing global
competition, engineering designs play an increasingly important role in the successful
manufacture of products”. This obviously definitely shows that survival of firms mainly
depends upon innovation.

Marketing gurus are readily agreeing on one point that buying decisions are much influenced by
the extrasensory perception of the brand or firm in the minds of buyers. Every firm is trying to
create a better image in the minds of customers and buyers about their products and as well as
firms. All efforts are done to improve their images. One takes goods and services from others to
improve his or her productivity. Brand perception is directly related with the contribution of
service or goods in significantly improving buyer's productivity. In the current scenario, every
firm should try to be major contributor in the useful enhancement of buyer's productivity.

Furthermore, firms have to be much careful in their operations. People are more concerned with
social practices of the firms. They will never prefer a firm, which is using child labour, creating
high-level pollution or involve in anti social activities. It is the call of the day that firms should
 7
ultimately prove that their operations are as per business ethics and they are contributing in up
lifting of the society as a whole. This is also part of productivity and ultimately this would help
in increasing the image of the firm and that is the major tool for better profits.

All above discussion is to understand the meaning of productivity. Still there is no precise
meaning of the productivity. It is highly complicated and has many dimensions. There is a bleak
chance that people would have a common meaning of productivity. This is due to many factors
associated with productivity as discussed above. Based on all above discussion we have reached
to the following conclusion:

Productivity is an approach, a mindset, and a way of thinking to do more with less by observing
the business ethics, caring the risk of stakeholders and keeping the planet clean.

References:

Afzal Muhammad (2004). Measurement of Productivity in the Large Scale Manufacturing Sector of
Pakistan. Ph.D. Thesis, The University of Lahore, Pakistan.

Ali K J (1978). Labour Productivity in Iraqi Economy. Unpublished Master’s Thesis, University of
Manchester Institute of Science and Technology, UK.

Baig Ayesha (2002). Your Productivity is National Prosperity. Productivity Journal, National Productivity
Organization Pakistan, Islamabad, 8-9.

Bernolak Imre (1980). Interfirm Comparison in Canada. In Bailey David and Huber Tony (eds.) (1980).
Productivity Measurement: An International Review of Concepts, Techniques, Programmes and Current
Issues, Gower, UK.

Brinkerhoff Robert O and Dressler Dennis E (1990). Productivity Measurement: A Guide for Managers
and Evaluators. Sage Publication Newbury Park London- New Delhi.

Campbell John P and Campbell Richard J (1998a ). Introduction: What Industrial –Organizational
Psychology Has to Say about Productivity. In Campbell John P, Campbell Richard J and Associates
(Contributors). Productivity in Organizations. Jossey- Bass Publishers, USA.

Campbell, John P. & Campbell, Richard J. (1998b). Industrial –Organizational Psychology and
Productivity: The Goodness to Fit. In Campbell, John P., Campbell, Richard J. & Associates
(Contributors). Productivity in Organizations. Jossey- Bass Publishers. USA.

Chen Liang-Hsuan, Liaw Shu-Yi and Chen, Yeong Shin (2001). Using financial factors to investigate
productivity: an empirical study in Taiwan. Industrial Management and Data Systems. 101/7,MCB
University Press [ISSN 0263-5577], 378-379.

Daniels Shirley (1997). Back to basics with productivity techniques. Work Study, Volume 46 · Number 2
© MCB University Press · ISSN 0043-8022, 52–57.

Gharneh Shams Naser (1997). The measurement of productivity and

Performance in Textiles: The UK and Iran. PhD Thesis, University of
Manchester Institute of Science and Technology UK.

Industry Commission (1997). Assessing Australia’s Productivity Performance: AGPS, Canberra.

Lawlor Alan (1985). Productivity Improvement Manual. Gower Aldershot, UK.

Mahoney Thomas A (1998). Productivity Defined: The Relativity of Efficiency, Effectiveness, and
Change. In Campbell John P., Campbell Richard J. (eds.)(1998). Productivity in Organizations. Jossey-
Bass Publishers, USA.

Monga R C (2000). Managing Enterprise and Competitiveness. Working paper PMD-3 International
Labour Organization.

Nachum Lilach (1999). Measurement of productivity of professional services an illustration on Swedish

management consulting firms. International Journal Operations and Production Management, Vol. 19
No. 9, pp. # MCB University Press, 0144-3577, 943-948.
 8
National Productivity Corporation (1999). Handbook on productivity –linked wage system. Malaysia.

Performance and Innovation Unit (2001). Resource Productivity. Cabinet Office UK Government
London.

Porter Michael E and Linde Class van der (Sep- Oct 1995) Green and Competitiveness. Harvard
Business Review, 128-134

Prokopenko Joseph (ed.) (1999). Productivity Promotion Organizations:

Evaluation and Experience. International Labour Organization Geneva.

Sink D Scott (1985). Productivity management: Planning, Measurement and Evaluation, Control and
improvement. John Wiley and Sons. Canada.

Srinivasan C (2002). Productivity in the e-Age. Proceedings of APO International Conference on

Productivity in the e-Age, New Delhi.

Sumanth David J (1990). Productivity Engineering and Management. Delhi India: Tata McGraw-Hill
Edition.

Taylor G Don English, John R and Graves Robert J (1994). Designing New Products: Compatibility with
Existing Production Facilities and Anticipated Product Mix. Integrated Manufacturing Systems, Vol. 5 No.
4/5, 1994, © MCB University Press Limited, 0957-6061, 13-20.

Vittal N (2002). The Productivity Paradigms and Strategies for the e-Age: Focus Government.
Proceedings of APO International Conference on Productivity in the e-Age, New Delhi.

Wilson Rick L (1994). An Improved Goal-oriented Method for Measuring Productivity. International
Journal of Operations and Production Management, Vol. 14 No. 1, © MCB University Press, 50-58.

About the author:

Mr. Mushtaq Mangat is assistant professor at University of Management and Technology, Lahore and
head of Garment Productivity Centre.

To read more articles on Textile, Fashion, Apparel, Technology, Retail industries and General
related topics, please visit at www.fibre2fashion.com/industry-article/