What is Productivity? Definition Meaning

What is Productivity? Definition ↓

According to Peter Drucker,

“Productivity means the balance between all factors of production that will give the greatest output for the smallest effort.”

The meaning of productivity is shown in the following diagram.

Image credits © Prof. Mudit Katyani.

Meaning of Productivity ↓

Productivity is the relationship between output and input. It is expressed or measured as a ratio of output and input.

Productivity equals output divided by input.

Two simple examples of productivity measurement:-

1. Productivity of a manufacturing unit can be measured in terms of the number of goods-produced in some fixed amount of time (usually in hours).
2. Generally, in service industry, productivity is measured in terms of income generated by an employee for his or her's organization.

Nowadays, organizations give more importance to productivity and less importance to efficiency.

Higher productivity indicates the following:-

1. Best utilization of the available human and material resources.
2. Minimum wastage and losses of materials.
3. Quantitative and qualitative production of goods at lower cost.