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PRODUCTIVITY MEASUREMENT APPROACHES[Alan Lawlor's approach (Lawlor)]

Presented By:Amit Verma214216014

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A general definition is that productivity is the relationship between the output generated by a production or service system and the input provided to create this output.

What is productivity?

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Productivity Variables• Labour - contributes about 1/6 of the

annual increase

• Capital - contributes about 1/6 of the annual increase

• Management - contributes about 4/6 of the annual increase

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Factors Affecting Productivity

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important for productivity improvement.effective tool for decision-making at all

economic levels.to evaluate the impact of national

development programmes.to help analyse effectiveness and

efficiency. (enterprises productivity)stimulate operational improvement.(labour

Productivity)

PRODUCTIVITY ANALYSIS

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Three of the most common purposes are:

comparing an enterprise with its competitors; determining the relative performance of

departments and workers; comparing relative benefits of various types of

input for collective bargaining and gains sharing.

Purpose of the productivity analysis

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Two types of productivity ratio can be used to measure productivity at all economic levels.

An approach to productivity appraisal:

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Productivity measurement and evaluation system (ProMES) Deterministic productivity accounting (DPA) The National Productivity Institute (NPI) Theory of constraints (ToC) The total productivity model (TPM) Alan Lawlor's approach (Lawlor) Applied productivity - Gold's approach (Gold) Operation function analysis (OF A) International Labour Organisation- (ILO) Quick productivity appraisal (QP A) Kurosawa and Goshi - Japan Productivity Center (Kurosawa) Multifactor productivity measurement model (MFPMM)

PRODUCTIVITY MEASUREMENT APPROACHES:

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Lawlor's (1985:22) approach addresses three questions:

Where are you now?(how efficiently resources are currently being used)

How much better could you be?(improvements in performance are still possible.)

Where should you be?(alterations in the way organisations function will be necessary)

ALAN LAWLOR'S APPROACH (Lawlor):

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Five aims of a productivity measurement approach are provided by the ILO and Lawlor, Objectives: the degree to which principal objectives

are achieved; Efficiency: how efficiently resources (inputs of labour

materials, purchased services and capital) are used to generate useful outputs, useful in the sense that goods made or services provided are actually needed;

Effectiveness: what is achieved in output and input terms compared to what is potentially possible;

Comparability: how productivity compares with other organisations, industries and countries;

Trends: the productivity performance record over time, that is, the decline, static or growth aspects.

Aims Of Lawlor’s Approach

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Step 1: Achievement of objectivesStep 2: Measurement of efficiencyStep 3: Effectiveness potentialStep 4: Comparability of performanceStep 5: Trends

Lawlor's methodology:

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Objectives can be met when the total fund is adequate to meet the demands of the organisation.

TE = sales — materials = S — M

The key objective will normally relate to maximisation of profit. paying satisfactory wages to employees, meeting the payments to outside suppliers setting aside a fund for wear and tear of plant for

later replacement.

Step 1: Achievement of objectives

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Efficiency is a measurement of the way an enterprise is currently using the resources at its disposal.

Step 2: Measurement of efficiency

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Effectiveness and efficiency are related, but are different aspects of productivity measurement.

Effectiveness compares what could be done with the enterprise's resources, while efficiency determines the existing state of affairs.

This concept includes an output target achieving a new standard of performance, or potential.

Step 3: Effectiveness potential

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Productivity measurement means comparisons at three levels: comparison of present performance with a

historical base performance; comparison of performance between units: such a

measure indicates relative achievement; and comparison of actual performance with a target:

this is best, because it concentrates attention on objectives.

Step 4: Comparability of performance

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Trends, that is the aim of achieving progressive trends, must be associated with a comparison between current performance and a historical base in order to identify whether enterprise performance is moving up or down and how fast.

Step 5: Trends

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Lawlor's productivity model

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