Efficiency & productivity

From a leadership perspective, efficiency and productivity are clear signs of success.  Measuring output is the first step to identifying opportunities to improve return on investment and to stimulate growth.

The following section is reproduced from extracts of a paper written by Paul Krugman and published by the OECD.

“Productivity is commonly defined as a ratio between the output volume and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output.

Productivity is considered a key source of economic growth and competitiveness.  One of the most widely used measures of productivity is Gross Domestic Product (GDP) per hour worked. This measure captures the use of labour inputs better than just output per employee.

After computing the contributions of labour and capital to output, the so-called multi-factor productivity (MFP) can be derived. It measures the residual growth that cannot be explained by the rate of change in the services of labour, capital and intermediate outputs, and is often interpreted as the contribution to growth made by factors such as technical and organisational innovation.”

The invisible, or at least less tangible, effects of “technical and organisational innovation” can result from a number of leadership initiatives. These are all part of strategic growth planning and include:

  • Employee training and development
  • New product development (NPD)
  • Service improvements
  • Design excellence
  • Technological developments
  • New market development
  • Quality management systems and standards.

Our clients are companies that have seen the advantages of improved productivity and have invested in systems, processes and policies that deliver greater output and increased earnings.

Nurturing relationships is a vital factor in maintaining performance (or output) and profits.  Good internal communications and high levels of customer satisfaction are both critical factors that feed back into improved efficiency and productivity.