Return to Productivity

‘New’ productivity

  • ‘Old’ productivity was measured using the single ratio of output volumes divided by direct labour inputs – both were the main output and input factors in manufacturing when it was the dominant sector in any G8 economy

  • No longer, however

  • Service sectors now dominate economies – quality and service level outcomes have become as important as unit prices and output volumes, and direct labour inputs have fallen dramatically

  • A new way of measuring overall performance is needed for the 21st century

  • And a single measure will no longer suffice – a set of measures is needed to provide the big picture of any organisation’s performance level

  • This set is made up of at most 10 cardinal measures per manager, whatever his level – it covers the most important outcomes, outputs and inputs employed by any manager and his team viz:

    • Financial outcomes – Revenue, Costs, Profitability

    • Customer outcomes – Price, Quality, Service levels

    • Physical inputs – Productivity and waste levels 

    • Mental inputs – Employee motivation and corporate knowledge levels

  • When the same set of cardinal measures is used by all managers at all levels, this provides them with a common language for understandable communications both up and down, and side to side

  • Each cardinal measure in the set is defined in the following pages

 

 

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