‘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