Improving Organisational efficiencies using Total Factor Productivity

IPC Team / Posted On: 23 September 2020 / Updated On: 25 March 2022 / Education / 12

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Improving Organisational efficiencies using Total Factor Productivity

The Challenge

In this post, we present the results from a research study on using productivity measurement models to determine the sustainability of profits at a local company in Zimbabwe. Given the tough economic environment that Zimbabwean companies are operating in, this particular company felt that it was crucial for them to know if their financial position was sound and stable. The company's revenue was going down and they wanted to cut down on the cost of resources in general. To be in a position to answer this question, a productivity measurement study was carried out using a profit linked productivity measurement model. Productivity measures the amount of products and services that are produced per each unit of resources or input.

 

Productivity is better measured as a change between two periods (i.e. improvement or deterioration), rather than as an absolute figure. Generally an improvement in the labour productivity of a company is simply the increase in the output (such as, number of products or amount of services provided) produced as a result of the efforts of the employees of a company. This may be due to employees working harder or the employees working smarter as a result of training, good working environment, better or attitudes, among other things.



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