ECS2604 Assignment 02/2021

Question 1: Why is productivity improvement important? Productivity is used to consider the extent to which certain outputs can be extracted from a given input. Productivity measures provide a means to managers to ascertain, plan control and improve efficiency at different levels of organization. Productivity measures are also essential for motivating employees through payment of incentive for high productivity. Reasons why productivity improvement is important and the impact that it has: 1. Increasing Profitability Companies experience an increase in profitability when it becomes less expensive to produce their goods and services. When workers become more efficient, less labour is required to produce the same amount of goods. The company could choose to reduce the number of employees to produce the same output, but if it chooses to maintain the same amount of labour, it will benefit from an increase in output. 2. Lowering Operational Costs Companies can reduce operational costs through a number of initiatives. If individual workers improve their personal workflow, they will either produce more in less time or reduce the amount of hours they need to work to achieve the same output. Operational costs can often be reduced through an investment in technology, and over time improved processes can lead to a reduction in labour costs. The introduction of flexitime and three day weeks can see productivity increase when people feel more valued and engaged and suffer less from stress as a result of less commuting. Often people can achieve the same amount of work in three flexi days as they might previously have done in a week.