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Understanding Productivity in Economics

Productivity measures how efficiently inputs like labor, capital and materials are converted into outputs. It grows when more outputs are produced relative to inputs used. Productivity reflects efficiency and can be quantified but does not consider the value of outputs or account for factors varying by sector, company or role like customer satisfaction, employee engagement or performance against goals. High employee engagement teams are 21% more productive while the most productive teams focus on multiplying individual strengths rather than having individuals do more.

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51 views1 page

Understanding Productivity in Economics

Productivity measures how efficiently inputs like labor, capital and materials are converted into outputs. It grows when more outputs are produced relative to inputs used. Productivity reflects efficiency and can be quantified but does not consider the value of outputs or account for factors varying by sector, company or role like customer satisfaction, employee engagement or performance against goals. High employee engagement teams are 21% more productive while the most productive teams focus on multiplying individual strengths rather than having individuals do more.

Uploaded by

monk0062006
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

To economists, productivity is the efficiency with which firms, organisations, industry,

and the economy as a whole, convert inputs (labour, capital, and raw materials) into
output. Productivity grows when output grows faster than inputs, which makes the
existing inputs more productively efficient. Productivity does not reflect how much we
value the outputs — it only measures how efficiently we use our resources to produce
them.
Objective concept, It can also be measured in quantitative terms, Productivity is often
confused with efficiency

account a range of factors that will vary depending on the sector, company, or
employee role. Here are a few examples

Customer Satisfaction:

Employee Engagement: According to research conducted by Gallup, teams with high


employee engagement are 21 percent more productive than teams with lower
engagement rates.
Performance Against Goals

Innovative productivity improvements will not be accurately reflected by this kind of


measure and teams will not look for innovative ways given they are measured on
something different. Best Code: The team is more productive with him doing this than
with him writing lots of code himself. He multiplies his strength rather than linearly
growing the team’s productivity by doing more himself.

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