A Guide to Productivity Measurement - Spring

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Labour Labour refers to all categories of employees in an organisation. It includes working directors, proprietors, partners, unpaid family workers and part-time workers. Labour can be measured in three ways: Number of hours worked This measure reflects the actual amount of input used. It excludes hours paid but not worked (e.g. holidays, paid leave). Number of workers engaged This measure is more commonly used, as data on hours worked may not be readily available. Part-timers are converted into their full-time equivalent. An average figure for a period is used, as the number of workers may fluctuate over time. Cost of labour Labour costs include salaries, bonuses, allowances and benefits paid to employees. Capital Capital refers to physical assets such as machinery and equipment, land and buildings, and inventories that are used by the organisation in the production of goods or provision of services. Capital can be measured in physical quantity (e.g. number of machine hours) or in financial value, net of depreciation to account for the reduced efficiency of older assets. Intermediate Input Major categories of intermediate input include materials, energy and business services. Such input can be measured in physical units (e.g. kilogrammes, kilowatt per hour) or financial units (e.g. cost of energy and materials purchased). Productivity Indicators Productivity indicators measure the effectiveness and efficiency of a given input in the generation of output. Labour productivity and capital productivity are examples of productivity indicators. Labour Productivity Labour productivity, defined as value added per worker, is the most common measure of productivity. It reflects the effectiveness and efficiency of labour in the production and sale of the output. Capital Productivity Capital productivity measures the effectiveness and efficiency of capital in the generation of output. It is defined as value added per dollar of capital. Capital productivity results from improvements in the machinery and equipment used, as well as the skills of the labour using the capital, processes, etc. 6 SPRING Singapore
4 WHAT IS VALUE ADDED? Value added is commonly used as a measure of output. It represents the wealth created through the organisation’s production process or provision of services. Value added measures the difference between sales and the cost of materials and services incurred to generate the sales. The resulting wealth is generated by the combined efforts of those who work in the organisation (employees) and those who provide the capital (employers and investors). Value added is thus distributed as wages to employees, depreciation for reinvestment in machinery and equipment, interest to lenders of money, dividends to investors and profits to the organisation. Goods and services from external suppliers Wages to employees Interest to lenders of money Value added creation process Depreciation for reinvestment in machinery and equipment Sales to customer Dividends to investors Profits retained by organisation A Guide to Productivity Measurement 7
Page 1 and 2: A Guide to Productivity Measurement
Page 3 and 4: CONTENTS 1. INTRODUCTION 2. WHY MEA
Page 5 and 6: 1 INTRODUCTION Integrated Managemen
Page 7: 3 HOW TO MEASURE Productivity is th
Page 11 and 12: Value added = Sales - Cost of purch
Page 13 and 14: Value Added Statement Figure 4.2 sh
Page 15 and 16: 5 AN INTEGRATED APPROACH TO PRODUCT
Page 17 and 18: 5 An Integrated Approach To Product
Page 19 and 20: Reliability of data Data should be
Page 21 and 22: 6WHAT DO YOU DO WITH Conclusion PRO
Page 23 and 24: Use of Productivity Measures to Gui
Page 25 and 26: ANNEX Common Productivity Indicator
Page 27 and 28: Table 1 : 10 Key Management Indicat
Page 29 and 30: Table 2: Common Indicators for the
Page 32: SPRING Singapore Solaris, 1 Fusiono

A Guide to Productivity Measurement - Spring

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