Productivity is the measure of production efficiency in business.
Productivity refers to the level of output in relation to a given
level of input. Productivity reflects the relationship between
input and output in the operations. Productivity can also be
called efficiency, which therefore refers to the relationship between
production input and output. Productivity is not a concept based
on amounts of money used:
productivity = production output/production input = output/input
production output means the total number of produced output
units. Production input means, for example, the man-hours used
The principle of productivity is to:
- achieve an output as large as possible for a certain amount of
- achieve a certain output with as little input as possible
- achieve the best possible output with the least possible input.
The most important production inputs in a restaurant business
are the raw materials, work force and capital invested in the form
of various assets, such as premises, machinery and other fixed
assets. Productivity can be calculated either as total productivity
for the whole business or as the partial productivity of various
production inputs, if the denominator is only one production
factor at a time. Thus it is possible to define:
- total productivity
- productivity of labour
- productivity in the use of raw materials
- productivity of invested capital.
If total productivity improves, the reason might be one or more of
- the production output has increased without an increase in the
- the level of refinement has risen or better quality products
have been produced
- less input has been used per product unit than previously.
In addition to the above mentioned classical production inputs,
the inputs can also consist of the following:
It is difficult to measure and present knowledge and entrepreneurship
numerically and therefore it is challenging to attempt a
calculation of key figures for these inputs. In business operations
in the restaurant industry, productivity most often means efficiency
in the use of the work force. From the point of view of productivity,
the aim is to achieve the maximum amount of revenue
(e.g. turnover) for the given input (e.g. man-hours).
Economy as an element of productivity
Economy as a goal in business operations refers to the amount of
economic input necessary for a certain amount of output. The aim
is, of course, that the output is achieved with as little financial
input as possible. Economy can be defined as the kind of productivity
in which the input and output are expressed in terms of
money. Thus, economy is in fact the same concept as productivity.
The principle of economy is identical to the principle of productivity