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Chapter 18 Employee Productivity Overview Productivity and Human Behavior Designing Workers’ Jobs Empowering Workers Work Methods Analysis Work Measurement Learning Curves Employees’ Health and Safety Wrap-Up: What World-Class Companies Do Productivity Productivity means the amount of products or services produced with the resources used Productivity = Quantity of products or services produced Amount of resources used Productivity varies with the amount of production relative to the amount of resources used. Ways to Increase Productivity Increase output using the same or a lesser amount of resource. Reduce amount of resource used while keeping output constant or increasing it. Use more resource as long as output increases at a greater rate. Decrease output as long as resource use decreases at a greater rate. Impact of Price/Cost Change on Productivity When the cost of a resource increases and profit is to remain the same, some combination of the following must occur: output is increased resource usage is decreased price of output is increased Why do We Care About Productivity? Without productivity improvement, businesses do not survive in a global economy. Higher productivity means higher standard of living. The US has traditionally been the leader in productivity gains but other countries are closing the gap. Single Factor Approach toMeasuring Productivity Capital - Number of products produced divided by asset value Materials - Number of products produced divided by dollars spent on materials Direct Labor - Number of products produced divided by direct labor-hours Overhead - Number of products produced divided by dollars spent on overhead Single Factor Approach toMeasuring Productivity Note that the productivity of a particular resource can be increased simply by replacing some of this resource with a different type of resource. For example: If automation is substituted for direct labor and output vol