productivity and efficiency

lindas1967

can any one tell me how do you explain the difference or where can i get some information on these please
thank linda

SandyHood

Linda
I discuss performance with production managers and accountants in manufacturing businesses. We talk about output in terms of the labour hours used or the value of equipment used. We use the words productivity and efficiency as if they mean the same thing.
If a car plant can produce a car from 12 hours of labour time when it used to take 14 hours then productivity is up. The production manager is also using the labour time more efficiently.
A long time ago the exam that has now become financial performance had an examiner who used to test the difference between these two words: productivity and efficiency.
I didn't consider it was a difference worth looking at then and I still don't. But as happens if you are a tutor and you know what an examiner is looking for, I included it in my classes.
On those old exams I would tell candidates that the examiner wanted productivity to be measured in the physical output whereas efficiency should be measured in the value of output.
For example:
Productivity - Average hours needed per car produced or number of widgets produced per labour hour
Efficiency - Value of production per labour hour or value of production per £1 of labour cost used to produce it

The information you get is very similar in each case. The value of production per £1 of labour cost does build in the fact that different production methods need different grades of staff. But in a realistic working environment I have yet to meet anyone who sees the two words as meaning different things. That sort of thing seems to be more of an academic point.

I would be taken by surprise (and disappointment) if AAT exams were to test the difference between productivity and efficiency again.

lindas1967

Thank you this does help a lot