One of the most important aspects of any organization is its productivity. That can be defined by the relationship between its inputs and its outputs. If a company is able to produce more widgets with less inputs (raw materials, labor, capital) than it would be considered more productive. Generally competition forces the organization to be more productive with the reward being more profit. Unfortunately the lack of competition does not force productivity which is why productivity is generally poor in government, health care, and public education.
The best way to improve productivity is to measure it and then track it. In a retail store an owner might track salaries verses sales by striking a ratio of salaries divided by sales to get a percentage. Then follow that percentage over a few quarters or years and the owner will know if productivity is increasing or decreasing. Each and every organization needs to watch productivity or it will decrease costing the firm profits or increasing costs. Business owners understand this, but government, health care, and education haven’t figured it out yet which is why the costs of those sectors of our economy are increasing several times the rate of inflation.
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