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Fact - Productivity Analysis Is Of Little Consequence In The Boardroom

Jan 29, 2008
It seems irresponsible. Shouldn't it be that companies are to be most concerned about their productivity levels? After all, productivity is supposed to be the basis for determining how a company or a whole country is doing economically, isn't it? Yes, it is, the trouble is that companies do not give as much weight in productivity analysis as they do with revenue reports. As long as revenue is where it needs to be, boards could care less of their productivity ratings. How so? This is because profit or revenue is often considered directly proportional to productivity and is also preferred because it gives a simple glimpse into the state that the company is in. Some companies may even find productivity analysis reports too cumbersome to look at and some of them even cut it out completely, leaving it only to the accounting department.

What is productivity analysis? Productivity Analysis is the process of determining the productivity of a certain organization. For some economists and businessmen productivity is as hard to define like the way 'Love' or 'Faith' is. There are so many levels to it, but one fact remains the same for all: Everyone longs for it.

In general, Productivity is the output for a certain period of time, plus a whole slew of other factors. Productivity can be measured either partially or as a whole. Companies aren't the only ones who measure their productivity, Governments also measure productivity, the measure theirs by way of GPAs and other analytical methods. The measurement of productivity is important so that companies and governments have an idea of how they are faring financially. An increase in productivity is a positive, while a decrease in it is considered negative.

Revenue reports on the other hand, are just that. They are reports of a company's total revenue for a period of time. This may be the final revenue, where all the necessary deductions are deducted and it can also be a general revenue report, where the total company revenue, void of subtractions is reported.

It may seem like productivity and revenue reports are the same, but they are not. With revenue reports, you don't see the actual productivity rate. The Total output of a company is not seen only the costs and profits. This is considered to be a quick look into the company's health, which is why companies tend to prefer hearing about revenue reports rather than productivity analysis.

The problem here is that revenue reports are a quick solutions and are not helpful enough when a company is looking at their losses or if they are looking to improve their revenue. If that is the case, then it will be the time that company board members scramble to look at productivity analysis to help them improve their output in general. Therefore, we can conclude that productivity reports are still very much important and that it should not be passed over in any circumstances. After all, studying the productivity rates is the reason why companies have grown over the years.
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