Published on International Journal of Economics & Business
Publication Date: April, 2019
Alhaji Umar Lawal Aliyu
LIGS University Hawaii, USA
Journal Full Text PDF: Factors Responsible for Low Productivity in An Organization.
The thrust of the project is to examine Factors responsible for low productivity in an organization. Productivity is the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input. Whereas the term low productivity in an organisation refers to the inability of an organization to produce required installed capacity or required expected output of the organisation. Low productivity in the workplace refers to a condition where one or more workers complete tasks, processes, production or sales inefficiently. Low productivity has a number of negative impacts on a workplace, including economic effects on profitability and systemic implications for worker morale. Production both in private and public organizations is simply the interrelationship between input and output. Productivity is generally measured by the ratio of output to input. An increase in the ratio indicates an increase in productivity. Conversely, a decrease in the output/input ratio indicates a decline in productivity. Low productivity in an organisation can be as a result of many factors ranging from Inadequate technologies, Inappropriate behaviour, Inconsistency, Lack of acknowledgement, Lack of delegation, Lack of training and development, Limitation of real out-put, Mismanagement, Poor communication, Poor supervision etc. The thesis shall take into account what is low productivity, what are the factors influencing low productivity in an organisation and foster recommendations that will result to increase in productivity, growth and development in the organisation.
Keywords: Development, Employee, Employer, Growth, Low Productivity, Management, Organisation, Performance, Productivity.
An organization or organisation is an entity comprising multiple people, such as an institution or an association that has a particular purpose. According to Bates and Parkinson, “Production is the organised activity of transforming resources into finished products in the form of goods and services; the objective of production is to satisfy the demand for such transformed resources”. Low levels of productivity at an organisation can affect employee morale, hinder efficiency, and affect profit margins. Thus, problems arise when productivity dwindles across an organisation because it will result to Lack of productivity that can boomerang and cause decrease in output, performance, and profit, and can also affect morale and cause the work environment to become toxic. The efficiency with which output is produced by a given set of inputs. Productivity is generally measured by the ratio of output to input. An increase in the ratio indicates an increase in productivity. Conversely, a decrease in the output/input ratio indicates a decline in productivity. “Sampson Quain”.
Low productivity for a business is not only a personnel problem; it also has financial consequences. The effects of low productivity can quickly damage a company’s revenues and make it harder to pay bills and sustain growth. Identifying the cause of low productivity requires a thorough investigation of production methods and employee morale levels. “Jonathan Lister”. Low levels of productivity at your workplace can affect employee morale, hinder efficiency, and affect profit margins. Unfortunately, low levels of productivity are often the result of a number of internal issues that have boiled over and require your immediate attention.
The smallest of things you can ever think of can cause low productivity in an organisation and these things can hinder with the growth and development of an organisation by causing decrease in output, performance, and profit, and affect morale and cause the work environment to become toxic.
2. LITERATURE REVIEW
2.1 Concept Of Production
The objective of every organisation all over the world irrespective of their different economic policies is the desire to achieve her set goals and objectives; it is in this regard that productivity plays a significant role in how an organization strives to achieve this desire objective goals. According to J. R. Hicks, “Production is any activity directed to the satisfaction of other peoples’ wants through exchange”. This definition makes it clear that, in economics, we do not treat the mere making of things as production. What is made must be designed to satisfy wants. Productivity describes various measures of the efficiency of production. A productivity measure is expressed as the ratio of output to inputs used in a production process, i.e. output per unit of input. Productivity is a crucial factor in production performance of firms and nations.
Productivity is the measure of the efficiency of a person, machine, factory and system in converting inputs into the desired outputs. Productivity is an important parameter in the production performance of a workplace, the growth in productivity of an organization helps in boosting the profitability of that organization. It will be good to understand that there are various things or components involved in the productivity of an organisation, which includes human resources (labour), machinery, and the working condition of the workplace. In addition, productivity is the process by which resources are optimized in order to achieve the desired outcomes of the project.
Production takes into consideration the quantity but productivity measures, the efficiency or the rate of production. However, the fact that you are producing in a workplace does not mean the organization is productive. Productivity lays more emphasis on the output of goods and service in relation to the input, which are labour, equipment, and capital. On the other way round every organization is tasked with the responsibility of maintaining the appropriate levels of productivity in order to achieve the objectives goals. Therefore, loss of productivity will result in the reduction of production and have a bad economic impact on the organization.
Moreover, the creating, making or doing of things, which are not wanted or are made just for the fun of it, does not qualify as production. On the other hand, all jobs which do aim at satisfying wants such as hair-dressers, solicitors, bus drivers, postmen, and clerks are as much a part of the process of satisfying wants as are farmers, miners, factory workers and bakers and are all part of production.
2.2 Types Of Production
Production is simply the process of converting raw materials or other inputs such as ideas into finished goods or services. In fact, it is the process of creating utility. All goods and services produced must be able to give value to the consumers.
However, there are three (3) types of production Primary Production, Secondary Production and Tertiary Production.
a. Primary Production: Primary production is carried out by ‘extractive’ industries like agriculture, forestry, fishing, mining and oil extraction. These industries are engaged in such activities as extracting the gifts of Nature from the earth’s surface, from beneath the earth’s surface and from the oceans i.e. above, on or below the earth surface. Thus, this industry is the origin of production and without these, production would not take place. Primary production refers to the extraction of basic raw materials from their natural location as provided by nature.
b. Secondary Production: These industries take raw materials obtained by the extracted industries and change them into products such as fishing goods, office supplies etc. This includes production in manufacturing industry, viz., turning out semi-finished and finished goods from raw materials and intermediate goods. Example, conversion of flour into bread or iron ore into finished steel. In fact, Secondary production involves the transformation or conversion of raw materials or semi-finished goods into final forms that are acceptable to the consumers. Examples are houses, cars, food, etc. They are generally described as manufacturing and construction industries, such as the manufacture of cars, furnishing, clothing and chemicals, as also engineering and building.
c. Tertiary Production: Finished products must be transported, stored insured adverted and sold by traders. This is what makes up the Tertiary Production. Industries in the tertiary sector produce all those services, which enable the finished goods to be put in the hands of consumers. In fact, these services are supplied to the firms in all types of industry and directly to consumers. Examples cover distributive traders, banking, insurance, transport and communications. Government services, such as law, administration, education, health and defence, are also included. In fact, this ensures goods produced at the primary and secondary levels are distributed to the final consumers. This also includes all kinds of service industries such as transportation, communication and tourism.
2.3 Factors Of Production
Production of a commodity or service requires the use of certain resources or factors of production. Factors of production are an economic term that describes the inputs used in the production of goods or services in order to make an economic profit. Factors of production are the resources people use to produce goods and services; they are the building blocks of the economy. The factors of production include land, labour, capital and entrepreneurship.
Fig 1. The Factors of Production Into Four Categories
Each factor gets a reward based on its contribution to the production process, as shown in the table. It is good to note that factors of production are the resources people use to produce goods and services; they are the building blocks of the economy. Economists divide the factors of production into four categories: land, labour, capital, and entrepreneurship.
Fig 2. The Factors of Production
a. Land: Land is the first factor of production and in economics; the term land is used in a broad sense to refer to all natural resources or gifts of nature, which includes any natural resource used to produce goods and services. This includes not just land, but anything that comes from the land. Land is a gift of nature and it comprises of what in on top of the land, below the land and above the land surface. Some common land or natural resources are water, oil, copper, natural gas, coal, and forests. Land resources are the raw materials in the production process. These resources can be renewable, such as forests, or non-renewable such as oil or natural gas. The income that resource owners earn in return for land resources is called rent. Characteristics of land are it is fix, it has alternative uses, it is a gift of nature with no cost of production, it is not homogeneous and it is not geographically mobile.
b. Labour: The second factor of production is labour and like land, labour also is a primary factor of production. Labour is the effort that people contribute to the production of goods and services. Labour provides a human service, which can be either physical or mental, which is directed to the production of goods and services. Labour resources include the work done by the waiter, teacher, barber, pilot etc. If you have ever been paid for a job, you have contributed it is referred to as labour and the income earned by labour resources is called wages and is the largest source of income for most people.
c. Capital: The third factor of production is capital and it is amount of money or assets used to start a business. Think of capital as the machinery, tools and buildings humans use to produce goods and services. Some common examples of capital include hammers, forklifts, conveyer belts, computers, and delivery vans. The income earned by owners of capital resources is interest.
d. Entrepreneurship/ Enterprise (Organisation): The fourth factor of production is entrepreneurship. An entrepreneur is a person who combines the other factors of production – land, labour, and capital – to earn a profit. In fact, organisation, as a factor of production, refers to the task of bringing land, labour and capital together. It involves the establishment of co-ordination and co-operation among these factors. Entrepreneurs thrive in economies where they have the freedom to start businesses and buy resources freely. The payment to entrepreneurship is profit. The entrepreneur is the person who takes the charge of supervising the organisation of production and of framing the necessary policy. The entrepreneur performs the following useful functions decision making, management control, division of income, risk-taking and uncertainty bearing, innovation etc.
2.4 Importance Of Production
Productivity is a measure of the efficiency of production. It is a ratio of actual output (production) to what is required to produce it (inputs). For businesses, productivity growth is important because providing more goods and services to consumers translates to higher profits. Production is important for the following reasons:
a. Production helps to improve our standard of living
b. Provision of employment opportunity
c. Production makes goods and services available
d. Production helps to increase export potentials
e. Production increases the wealth of the people
f. Production helps people to acquire special skills
g. Production can lead to specialization
2.5 Causes Of Low Production
Production (economics) Production is a process of combining various material inputs and immaterial inputs (plans, expertise) in order to make something for consumption (the output). It is the act of creating an output, a good or service, which has value and contributes to the utility of individuals. Low productivity has a number of negative impacts on a workplace ranging from Low profitability, Downsizing and Low Morale, Low productivity and low motivation, Suffocating Benchmarks and Standards etc. Concisely, Low productivity has a number of negative impacts on a workplace, including economic effects on profitability and systemic implications for worker morale. Below are some causes of low productivity in an organisation:
a. Inadequate technologies
b. Inappropriate behaviour
d. Lack of acknowledgement
e. Lack of big-picture view
f. Lack of delegation
g. Lack of involvement of employees in decision-making
h. Poor communication
i. Poor supervision
j. Lack of employee training
k. Ineffective Management and Supervision
l. Ineffective Organizational Structure
m. Out-dated Systems
n. Employee dissatisfaction
If such issues are happening in your company, then it is time to bring it up to the management, revise, and improvise current strategies in order to create a better work environment to support the employees.
3. RESEARCH METHODOLOGY
3.1 Research Design
This research work is specifically designed to study what is production and factors responsible for low productivity in an organization. The research design is meant to guide the researcher in the use of the best method of collecting data in the course of the study. The research design used in this study is the simple survey approach. The researcher is interested in observing what is happening by using secondary data in order to ascertain what is production and factors responsible for low productivity in an organization.
3.2 Population Of The Study
The population of the study defines the limit to which the research findings are acceptable. The population comprises of only what is production and factors responsible for low productivity in an organization. It will however be good to note that the secondary data collated was carefully analysed. This was all in view to ascertain a viable result and avoid fallacious conclusion.
4. CONCLUSION AND RECOMMENDATION
Production is simply the process of converting raw materials or other inputs such as ideas into finished goods or services. In fact, it is the process of creating utility. All goods and services produced must be able to give value to the consumers. Thus, the four factors of production – land, labour, capital, and entrepreneurship – are scarce resources that form the building blocks of the economy. Low productivity in the workplace refers to a condition where one or more workers complete tasks, processes, production or sales inefficiently. Low productivity has a number of negative impacts on a workplace, including economic effects on profitability and systemic implications for worker morale.
The thesis has analysed what is production, types of production, factors of production, importance of production and factors responsible for low productivity in an organization. The research work have finalised that low productivity in an organisation can lead to decline and eventual failure or collapse of an organisation. Low levels of productivity in an organisation can affect employee morale, hinder efficiency, and affect profit margins. Unfortunately, low levels of productivity are often the result of a number of internal issues that have boiled over and result in most failures of organisations in recent times.
However, the researcher has been able to identify some of the factors that can Improve Productivity in an organisation. The researcher hereby makes the following recommendations. Below are ways to Improve Productivity at the Workplace:
a. Break the routine.
b. Effective Organizational Structure
c. Face out-dated Systems and introduce modern system
d. Good and occasional supervision of all factors of production
e. Instil accountability in your employees
f. Involve employees in decision-making
g. Manage but do not micro-manage
h. Motivate and reward for good results
i. Provide employee training and development
j. Provide the proper equipment
k. Provide upgrading opportunities
l. Provision of good means and ways of communication
m. Try to give employees feeling of satisfaction
Finally, this research is recommended for further study because it deals with production, which is not static but dynamic and capable of being influenced to change with passage of time.
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