Labour Productivity

Question 1

What is labour productivity?

Answer 1

• concerned with the amount of output that is obtained from each employee

Question 2

Why is labour productivity important?

Answer 2

• another way of seeing how efficient a business is
• labour costs are a significant part of total costs, more productive = lower unit costs (same no. of workers do same amount)
• in order to remain competitive, a business needs to keep unit costs down

Question 3

What is the calculation for labour productivity?

Answer 3

Output per period (units) / no. of employees at work

x 100

Question 4

How can labour productivity be improved?

Answer 4

• measure performance and set targets
• streamline production process
• invest in capital
• train employees
• reducing waste via lean production

Question 5

What is lean production?

Answer 5

• an approach to management that focuses on cutting out waste and ensuring quality
  -includes:
  Doing the right thing
  Doing things better
  Involving employees in the continuous process of improvement

Question 6

Why cut out waste?

Answer 6

• waste = unnecessary cost

Question 7

What are some examples of waste in business?

Answer 7

• over production, making more than is needed
• waiting time, equipment and people being idle and not producing
• transport, moving resources around necessarily
• stocks, often held as an acceptable buffer, but not excessive