Getting back to basics: productivity revisited

The measurement of productivity has been a contentious issue in many organizations. Many different ways of measuring productivity are available for use by managers. This paper provides a look at the fundamental principles underlying the measurement of productivity, by analyzing a fictitious case, which is well known within the literature. This paper demonstrates that productivity measurements may often be applied inconsistently with devastating results when system principles are ignored, resulting in local optimization rather than system or organizational optimization.