Importance of Productivity in Modern Organizations

The importance of productivity in a company cannot be overstated. Productivity is one of the ideal measures defining any organization’s growth and development. It is simply the measure of the efficacy of production. Production is expressed as the ratio of outputs to inputs in the total production processes. Adriaenssen et al. (2016) and Green (2016) define productivity as the assessment of an employee’s performance in the workplace. When analyzing the enterprise’s growth and development, organizations view productivity as a key aspect of their performance. The major productivity measures for any organization include capital, material, labor, and total factor productivities (Adriaenssen et al., 2016; Green, 2016). Studying productivity requires viewing it from the employee, consumer, or organization’s lenses. Any successfully productive organization must address the needs of the employees, the customers, and the business. Therefore, productivity is a principal factor in determining the direction of any business. Therefore, it is important to narrow down to understanding the importance of productivity for managers in most modern organizations.

Basic importance of Productivity is to Meet Organizational Goals

The primary importance of productivity to any organization is to attain, if not exceed, the goal set within a specific period. Productive employees are more engaged and have a full commitment to achieving the goal of any business or organization. The level of engagement within an organization is linked to the leadership, the amount and level of autonomy of individuals, and the degree to which they control the workload. Organized employees always lead to better performance, are always committed, and are more engaged in the organization’s development. Productivity also leads to the total optimization of resources, lowering operational costs, and a general increase in profitability.

Cost Reduction as a Basis of Productivity

Organizations will always seek to reduce the cost of inputs compared to the resulting outputs using the same amount of resources and labor. Achieving optimization of resources will require improving the workflow systems and identifying situations where the potential of most employees is underutilized (Bottazzi et al., 2008). The approach makes it easy to reprogram and replan the workflow and systems within the organization to increase their effectiveness. Productivity leads to an organization that improves the individual workflow, reducing the time spent on producing goods and services. Technology has been one of the most common means of minimizing operational costs. Today, most organizations are introducing flextime and the three-day week, which will likely increase employee productivity as they feel more valued and engaged. All these activities will result in one thing- increased profitability.

Another Importance of Productivity is attainment of Efficiency

A manager of any organization maintains an interest in the competitiveness and effectiveness of their organization, leading to continued prosperity and economic growth of their entities and country. All the systems and tools in place within any organization increase the organization’s competitiveness in the marketplace. Organizations that perform tasks faster and more efficiently without compromising the quality of products are likely to give their business an edge (Bottazzi et al., 2008). The result of such systems is that the business produces more with reduced operational costs. The businesses can then sell their products and services at a lower price than their competitors can, which is likely to be a value-added to their consumers hence increasing the command of the market. Efficient productivity also reduces wastefulness and negative environmental impact. An organization with better performance systems has fewer negative impacts on the environment (Palaniswamy, 2021; Shetty & Prakash Rao, 2019). An environmental-friendly organization will have increased productivity levels amongst its employees, creating a happier and healthier working environment that will boost the workers’ morale. As mentioned, the goal is to increase the organization and country’s prosperity and economic growth, which is productivity’s primary focus. Any business, notwithstanding its size, always has a key contribution to the economic growth and the general improvement in the living standards of a place. A more productive and effective organization/business contributes significantly to the economy, which is good for the growth of a country or a region.

Results in Better Pay

A productive workplace means the employees get better pay, and the management makes more money. An organization that can satisfy the needs of the employees is likely to experience higher growth and lower employee turnover (Adriaenssen et al., 2016; Green, 2016). Such a situation allows the organization to keep growing and expanding to other markets while incorporating newer and better business ideas. The managers must continue encouraging efficiency and ensuring optimal workplace conditions that will encourage the employees to continue working better. The managers also need to continue conducting developmental workshops to sharpen the employees’ prowess, increasing their productivity. Both the organization/business and the employee will benefit.


Productivity is an essential aspect of the growth and development of any organization. A highly productive work environment results in efficiency, increased performance, the general command of profits, and marketplace value. There are diverse ways managers can work on ensuring they encourage their employees to be more productive. A highly productive organization will reduce operational costs, increase the marketplace value, boost the employees’ morale, and increase income in general. Therefore, managers must find means of improving the rates and levels of productivity amongst the employees to benefit all the parties.


Adriaenssen, D. J., Johannessen, D. A., & Johannessen, J. A. (2016). Knowledge management and performance: Developing a theoretical approach to knowledge workers’ productivity, and practical tools for managers. In Problems and Perspectives in Management (Vol. 14, Issue 3).

Bottazzi, G., Secchi, A., & Tamagni, F. (2008). Productivity, profitability and financial performance. Industrial and Corporate Change, 17(4).

Green, P. (2016). The perceived influence on organizational productivity: A perspective of a public entity. In Problems and Perspectives in Management (Vol. 14, Issue 2).

Palaniswamy, R. (2021). Productivity improvement by reducing waiting time and over-production using lean manufacturing technique. Journal of Textile and Apparel, Technology and Management, 12(1).

Shetty, P., & Prakash Rao, B. (2019). Importance of lean concepts and its need in construction projects. International Journal of Recent Technology and Engineering, 8(2).


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