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What is Productivity? Definition Meaning

Definition of Productivity

The definition of productivity according to management expert Peter Drucker.

“Productivity means the balance between all factors of production that will give the greatest output for the smallest effort.”

Productivity is expressed or measured as a mathematical division of two important parameters (functions) viz., output and input.

The concept of productivity is depicted in the following illustration.

what is productivity definition meaning

Image credits © Prof. Mudit Katyani.

Meaning of Productivity

Productivity is a relationship between output and input. It is expressed or measured as a ratio of output and input. In other words, it equals output divided by input.

Some examples of productivity measurement are as follows:

  1. Productivity of a manufacturing unit can be measured in terms of the number of goods produced in some fixed amount of time (usually in hours).
  2. Generally, productivity of a service industry is measured in terms of income generated by an employee within an organization.

Nowadays, organizations give more importance to productivity and less importance to efficiency.

The three main indicators of higher productivity are as follows:

  1. Best utilization of the available human and material resources.
  2. Minimum wastage and losses of materials.
  3. Quantitative and qualitative production of goods at lower cost.


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