Relation Between Operations Management and Productivity


Operations management is a management approach that conducts the complete production cycle of a product or service. Different concepts of operation, technologies and procedures are put to use to transform inputs into finished goods or services. The performance and efficiency of a business depends on how successfully the operations are managed. The process through which a set of input gets transformed into final output is called production.

Productivity, on the other hand, refers to the rate of efficacy in which the production takes place. It is rather a concept of performance measurement that indicates the ratio of outputs in relation to the inputs given in the process of production. High productivity is required essentially for any business to flourish. It is the major area of focus of operations managers as they are responsible to maintain a positive balance of operating costs with revenue to maximize net operating profit. It is apparent that the efficiency of the operations management leads to productivity. The relationship between these concepts and factors that influence productivity in operations management is discussed here.

What is Operations Management?

Operations Management covers all the activities ranging from planning, organizing, administering and monitoring all the process and procedures that result in conversion of technology, workforce, and raw materials into finished goods and services.

  • Operations management team is responsible to accomplish maximum operating profit by controlling costs and revenue.

  • They collaborate and work jointly with other departments to increase profits and deliver good quality goods and win customer satisfaction.

  • It is an area with a wider scope depending on the size of business and industry concerned. Based on the requirement the operations managers might have a very broad range of responsibilities or may have separate managers assigned to focus each area of operations.

  • For large companies each of the operational functions including product design and development, planning and managing production units, purchasing, inventory, quality control and delivery would be assigned as a separate operational unit to manage. Dynamic market conditions prevailing lately have necessitated the critical importance of operations management in meeting market share and customer trends.

What is Productivity?

The rate of how efficiently the resources are converted into customer ready goods or services is called productivity. It is rather the performance measure of the efficiency of operations management of a business entity. Productivity measures or quantifies the rate of success of utilising resources towards output. It is basically the ratio of goods and services in relation to work and materials. Increased productivity leads to improved customer satisfaction.

Measuring Productivity

The equation below is used for calculating the total productivity of a company. It is the ratio of total output divided by total input.

ormalsize Normal\:Productivity=\frac{Total \:Output}{Total \:Input}}$$

Generally, the costs incurred such as cost of labour hours and raw materials used over a period of time is divided by the sales figures carried out over the same period of time.

Factors Influencing Productivity in Operations Management

There are a number of factors that influence productivity in operations management.

Business Objectives

It is the objective or vision of a business that lays the foundation of the work plan and processes in place. A well curated and realistic objective will pave way towards realization of business goals when efficiently executed. Participation and involvement in conjunction with adequate resources will lead to productivity.

An ideal business objective should be formulated based on the SMART principle (Specific, Measurable, Action oriented, Realistic and Time bound). It is equally important to make these objectives transparent. Employees would be made well aware of team goals. Working towards a common goal would keep employees motivated and engaged.


Leadership qualities of team leaders and management have a positive influence on productivity. The departmental heads, team leads and other managerial executives are much involved in developing business objectives and making decisions. The leadership traits and qualities of a team lead will reflect in the decisions made and managerial skills exercised. A leader who is trust worthy, honest and dedicated with balanced supervision and proper control can add to increased productivity of any process unit.


Adequate infrastructure support is vital to carry out any activity and a lack of proper infrastructure can hinder the level of productivity achieved. This includes equipment and machinery for production, proper allocation of human resources, support activities including technical and training support for smooth operations and allocation of sufficient budget for carrying out operating costs. Scarcity of any of these could result in a decrease in productivity as all these factors together contribute to and are directly linked with productivity.


Employee training and development should be a part of investment made. Continuous training and learning helps boost the capacity of employees and improve their efficiency. Well-trained workforce gives more output by providing quality output in lesser delivery time. Proper training enables employees to work independently with lesser wastage of resources and minimal errors. Training also supports weak performers as a remedial measure and foster performance improvement. It offers a platform where employees can strengthen their skills and guided towards productivity.


Adoption of technology in the operations of a company is highly inevitable for sustaining in today’s market. Advanced technologies change the way a business functions through automation and integration of technology enabled processes and techniques. It helps to deliver the best quality products in lesser time. Adoption of technology in business operations and upgrading as appropriate is imperative to stay ahead of the competitors.

Work Environment

Work ergonomics is another contributory factor for productivity. Comfortable and uncluttered spaces make the employees more at ease. It includes everything from furnishings to the proximity between workmates and handy placement of equipment. An airy space with sufficient natural light, added amenities like coffee and snacks, all influence productivity of the employees.

Remuneration and Incentives

One of the biggest motivating factors of any employee is the assurance that they are being paid fairly for their work. Competitive remuneration, incentives and other benefits including free healthcare and annual leave are some of the motivational ways by which employees feel valued and dedicated.

Government Policy

An external factor that influences the productivity of a business is the policies framed by the Government from time to time. Every business units are bound to adhere to changing rules and policies of Government. A sudden change in fiscal policy can lead to change in taxes.

Other regulations on trade, withdrawal of subsidies, change in interest rates and licencing norms are other policy changes that influence productivity. The policies taken on commercial transportation, communication and power rates also influence productivity.


In short, it can be observed that productivity is the essence of success and profitability of a business. It is vital to a company’s revenue and ability to thrive in the market. Efficiency in managing operations leads to a productive team that finally contributes to productivity. Quantifying, tracking and monitoring productivity helps to analyse the current performance of a business and can aid in forecasting and planning long term business objectives. Increased output at a faster rate with lower inputs is the ultimate goal of operations management leading to maximum productivity.

Updated on: 18-Apr-2023


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