Productivity Based Management, Softcover reprint of the original 1st ed. 1984 Studies in Productivity Analysis Series, Vol. 5

Realization of productivity gains is a necessary condition for long-term consistent improvement in economic well being. We have to work smarter and produce more efficiently to attain an ever higher quantity and quality of goods and services without sacrificing leisure. This is true for the economy at large as well as for individual firms. In a competitive environment, businesses must continuously improve the productivity of their operations in order to sustain and augment profitability and growth. This basic requirement may be temporarily obscured by unexpected external developments or financial manipulations, but it is nevertheless essential to the long-term health of any economic enterprise. Increasing awareness of the importance of productivity has recently motivated renewed interest in the development and refinement of productivity-based management techniques. The purpose of this book is to review and evaluate some of the new contributions in this area. The analysis of productivity-based management in this book encompasses planning, decision making and control methods which explicitly incorporate techniques designed to measure, monitor, induce and improve underlying productivity performance in production, financial planning, marketing and international operations. These productivity-based methods can easily accommodate built-in efficiency incentives designed to motivate people vii viii PRODUCTIVITY BASED MANAGEMENT working in decentralized organizations toward goal congruent behavior. It is argued throughout the book that productivity-based management, at its best, is likely to improve significantly the efficiency and effectiveness of economic enterprises.

1 The Productivity Concept: Definition, Measurement and Managerial Importance.- Aggregation Problems.- Total Factor Productivity.- Unbiased and Unique Discrete Approximations to TFP Indexes.- Value Added Versus Gross Output.- The Concept and Measurement of Capital.- Productivity Measures and Financial Statements.- Objectives and Uses of Productivity Indexes.- 2 Productivity Indexes, Production Functions, Cost Functions and Technical Change.- TFP Indexes, Cost Functions and Technical Change.- Specific Functional Forms and TFP Indexes.- Some Empirical Macro—Economic Observations.- Empirical Study of Major U.S. Industrial Groups.- Selected Empirical Observations on the Company Level.- 3 Efficiency and Effectiveness.- The Relationships Between Technical Efficiency and Effectiveness.- Conflicts Between Productivity and Effectiveness.- The Measurement of Effectiveness.- Identification of Feasible and Admissible Sets.- The Importance of Joint Efficiency and Effectiveness Based Management.- Notes.- 4 Use of Productivity Accounting in Financial Analysis.- Quantitative Standards as Productivity Targets.- Productivity-Based Flexible Budgeting.- Efficiency Variances as Indicators of Productivity Performance.- Interdependence among Variances and Evaluation of Productivity Performance55.- The Role of Indirect Inputs and Capital in Productivity Accounting.- Determination of Efficient and Effective Quantitative Standards under Uncertainty.- 5 TFP-Based Financial Analysis.- TFP-Based Financial Analysis and Flexible Budgeting.- A Case Study of TFP-Based Financial Analysis (Eldor and Sudit (1981)).- Distribution of Productivity Gains.- Productivity Based Budget Audits 72 Selective Sequential Budgetary Audit Based on Total Factor Productivity Indicators (Ishikawa and Sudit (1981)).- Notes77.- 6 Efficiency Measures in Marketing.- Marketing Objectives and Total Marketing Output.- Measuring Efficiency in Expansive Marketing.- Measuring Efficiency in Retentive Marketing.- Efficiency Measures for Marketing Financial Services: A Case Study (Jagpal and Sudit (1978)).- Selection of an Efficient Mix of Marketing Instruments.- Notes.- 7 Productivity Based Management of International Operations.- International Differences in Productivity Growth.- The Role of Relative Productivities in Export Decisions.- Oligopolistic Markets and Politization.- Productivity Based Diversification of International Investments.- The Effects of Flexible Exchange Rates.- Productivity Accounting Requirements and Their Use in Export Decisions.- Conclusions.- Notes.- 8 Productivity Based Management in the Public Sector and in Regulated Industries.- The Valuation Problem.- Subjective Valuation.- Objective Valuation and Relative Efficiency.- Data Envelopment Analysis.- Relative Efficiency Analysis in Education: A Case Study.- (Charnes and Cooper (1980)).- The Role of Productivity in Rate of Return Regulation.- Productivity Based Rate Adjustment Clauses.- Productivity Incentives.- Built-in Cost Efficiency Incentives.- Built-in Rate of Return Incentives.- Pricing Efficiency 141 A Retrospective Illustration of the Effects of Productivity Based Regulation.- Productivity Based Pricing in the Public Sector.- Notes.- References.- Name Index.