Productivity and Efficiency of Manpower

Productivity is here defined as some measure of the output per man while efficiency is regarded as the best possible utilisation of resources under given circumstances. Productivity may be difficult to measure and sometimes hard to explain so that the link between productivity and efficiency, which depends in part on the reasons for productivity differences, is weak. No satisfactory means has, however, been found of measuring efficiency. First the question arises as to efficiency for whom to what? An efficient utilisation of resources on a project for a client may mean that which produces the building at the lowest cost in the time required. The contractor will, however, also have to consider the opportunity cost of using, say, his site agent or plant on that site rather than another and it may well have been an inefficient operation so far as his firm is concerned. Moreover, while high output per man may be efficient, yet, if it implies large overtime payments, it may not be the cheapest way to produce. From a national point of view the situation is even more complicated. Although high output per man on the site may be cheapest for the contractor, for the nation as a whole if there is substantial unemployment it could be cheaper in money terms to use more men and pay less unemployment and social security benefits. In social terms, the diminution of unemployment and job satisfaction may be overridingly important. In general, high productivity is desirable, but not at the expense of everything else.