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Concept Version 8
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Incentives for Efficiency and Productivity

Efficiency is the extent to which effort is used for a task and productivity is the measure of the efficiency of production.

Learning Objective

  • Summarize the Efficiency Movement and the institutions it, in part, bequeathed


Key Points

    • The Efficiency Movement played a central role in the Progressive Era (1890-1932) in the United States.
    • The result was strong support for building research universities and schools of business and engineering, municipal research agencies, as well as reform of hospitals and medical schools and the practice of farming.
    • At the national level, productivity growth raises living standards because more real income improves people's ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social environment programs.

Terms

  • operationalization

    The act or process of operationalizing.

  • manifold

    Exhibited at diverse times or in various ways.


Full Text

Efficiency describes the extent to which time or effort is well used for the intended task or purpose for relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense or unnecessary effort.

The Efficiency Movement was a major movement in the United States, Britain and other industrial nations in the early 20th century that sought to identify and eliminate waste in all areas of the economy and society and to develop and implement best practices. The concept covered mechanical, economic, social and personal improvement. The quest for efficiency promised effective, dynamic management rewarded by growth.

The movement played a central role in the Progressive Era in the US, where it flourished 1890-1932. Adherents argued that all aspects of the economy, society and government were riddled with waste and inefficiency. Everything would be better if experts identified the problems and fixed them. The result was strong support for building research universities and schools of business and engineering, municipal research agencies, as well as reform of hospitals and medical schools and the practice of farming. Perhaps the best known leaders were engineers Frederick Taylor (1856–1915, ), who used a stopwatch to identify the smallest inefficiencies, and Frank Gilbreth (1868–1924) who proclaimed there was always one best way to fix a problem.

Frederick Winslow Taylor

Frederick Winslow Taylor, a mechanical engineer by training, is often credited with inventing scientific management and improving industrial efficiency.

Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it. The measure of productivity is defined as a total output per one unit of a total input. In order to obtain a measurable form of productivity, operationalization of the concept is necessary. A production model is a numerical expression of the production process that is based on production data.

The benefits of high productivity are manifold. At the national level, productivity growth raises living standards because more real income improves people's ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social and environmental programs. Productivity growth is important to the firm because more real income means that the firm can meet its obligations to customers, suppliers, workers, shareholders and governments and still remain competitive or even improve its competitiveness in the market place.

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