Economists define productivity as the ratio of output to input, or the results achieved per unit of resource. This is a measure of how effectively the resources are utilized. Management has a very important role in maintaining and increasing the firm's productivity.

A comprehensive project to improve the firm's productivity requires a substantial commitment of resources. The first step should be strategic assessment of the firm's products' and services competitive position, its culture and the availability and quality of its resources.

A productivity plan's design and definition should be 'custom tailored' to the firm's needs and capabilities, but successful schemes do have some generic characteristics. First, a strategic integrated approach is required to link the plan to the firm's business needs; all major departments within the firm and key outside suppliers should be involved. Second, no comprehensive scheme can be successful without the chief executive's strong support and involvement. A successful scheme requires strategic input, a high priority, a commitment of resources and an integrated effort throughout the firm; only the chief executive can deliver all these and also provide the leadership needed to initiate and sustain the project.

Strategic productivity plans emphasize 'breakthrough' improvements, as compared with the incremental improvements sought by activities such as employee quality circles (though the two are not mutually exclusive). Technology is a key resource and an important factor in increasing productivity, as has been confirmed by a number of studies. Finally, a long-term view is essential if productivity improvement is to have a real impact on the firm's performance and profitability.

Barriers to success include limitations on management action, such as those imposed by restrictive work practices. In the 1990s globalization has increased awareness of the importance of productivity. Many of the economies of western Europe are experiencing no growth and historically high levels of unemployment; any solutions to these challenges must include substantial productivity improvement.

Robert Conti