Page 73 - CITN 2017 Journal

Corporate Effectiveness and Measurement of Productivity
The productivity of labour can be measured either as output per operator or output per man-
hour, expressed in money value (economic productivity) or in quantities (physical
productivity) (Neely, Adams & Kennerley, 2002). As a result of the heterogeneity of
output, it is more usually expressed in value terms which, for the manufacturing sub-
sector, are easily calculated from ex-factory prices of finished products, estimated value of
semi-finished products and other works and services of an industrial nature. When
productivity is measured in physical units, the following formulae can be used to calculate
productivity index:
Xt = Qt ÷ Lt
Qo Lo
where:
Xt = productivity index
Q = Output in physical units
L = labour inputs
t and o are current and base periods, respectively.

On the other hand, if the value of output is used to measure productivity, the following
formula is used:
Xt = Po Qt ÷ Lt
Po Qo Lo

where: Po is the base period unit price of output and other variables are as defined above.

One of the most important issues facing the applied behavioural sciences is that of human
productivity, the quality and quantity of work. Productivity concerns both effectiveness
and efficiency. According to Drucker (2000), effectiveness is a minimum condition for
survival after success has been achieved. Efficiency is concerned with doing things right
and effectiveness is doing the right things. In discussing effectiveness, we must once again
distinguish between management and leadership. Accordingly, Parkinson's Law suggests
a clear example of a person placing personal goals before organizational goals (Moullin,
2002). His law states that in bureaucracies, managers often try to build up their own
departments by adding unnecessary personnel and more equipment. Succinctly, this
tendency may increase the prestige and importance of the managers. From the above we
hypothesize that:

The Emergence of Performance Measurement
Performance measurement is not a new concept, but rather an old concept of renewed
importance as a result of industrialization and globalization that has existed for over five
decades. The International City Management Association in 1943 published an article on
measuring the performance of municipal activities. During the John Kennedy
administration in the United States, the systems analysis processes were introduced to the
Department of Defense which fueled interest in performance measurement in the federal
government. Other agencies began experimenting in the new concept (performance
measurement) when the Johnson administration introduced what they called planning-
programming-budgeting system (PPBS). Eventually more and more states including
Municipal (local) governments began using performance measurement to improve their
management and budgeting (Jansen 2002).
According to Poister (1998) the use of performance measurement became a common

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