the organization

Respond to…

Depending on the nature of the business and the overall goal of the organization, sometimes it is often necessary to make trade-offs in order to accomplish or improve overall productivity.  For example, one of the most profound and far-reaching is when capital is traded for labor.  It is important to understand the concept of labor which refers to workers and their tradable labor power or work needed to produce a certain amount of goods or services. The productivity of the labor can best be measured by an assessment of the output, which is based on the work that is produced and compared to some measure of labor inputs, such as the labor hours (Vonderembse, & White, 2013).

On the other hand, capital refers to financial, material or other materials of production.  The capital productivity factor assesses the output such as units produced and compares it to inputs, such as machine hours or cost in dollars.  Capital investments are often made in land, facilities, and equipment (Vonderembse, & White, 2013).  Automation of activities in the workplace that was traditionally performed by people is a good illustration of this concept.  For example, the hiring process has vastly changed based on the extensive use of automated systems that are used by many organizations for recruitment purposes.  Automated hiring tools that are used by more than 81% of employers today can read through applications at amazing speeds to find keywords that match the employment needs.  As a result, this significantly reduces the time to hire and cut the screening process time for the hiring managers which results in greater productivity.

Also, sometimes the material cost is traded for increases in labor productivity.  For example, if an organization can achieve higher output rates from the labor force, then they may willingly increase the cost of tits incoming materials (Vonderembse, & White, 2013).

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