Productivity measures the relationship between inputs used and outputs produced. It can
be used as a measure of performance since two organisations (or industries) could produce
different quantities of output with the same quantities of inputs because of differences in
productivity level. The organisation (or industry) with higher productivity levels will be
operating at lower cost and therefore more efficiently than the other. The use of productivity
as a performance measure overcomes the problems involved in plotting and finding the
lowest point of the cost curves of organisations in the determination of efficiency.