Total Productivity Measurement
Measuring productivity for all inputs at once is called total productivity measurement.
In practice, it may not be necessary to measure the effect of all inputs. Many
firms measure the productivity of only those factors that are thought to be relevant
indicators of organizational performance and success. Thus, in practical terms, total
productivity measurement can be defined as focusing on a limited number of inputs,
which, in total, indicate organizational success. In either case, total productivity
measurement requires the development of a multifactor measurement approach. A
common multifactor approach suggested in the productivity literature (but rarely
found in practice) is the use of aggregate productivity indices. Aggregate indices
are complex and difficult to interpret and have not been generally accepted. Two
approaches that have gained some acceptance are profile measurement and profitlinked
productivity measurement.