PRODUCTNITY MEASUREMENT AND MANAGEMENT CONTROL

In recent years, manufacturing firms in the United States have been directing increasing attention to the need for improving productivity in order to strengthen their competitive position. To monitor and evaluate productivity changes, and to communicate and reinforce this new emphasis on productivity improvements, ap­ propriate measures of productivity are required. Productivity mea­ surement can generate information that may be useful for man­ agement control purposes in two ways. First, such measurement may identify dimensions on which productivity improvements are pos­ sible, in which case targets may be generated to guide future operations. The productivity measures may be employed to identify products or processes for which the firm has a competitive edge in productivity or similarly evaluate new technologies or investment projects that are likely to increase the firm's profitability. The second role for productivity measures in management control systems arises from their use in evaluating the performance of managers. In conjunction with the usual profit or cost accounting system, a productivity measurement system can be designed by the corporate