Topical 01: Explain one way of measuring operational efficiency. [5]

[Sir Afzal Shad]

Explain one way of measuring operational efficiency. [5]
Topical Past Paper Question 01

Answer

[KN] One way of measuring operational efficiency is through labor productivity, which assesses the output produced per unit of labor input (hours worked, number of employees).

[AN] Labor productivity helps businesses understand how effectively they are utilizing their workforce to produce goods or deliver services.

[AN+] This can result in cost savings, increased profitability, and improved competitiveness for the business. For example, if a manufacturing company produces 100 units of a product with 10 employees working 8 hours each day, its labor productivity would be 12.5 units per employee per day.

[AN+] It can also lead to higher employee satisfaction and morale, as employees may feel more valued and efficient in their roles. It can create a positive work environment where employees are motivated to contribute to the success of the business.

[AN+] By measuring labor productivity regularly, businesses can identify areas for improvement, implement strategies to optimize workforce efficiency, and make decisions about resource allocation, staffing levels, and operational processes.