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The Marginal Productivity of Labor in Business Management

Managing labor cost is one of the difficult tasks in business management that should be addressed with committed efforts. Successful managers should determine the best strategies for managing the cost to increase productivity and reduce labor turnover in an organization (Pekka 82). It is in this regard that this study addresses issues associated with labor productivity and cost.

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Labor Productivity

As an experienced manager, determination of productivity of different types of labor must embrace the expansion path and cost structure model. The model enables a manager to determine the ratio between input and output for various categories of labor. For instance, to determine the productivity of managers it is important to ascertain the ratio between input and output for the managers in the organization (Pekka 82).

To determine the productivity of workers in an organization, a manager should use the expansion path and the cost structure model. However, in this case the manager should be able to set production targets for the workers. The ratio of input to output for workers should be based on production targets and the cost of labor. Workers can be rated on the basis of production targets while managers can be rated on the basis of efficiency and effectiveness. However, in both cases the ratio of input to output is important in determining their productivity (Pekka 82).

Possible Problems

When determining productivity of various employees in an organization the most common problems arise from difficulties in comparing the level of effort and energy exerted by different employees. For instance, effort and energy contributed by the workers in the lower level of the organization can be determined by production units. However, at the management level effort cannot be accurately measured due to the fact managers contribute more of knowledge than physical effort in the organization. In some cases, it may be difficult to determine productivity especially where the batch production method is used by an organization. In batch production, a manager may not accurately determine the level of output for every employee.

Assessment of Employee Performance

Assessment of Performance for employees in an organization is mainly based on performance objectives. Performance objectives for workers at the lower level may include the ability to achieve production targets and the ability to embrace teamwork. On the other hand, performance objectives for managers may focus on effective communication, good decision making skills, and execution of business plans. The common problems during performance assessment are resistance and lack of information on performance objectives (Pekka 82).

Factors in Annual Performance Reviews

The effectiveness of performance reviews is influenced by factors which determine employee performance and productivity. The factors include skills and judgment, job knowledge, ability to take initiative, creativity, and customer focus. Moreover, flexibility and innovativeness of the employees also affect performance reviews (Pekka 82).

Difficulties in Assessing Employees Who Work In a Team

Assessing individual performance is very easy than team performance since the manager is able to determine the level of productivity for each individual. However, when assessing the performance of employees who work in a team, it is difficult to distinguish between individual and team performance. Most employees are very good team players who prefer working in teams due to collaboration. On the other, some employees misuse the opportunity to waste time and organizational resources (Pekka 82).

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Works Cited

Pekka, makunnas.”Worker turnover and productivity growth,” Taylor and Francis Journals, 12.7 (2005): 395-398. Print.

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StudyCorgi. 2022. "The Marginal Productivity of Labor in Business Management." April 30, 2022. https://studycorgi.com/the-marginal-productivity-of-labor-in-business-management/.

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