In an informal sense, productivity is getting more bang for the buck or doing the right things right. But these definitions do not help much when actual measurement is required. For that, a more mathematical approach is needed. Productivity is a ratio, a comparison of what is produced and what is used to produce it. It compares outputs with inputs, that is, it divides outputs by inputs.
Output is a physical entity - a car, a lightbulb, a typed page, or a processed pay voucher.
Each input can be used as the basis of a partial measure of productivity, depending upon circumstances. Labor productivity, for example, is measured by dividing output by hours worked, number of employees, or labor cost. Capital productivity is arrived at by dividing output by money invested or machine hours used. Materials productivity is output divided by units of materials used, units of scrap, or money spent. Many large, diversified companies, however, now use all four inputs to determine what is called Total Factor Productivity.