What is the Relationship between Productivity and Quality? – Explained!

When quality increases, the productivity also improves. This is because wastes and rework are reduced, and inputs are optimally utilized. Higher productivity enables an organization to reduce price and gain competitive advantage both in terms of price and quality. Customers also feel happy as they get value for their money. Since organization’s bottom line improves, it raises the satisfaction level of all stakeholders, including employees.

The significance of cost of quality has been discussed, while explaining the ISO certification requirements. Saving the cost of quality will have an immediate effect on the enhanced productivity of an organization. All these establish that quality and productivity are indirectly related.

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Thus, productivity should not now be misconstrued as labour performance alone. It is the sum total of efficiency and, therefore, linking productivity to wages should be objectively done to create a win-win situation.

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In the following table, we have explained human development progress in India and adjoining countries. In the said table, we have explained human development index (HDI) and human performance index (HPI).

Human Development Progress:

CountryHDI rankHPI rank
Sri Lanka2322
Bhutan 6362

In the following table, we have explained organizational-level labour productivity data of some of country’s leading steel manufacturers, which indicate the year-wise variation of labour productivity. HRD activities in different steel plant played a very significant role in labour productivity.


Labour Productivity Index (Per Tonne per Employee):

IISCO 3429312429

Irrespective of the steel industries data, India ranks the lowest in labour productivity, as well as, in the overall productivity data. According to the analysis of the Associated Chambers of Commerce and Industry, during the year 2001, India is at the forty-ninth position in the world labour productivity per person employed per hour valued at $2.42 and overall productivity valued at $5,452 as against Luxembourg that tops the list with labour productivity valued at $41.90 and the overall productivity at $73,999. Prescriptive model for the correction of the situation is the adoption of flexible work culture and extensive human resource development activities.


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