Question

What can a business do to improve its productivity?

Lower salaries
Reduce its workforce
Sell assets
Invest in capital

Answer 1

To improve productivity, a business can consider various strategies, but among the options you've listed, **investing in capital** is typically the most constructive approach. Here’s a brief elaboration on each option:

1. **Lower Salaries**: While this might reduce costs in the short term, it can lead to decreased employee morale, lower job satisfaction, and higher turnover rates, which ultimately can harm productivity.

2. **Reduce its Workforce**: Downsizing can lead to immediate cost savings, but it can also negatively impact productivity and morale. The remaining workforce may feel overburdened, and the loss of experienced employees can reduce operational efficiency and innovation.

3. **Sell Assets**: Selling assets may provide short-term cash flow but could hinder the business's operational capacity and long-term productivity. If the assets sold are essential for daily operations, this could be detrimental.

4. **Invest in Capital**: Investing in capital (such as new technology, equipment, or infrastructure) can enhance productivity by streamlining operations, improving efficiency, and enabling employees to work more effectively. This is typically a forward-looking strategy aimed at sustainable growth and improved output.

In addition to investing in capital, businesses can also consider other strategies such as improving training and development, optimizing processes, enhancing employee engagement, and leveraging technology to drive productivity gains.