Recently, here in Canada, there has been a lot of talk about the need to increase productivity within Canadian businesses. Canada has consistently lagged behind other developed nations in productivity. According to 2009 data from the Conference Board of Canada, the country gets a “C” grade, and sits in the No. 12 spot among developed countries with a productivity growth rate of negative 0.9 percent. Canada’s productivity performance has been lower than that of top countries for several decades, which has undoubtedly hurt the country’s international competitiveness.

Productivity is a key economic term, measuring the output per unit hour of labor. Economists generally hold productivity to be a measure of how efficiently goods and services are produced. Typically, a country’s productivity is measured by dividing its gross domestic product (GDP) by the number of hours worked. Among the top 17 countries for productivity, the United States ranks as No. 1.

The intense focus on productivity raises interesting questions: How valid is productivity as a measure of business performance; and might a misplaced emphasis on productivity actually be damaging?

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