Microeconomic wage productivity and a management variable in controlling enterprise efficiency

Purpose: The aim of the paper is to present a new method of assessing a company’s economic performance. It also explores its potential use in managing and improving the firm’s efficiency.Methodology/approach: The research method is based on the economic activity function, an original concept classified as a type of production function. Unlike most commonly used production models, this function reflects natural production processes and is based on traditional cost accounting. This formulation of the economic activity function allows us to derive synthetic indicators of a company’s economic efficiency.Findings: The research process included an analysis of the dynamics of the management level indicator and labour productivity in the studied company. Several possible financial scenarios were developed, from which the management can select the optimal one.Research limitations/implications: Solving organizational problems using the presented method requires high-quality financial reporting data, particularly with regard to labor costs.Originality/value: The microeconomic labour productivity index and the management level indicator, derived from the economic activity function, provide information about the use of both traditional and human resources within the enterprise. Another aspect is the ability to apply these indicators when controlling the company's efficiency through financial planning and budgeting. An additional advantage of the proposed method is its ability to measure human resources and assess the level of utilization and remuneration.