Productivity

Productivity is the relationship between the resource use utilised to generate different levels of output. Often measured in monetary terms (which actually complicates the issue while making such comparisons more equitable with other situations), this is an area that has caused great concern amongst economists and organisation leaders alike – as it seems to be falling over time.

What is Productivity?

Defined as “the effectiveness of productive effort” it relates to the link between the amount of resource used to generate output. This measure is then used in comparisons between organisations, within organisational departments, between organisational sites and teams, as well as on national and international levels.  The aim is to identify the “best” or most productive team/site/organisation/nation and then to give closer inspection of the “winner” so as to identify what “they are doing that we are not – and could learn from”.

The problems are multiple: comparisons are only valid if the measurements are made the same way, if the products are identical and if the units of measurement are common. Sometimes monetary units are used to make a ‘common’ approach – but this gets more complicated if foreign exchange rates have to be involved.

Another problem is that the methodologies utilised may not be changeable in the same ways – politics or even cultural differences may interfere (imagine comparing output in a US factory on the day before Thanksgiving with a factory in Germany on the same day, or comparing output in France and in Saudi Arabia during Ramadan).

Then there is the issue that identifying the differences may not be that easy – especially if they are not linked to one significant indicator but to small variations in different indicators.

 

Why is Productivity important?

As Productivity directly states the output for a given input, it is another way of saying how efficient an organisation is at its job. This, in turn, means it identifies the competitive advantage held by that organisation versus another. And this too, means that the use of Productivity parameters allows comparison with teams/sites/organisations/nations that are better ready to survive the next few years/decades/centuries.  In the longer run, if mankind used the least productive methods to generate its goods, we would run out or natural resources far faster than if we used the more productive methods.

 

For example: in the 19th Century there was a common view that mankind would not have enough to feed the foreseen increase in world population and that we would all be starving.  This did not happen as productivity increased dramatically. How? By changing the way farming worked.  This involved two key areas of change: the wide use of fertilizers and the better understanding of higher yield crops that could then be grown on fertilized land.  The result is that the global population is now four times higher than the starvation thresholds that had been predicted.  Of course, there have been other impacts: the run off of excess fertilizer has polluted waterways. The crop monocultures are now more susceptible to crop diseases. Wildlife has suffered. It is not an unmitigated success, but it is far more successful than had been, at one time, feared.

 

Thus Productivity, as a measure of how well run and efficient an operation is, is used as a shortcut to identify optimal models in the field. This measure can be well or badly used and is frequently the case in both directions.

 

How do you improve Productivity?

In short, you have to either produce more with the same input, produce the same with less input or, ideally, produce more with less input.  This is simple to identify in a simple process, but as the process gets more complicated the identification of the key issues gets more and more difficult to determine.

For example: a peasant making adobe bricks with mud and straw by hand with a mould is a very simple process: Mix the mud with the straw, fill the mould, upend the mould to deposit the formed brick on a surface to dry and then stack for storage or use.  To increase the production you could increase personnel so that each person had one role (mud/straw mixing, filling the mould, upending the mould) which would probably increase the amount of bricks made (ignoring drying time) not least because of the competitive interaction between the individuals. Or you could change the process so the mould was far longer and once the mould was filled and turned out, there was an additional stage to cut the separate bricks with a wire (say). This would potentially be faster as filling a larger mould is easier than a smaller one several times – but only if the cutting of the turned out bricks worked fast too – maybe if the wire was heated so it burnt through the straw… And so on.

Compare this to the work in manufacturing a car. The number of roles, the skills, equipment, personnel, variables (colour, model, engine type and size, manual v automatic, left v right hand drive) etc are all controllable but will impact on the productivity in so many ways that identifying changes that will improve things will be infinitely more difficult.

For this reason, improving productivity has long been difficult to pin down.  One thing is clear, however, that NOT trying to improve it does not contribute to rising efficiency!  There are a wide range of techniques that will contribute to the relevant understanding which leads to insights in what needs to be done.

A key area for improvement is often deemed to be training of staff. This not only ensures that they know what they are to do, but also that they know why what they are doing is important, what to look out for to see if something is going wrong, when they should come forward with new ideas and how they can improve their own skills still further.  This last is one of the more important as support in it will encourage that person to appreciate their role in their organisation which, in turn, improves their attitude, work relationships, enthusiasm and ability to develop their work further. All this feeds back into enhanced morale, skills, capabilities and productivity.  Thus the right approach to training is a key part of all good business management systems such as the ISO Systems.

 

What do you do if you want to investigate your Productivity levels?

Please Contact Us to discuss how best you can find out more about what your Productivity levels are now, how they compare with industry sector means, what you want them to be and most importantly, how you can improve them.

 

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