Difficulties in improving productivity

Lal FONSEKA

"Much of the current problems of low productivity have been caused by management." Carlton P McNamara (1983)

With the certain factors given in this article, one might feel that we have already discussed it sometime back under the same column. It is true. But I feel we should once again start discussing about this subject of vast importance in a series of articles. Hence this is a beginning of a new series.

The bottom line of any organization is known to be the profit according to many entrepreneurs in Sri Lanka. As a result, they do always try to go after the profit rather than concentrating on Productivity.

However, it is virtually impossible to find a reasonably well-informed business person today who is unaware of the productivity problem in Sri Lankan industry. For the last ten to fifteen years, productivity has clearly been the most widely discussed topic in business publications, management seminars, industry conferences and other similar forums.

As on today, there is a separate minister appointed for the improvement of the productivity in the country. Still the biggest problem in the country is the productivity improvement.

Recognition of the role of productivity in so many areas of concern is itself a sign that productivity research has made progress. So also, in fact, is the uncertainty surrounding our knowledge, of which productivity research has made us more keenly aware? We have come to realize that there are unanswered questions we had not even thought to ask, and questions unanswered because we had not known enough to ask them properly.

The shift of interest among economists doing productivity research from labour productivity to total factor productivity reflects the postwar emphasis on the study of economic growth. In thinking about the sources of growth and the problem of measuring these sources, economists found it helpful to classify them into two main groups. One is change in the resources available for use in production-total factor input. The other is change in the efficiency with which available resources are used in production-total factor productivity.

This is not to say that labour productivity-output per man or man hour-was no longer of interest in the study of economic growth. In fact, labour productivity continued to be highly interesting, for it measures the fruitfulness of human labour under varying circumstances. It simply means that differences among different organizations at various stages of their business growth, in respect of output per man or per man hour, were recognized to reflect differences in total input per man or man hour, as well as in levels of efficiency.

Significance

This article will be helpful at the firms' level, especially for the manufacturing organizations. As a result, the managers of such organizations could take this article for their betterment. These contents presume that they will ensure of the findings to enhance the labour productivity of the manufacturing organizations. At the same time, this is also available to those who are interested to ascertain their weaknesses and the areas that they have got to improve even in the service sector organizations. I am confident that contents are useful even for those who are engaged in the similar fields in the international organizations.

Furthermore, it is a well-known fact that similar types of articles sometimes even my ones has been published by various newspapers in the past. As a result one might wonder as to why another article is prepared to do a similar exercise once again. However, it is a well-accepted fact by the scholars in the country that no proper and detailed study had been conducted on this topic under reference. Hence there is a very large gap to fill in this area and the entrepreneurs including managers of Sri Lankan organizations are yet to be learnt real meaning of the word "Productivity."This is a statement made by me with some honest intention and not to downgrade them. They are clueless about the importance of Productivity.

In order to fill this large gap, I am forced to produce this article for the betterment of organizations in Sri Lanka.

A majority of our entrepreneurs including Senior Managers are not willing to take well-calculated risks and at the same time they do not know how to work in harmony with a business entity.

W. Edward Deming, a respected statistician, has concluded that 85 percent of all productivity problems relate to management and only 15 percent relate to worker performance. Before his death in 1994, he revised his estimates to 94% and 6%. If a company is to achieve significant gains in productivity, the management methods and styles of the organization must change.

The standard definition of productivity is actually what is known as a partial factor measure of productivity, in the sense that it only considers a single input in the ratio. The formula then for partial-factor productivity would be the ratio of total output to a single input or: Managers generally utilize partial productivity measures because the data is readily available.

Also, since the total of multifactor measures provides an aggregate perspective, partial factor productivity measures are easier to relate to specific processes. Labour-based hours (generally, readily available information) is a frequently used input variable in the equation. When this is the case, it would seem that productivity could be increased by substituting machinery for labour. However, that may not necessarily be a wise decision. Labour-based measures do not include mechanization and automation in the input; thus when automation replaces labour, misinterpretation may occur.

Other partial factor measure options could appear as output/labour, output/machine, output/capital, or output/energy. Terms applied to some other partial factor measures include capital productivity (using machine hours or Rupees invested), energy productivity (using kilowatt hours), and materials productivity (using inventory rupees).

If one could do a well complied research on this topic, I am confident that all managers and entrepreneurs will be able to understand their own weaknesses and how to use the ability of their workforce in full to uplift the labour productivity paying more attention to Biographical and Psychological factors.

Regarding these two words, a series of articles will follow in this column for a couple of weeks.

A research done by Phil Hodgson of Ashridge Management College has estimated that conventional managers probably operate just 40 percent of their true ability. (Phil Hodgson & Crainer - What do big performance managers really do, 1993). In my view which may further low when it applies to Sri Lanka.

Small & Medium Sized Manufacturing Organizations

Seventy per cent of Sri Lanka's workforce in the industry comprises small and medium industry labour. "The development of any country depends on its government's support for small and medium industry", explained Director of Techno Management Consultants, Samarasinhe. This could be in the form of finance, business development, research and development and marketing.

Samarasinhe warned that if the situation is not immediately dealt with the whole industry could collapse in a matter of years.

Holidays and productivity

Sri Lanka has a large number of holidays. As a first step towards development, Samarasinhe suggested that this should be cut down by 70 percent and a programme introduced to increase the productivity of Sri Lankan workers especially in the public sector.

Quoting Minister Champaka Ranawaka, Samarasinhe said that only a handful of intellectuals in Sri Lanka are capable of providing knowledge and advice towards the country's well-being.

And even fewer can actively implement such plans with dedication. Only a few officials who had been appointed as decision makers are educated, intelligent, honest and capable of fulfilling their tasks.

Most senior appointees are between 50 and 55 and have economic, health, mental and other social problems, said Samarasinhe. "At a time when they are struggling to solve their own problems, matters of national development would be of little interest to them."

(This is a commendable statement made by this versatile scholar in this country some time ago) Samarasinhe explained that countries such as Thailand, Malaysia and Singapore solved this problem by appointing honest and efficient individuals as young as 30 years of age to high positions in ministries, government departments and other organizations. The same could be applied to Sri Lanka, he said.

Samarasinhe said that it is the duty of all intellectuals in Sri Lanka to provide the Government with accurate facts on Sri Lanka's development. "If this happens the President would be able to develop the country in as little as five years."

(Sunday Observer-http://www.sundayobserver.lk/2010/05/02/imp01.asp)

This is not the only occasion which Sri Lankan newspapers published these types of articles stating that productivity levels are significantly low, in most of organizations in Sri Lanka.

Newspapers continuously stress this point giving practical evidence.

Will be continued in the next week............