Understanding the barriers in improving productivity

Lal FONSEKA

This is a continuation from the last week. In light of the increasing attention being paid to the concept of productivity in Sri Lanka especially from the government and also my role as a promoter of productivity for the last two decades, I thought it prudent to discuss this subject at length in a series of article of this nature.

Productivity has been interpreted by many scholars as a measure of how efficiently an organization manipulates its resources or factors of production (human, capital, materials, energy, knowledge etc) within the production of goods and services. However, productivity is not only related to the fostering of maximum efficiency by doing things right but also involves the attainment of maximum effectiveness (i.e. reaching organizational goals) by doing the right things.

Organizational productivity can be evaluated in relation to a particular decision criteria e.g. prior productivity level (workers, management, company etc.), competitor productivity, industry productivity or national productivity.

Productivity within the manufacturing sector is predisposed to the planning, scheduling and controlling of physical materials, whereas within the service sector it is focused upon the flow of human customers - internal and external. From a public sector perspective, it has been proposed (Boyce, 1995), "In a sense then, productivity of government boards and corporations is a measure of the return to taxpayers and the general citizens of a country on the resources which the society has entrusted to these institutions."

By considering the services rendered by most of the state owned organizations and institutions in Sri Lanka, hardly we could make use of the above proposal.

Stepping in to a state enterprise to get job done itself has now become a serious challenging task. Most of our public officers treat the client public as their slaves. No smiling faces are available in these organizations. Reception is very poor. These so called officers do not want to think that the general citizens are the people who pay their salaries and other earnings.

According to a recent research done by me, you will be surprised to hear that only a less than two percent of the client citizens who visit the state organizations go back with utmost satisfaction.

In a country where people do not follow the traffic rules and pedestrians do not want to follow the road crossing rules, improving productivity in that country will be an utmost difficult or sometimes an impossible task.

However by saying so, we cannot look other way and keep silent. All what is expected from the people like us to try and get them motivated on the subject of productivity.

Now we will turn once again on to the subject matter proper.

Often when people think about productivity, they consider only the output, and in particular the amount that individual workers produce. However, individual productivity is only part of the picture, and it can be difficult to measure what individuals produce. In the past, many office jobs were well-defined and repetitive, like those of data entry clerks or typists in typing pools and in particular the amount that individual workers produce.

This made output from these jobs relatively easy to measure and compare - i.e. the number of forms processed, or the number of characters typed. These skills and activities are useful indicators when studying employee behaviors. However, these performance measures no longer translate easily into productivity because their importance in different jobs varies widely. They represent only a portion of what modern office workers do.

Most office workers are now engaged in more complex knowledge work, the output of which is much more difficult to measure. They do not produce uniform units of output anymore; nor do many perform single tasks repeatedly during a day. Rather their work consists of generating ideas and knowledge for a variety of different projects. These projects are typically novel and not easily comparable - does an architect's design for a house have the same value as a design for a shopping mall to the organization or the clients? What about an architect's product and a computer programmer's? In addition, modern office work is often conducted in groups or teams, which makes it difficult to determine the contribution from any specific individual.

Output can more easily be measured at an aggregate level. Most organizations keep financial records on sales revenue, business volume, and market share and so on. However, other organizational output variables are hard to measure in dollar terms. For example, what is the value of fulfilling the public's expectation of a public service or the value of satisfying customers?

These outcomes are important to the organization but are not easily quantifiable.

Without quantifying these and other output measures, analysts find it very difficult to identify the effectiveness of any strategy, such as innovative office design.

A complete picture of productivity must consider not only the output of an organization, but must also include the costs incurred to produce the products and services. For an organization to function, its employees need somewhere to work, the appropriate resources, materials, and support, a salary, training, and so on.

Organizational productivity is the balance of all these costs, against the value of all the products and services. Many of an organization's costs are relatively straightforward to measure. For example, the amount spent on salaries or materials and supplies can be calculated. However, some costs consist of many elements and are difficult to estimate realistically.

Recruitment costs include resources for advertising the position; time spent by human resources and other staff to develop the position description, handle resumes, arrange and conduct interviews, and make follow-up background checks; and the time and resources needed to make an offer and arrange personnel and payroll files, computer, e-mail and phone access, and orientation and training for the new employee.

If recruitment is needed because an employee has left the organization, then the costs of an exit interview, the lost work from the unfilled position, the disruption to other employees in the department, the lost knowledge, expertise and contacts, and other associated costs also need to be factored into the equation. This equation has obviously become very complex.

Quantifying Productivity: Overall, although we can measure some of the input and output variables that contribute to productivity, it is very difficult to accurately determine all of the important contributors, and almost impossible to combine them into one financial figure representing productivity.

One solution for individual organizations is to choose the input and output variables that are most important to them, and develop meaningful, context specific methods of measuring them. In this way, an organization can track its performance against its own goals to determine its effectiveness. However, if we want a more generalized way to examine productivity and recommend measures that will contribute to better success, we need to take a different approach.

A different approach

It is more useful to take a wider view of the factors influencing organizational productivity. There are two main influences on the input and output for an organization: economic conditions and external factors, and employee attitudes and behaviors. Economic conditions and external factors are outside forces, like the labour market, the cost of supplies, and the market price for products and services. While these factors have a major influence, they are largely uncontrollable, and, therefore, cannot be manipulated for better productivity.

Employees, on the other hand, are greatly influenced by their organization's choices. They produce the goods and services that will be sold and are usually an organization's greatest asset. Employees are also the largest cost. Expenditures such as salaries, benefits, training, and recruitment constitute the majority of an organization's costs.

Therefore, how the employees think and behave at work - their attitudes and behaviors - can have a significant influence on the organization's input and output. By focusing on employee attitudes and behaviors, we can examine measurable, comparable results that contribute to productivity. This analysis can then support office design choices that are beneficial to employees. We cannot put a dollar value on the effect of one strategy, but we can show that hinges that benefit employees also benefit organizations.

Employees and organizational productivity

Employee behaviors and attitudes include how satisfied workers are with their jobs, how committed they are to the organization, how they interact with co-workers, how frequently they are absent, how efficiently and creatively they complete their tasks, and whether or not they choose to leave the company. Employee health and well-being, while not strictly attitudes or behaviors, must also be considered in this list because of their significant effect on employee commitment, task performance, absence, interaction, satisfaction, etc. For many years, behavioral scientists have examined how these attitudes and behaviors are related to each other and how they influence the input and output of an Organization. A review by Podsakoff and colleagues concluded that satisfied and committed workers are more likely to put in extra effort at work, such as volunteering overtime or helping colleagues. In a study of almost 200,000 employees from 8,000 business units, Harter and colleagues found that those business units with higher average job satisfaction had lower staff turnover, higher customer satisfaction, and better business unit performance.

Reducing staff turnover is a particularly important objective for organizations because it is estimated to cost up to twice a leaving employee's salary to find and train a replacement.

Workers' health and well-being can also affect organizational productivity. Sick employees cannot work to their full cognitive capacity and may be absent. They may also require paid sick leave or make additional claims on health insurance. Statistics Canada reported that the average worker lost seven days due to illness or disability in 2001. In addition to physical sickness, Hardy and colleagues showed that employees with lower job satisfaction and psychological well-being (depression, anxiety) were more likely to be absent. The cost of employee absence includes not only lost work from the individual, but also disruption and performance losses for co-workers. The amount of work lost can be significant. Not only psychological factors, Biographical factors such as Age, Gender, Distance and Distance as per the book written by Stephen Robbins, Organizational Behavior, 2010, p 52 affect the organizational productivity.

Establishing and maintaining a stable work force in any industry whether it is Manufacturing, Service or state enterprises is paramount to quality production/service and profitability. Many workers in the manufacturing industry are skilled apart from the trainee workers normally known as the unskilled workers and do consider the manufacturing industry as the destination employment. But the there is a high labour turn-over in the manufacturing industry especially in the apparel sector. Even if a trained worker leaves one industry, he or she has to join the similar industry owned by a different set of people because of the skills

captured by them. However there is always a big cry among the factory owners about the labour turn-over and the high absenteeism.

A better understanding of employee motivation is one answer to this dilemma. A review of this area indicates that there is a link between the industry that person is employed in and work motivation. My observations on this aspect also show that work motivation will vary between industries/service organizations and will also change over time.

It is generally agreed upon that if an employer can identify the reasons a worker is productive, reports to work on time, and remains with the company, the employer might then be able to apply these motivational factors unilaterally to the entire workforce. Applying this knowledge and fashioning the employment atmosphere to better accommodate the motivational factors of the employee, the employer becomes a more desirable employment destination, retaining employees longer, and increasing productivity and service at the same time.

We will continue on employee motivation towards productivity next week.