Improved productivity for tough times

One solution in tough economic times is to “do more with less.” That’s what improving productivity is all about. They used to call it “more value for money”. And with less money to go around, managers are looking for productivity improvements to help them get through the situation.

A QUESTION

Would you rather have twenty employees producing 1,000 widgets a day or ten workers producing seven hundred and fifty? The answer is quite clear. While the twenty employees make 50 units each, the production of ten employees, at 75, is 50% higher! This can mean the difference between loss and profitability; between survival and failure.

THE FORMULA 

The productivity formula is simple:P=O/I. Productivity = Output divided by Input. The more inputs required to produce something, the lower the productivity. Conversely, more output done with the same or less input results in higher productivity.

MEASUREMENT

The first key to productivity is measurement. The manager must know what the employees are doing. What are they supposed to be producing? It is true that this can be more difficult than it seems. Employees produce something. Are they reports, customer contacts, completed service calls, product sales, etc.? These are often multiple results/outputs. Determine the basic products for each employee. This will require some analysis and thought, as what the employee is currently producing may not be what they should be producing.

STANDARDS

The second key is to set “standards.” Once we know what the employee should produce, how much should he produce and in what period of time? The establishment of standards is essential and will allow some measure of control and evaluation.

COMPARISON

Can you compare what your employees are doing to what other employees are doing at similar companies within your industry? If so, your task is easier. You will be able to make comparisons. This factor alone will provide some objectivity to the process. Sometimes these reports cover only a few types of jobs and don’t take into account all the factors unique to your particular environment. In either case, adjustments will be required. However, you will have a meaningful starting point for this part of your analysis, and industry comparisons provide a useful advantage in dealing with employees.

ASSESSMENT

The data you have secured so far needs to be analyzed. Criteria, measures, standards, data collection procedures and reporting will need to be adjusted. If the result is not what you expect or need, and cannot be adequately explained by system deficiencies or measurement difficulties, then you need to take action. For example, if your workers are 15% below the industry average, why? If they are twenty percent above, why? If they are “correct”, why? Your analysis should include what you may be doing “right” as well as areas that call for improvement.

IMPROVEMENT OBJECTIVES 

When your monitoring system is in place, and you’re satisfied that it’s measuring the right things, measuring them accurately, and has a continuing ability to do so, it’s time to consider improvement goals. The concept of “continuous improvement” is based on the premise that “nothing is perfect” and there is always room for improvement. You will need to set moderate, realistic and achievable goals. Remember the SMART goal setting criteria. The objectives should be:yesspecific, METEReasy, HASreachable, Rrealistic, and Tprompt

CONSISTENCY 

You’re not done yet. Successful organizations not only implement the steps above, but consistently apply these principles, techniques, procedures, analyses, and processes aimed at creating a more productive business.

DON’T FORGET QUALITY

Yes, productivity is important, but not at the cost of sacrificing quality. Shortcuts can be taken, processes can be streamlined, more widgets can be produced, but quality standards must be maintained.

A reputation for poor quality will quickly negate any profitability gained through productivity gains.

WHY IS THIS IMPORTANT? 

Productivity improvement may be more important right now than at any time in recent history. Current economic conditions require cost reduction to maintain profitability. However, many companies are using a “meat axe” approach to the problem. They’re cutting payroll by laying off employees. Sure, this cuts costs, but without a more methodical approach, any lasting gains can be elusive.

Tough times call for tough measures, but productivity management is simply good business practice that is more important now than ever.

Copyright ©, 2008, Ben A. Carlsen, MD, MBA. All rights reserved worldwide for all media. You may reprint this article in your ezine, newsletter, newspaper, magazine, website, etc. as long as I leave all links active, do not edit the article in any way, leave my name and bio box intact, and follow all EzineArticles Terms of Service for Publishers.