International Competitiveness: Labor Productivity Leadership and ...
Competitiveness Through Productivity Special Presentation ... 1 Competitiveness Through Productivity...
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1 Competitiveness Through Productivity Special Presentation for NPO By Dr. Ali Sajid 01 July 2005 [email protected] Tel: 051-287-1703(off), pdfMachine trial version
Transcript of Competitiveness Through Productivity Special Presentation ... 1 Competitiveness Through Productivity...
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Competitiveness Through Productivity
Special Presentation for NPO
By Dr. Ali Sajid
01 July 2005
Tel: 051-287-1703(off),
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Competitiveness & Productivity: Concepts:
Ignored Issue in Pakistan�s Industry
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�The will to win, the desire to succeed, the urge to reach your full
potentials are the keys to unlock the doors to the
personal excellence�
Confuciuspd
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• Nobody Could make a greater mistake than he
who did nothing because he could do a
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• When person does good deed When he or she didn�t have to, God looks down & smiles & says �for this moment
alone it was worth creating world�
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EVERY THING THAT IS DONE IN
WORLD IS DONE IN HOPE.
MARTIN LAUTHER
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Vision without Action is
A Dream
Action Without Vision is
An Activity pd
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Minds are like Parachutes
They work onlywhen they are
Openpd
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Central Characteristics in Contemporary Era of Global Economies
� Intensified global competition & the emergence of new centers of production
An exceptionally innovative technological environment
� Proliferation, spread, & restructuring of MNCs
� A diversified global financial system
� Important changes in state's role in domestic & global economic affairs.
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What is Competitiveness?
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Competitiveness
• Ability to get customers to choose your product or service over competing alternatives on sustainable basis.
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Competitiveness-
�Degree to which a country can, under free & fair market conditions, produce goods & services which meet the test of intl� markets,
while simultaneously maintaining & expanding the real incomes of its people over the long-term�.
OECD
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Competitiveness
Competitiveness ---- continually sustained increases in productivity resulting in higher wages & living standards --- characterized by increasing export market shares.
Competitiveness ---- demonstrated by "ability to meet, rest of free intl markets while expanding real income."
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Indicators of Competitiveness
• Macro Level -- competitiveness of nations reflects standard of living of their citizens.
• National competitiveness -- consolidation of micro-level performances of companies & individual � true agents of economic growth. pd
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High
standard of living
Trade
Productivity
(Quality should exist)
Investment in productive facilities
(Factors, R&D, technology)
Competitiveness Pyramid
Source: Based on US Council on Competitiveness, 1995.
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Competitiveness depends on Productivity
"Standard of living is determined by the productivity of a nation's economy, which is measured by the value of goods and services (products) produced per unit of the nation's human, capital and natural resources".
Porter & Christensen, Harvard Business School pd
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What is Productivity
Ratio of output to input by large number of professionals.
ILO Definition:
�Ratio between o/p of wealth produced
& i/p resources used up in process of production�.
Comparative tool for mgrs, industrial engineers, economists, & politicians.
Contd�
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Operation Management System
Outputs
Products, services, &
other (pollution)
Inputs
Raw materials, human resources,
capital (land, buildings,
equipment), technology information.
Feedback
Product/ Service
Design & Facilities
Transformation Process
Control Processes
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Indicators of Competitiveness
Productivity is efficiency with which goods & services are produced & provided.
Determined by previous investments & by quality & performance of workforce, technological innovation, quality
of plant & equipment, & effectiveness with which these factors of production are utilized.
Productivity is both determinant & indicator of national competitiveness.
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Definition of Productivity
Successful Tech Org create surplus through productive operations.
Productivity, is output-input agreement on true meaning of due consideration for �Quality & Time�.Productivity = Outputs
Inputs
(within time period, quality considered)
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Concepts of Productivity
Comparison b/w:
�Quantity of goods or services produced� & �Quantity of Resources Employed� in turning out these goods or services.
Stress is on productivity being
Concern of production function only.
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• Relationship b/w output generated by production or service system
& input provided to create this output.
Efficient use of resources �labor, capital, land, materials, energy, information � in production of various goods & services. pd
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Concepts of Productivity
Faraday -Productivity as �Ratio of prescribed output to resources�. Ramsay - Productivity as ratio of output to inputs based on concept of value addition.
Formal definition of productivity:�Productivity is Optimization (or maximization of economic resources & generation of new resources through creative thinking, research & development, & by use of all possible improvement techniques & methods�.
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Concepts of Productivity
Smith recognizes productivity as:
�Ratio of o/p to inputs -expanded inputs to include technology besides labor, materials, machine utilization.�
Siegel Considers Productivity as:
�Class conceivable measure depicting output per unit of associated input in sequence of compared period�.
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Some Recent Attempt to Define Productivity
Mali - Rational departure to define productivity as:
�Productivity is measure of how well resources are brought together in organizations & utilized for accomplishing set of results.
Productivity is reaching higher level of performance with least expenditure of resources�.
Further Elaborates as. �Productivity is combination of effectiveness &
efficiency� & � Effectiveness related to performance, efficiency to resource utilization�.
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Some Recent Attempt to Define Productivity
Concept of Productivity Must:�Serve as a tool in the hands of mgt to take corrective steps for productivity improvement & also should provide ready reference & comparison of performance with performance objectives of org.�
Productivity Perceived as:
�Indicator of how well goals or performance objectives or mission have been achieved.�
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Higher Productivity
Productivity is comparative tool for mgr doctors/engineers, economists politicians.
It compares service delivery/production at different levels of economic system (individual & shop floor, org, operation theater sectoral & national) with resources consumed.
Productivity – more intensive use of such resources as labor & machines.
Reliability indicate performance or efficiency if measured accurately.
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Term �productivity’ encompassed everything, which concerns an org. This is not to suggest that concepts advanced are faulty or ill defined.
Different meaning, definitions, interpretations & concepts emerged as experts working in various fields have looked at it from their own emphasis, perceptions & reference point they have before them.
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Difference b/w Production & Productivity
Production is concerned with activity of producing goods & or services.
Productivity is efficient utilization of resources (inputs) in producing goods or services (outputs).
Production is quantity of output produced.
Productivity is ratio of output produced in input (s) used.
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• Higher productivity means accomplishing more with same
amount of resources
or
achieving higher output in terms of volume & quality for same
input.pd
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• Relationship b/w results & time it takes to accomplish
them.
• Time is often good denominator to since it is achieve desired result,
more productive system.
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Productivity as a Tool
• Tool in hands of mgt
• To take corrective steps for performance improvement
• To provide a ready reference & comparison of performance with stated objectives of org.
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� Productivity in a nation is a reflection of what both domestic & foreign firms choose
to do in that location.
� Location of ownership is secondary for national prosperity.
� Productivity of �local� industries is of fundamental importance to competitiveness.pdfM
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Depends on:
� Sophistication with which companies compete &
� Quality of microeconomic business environment".
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Evolution of Productivity Concept in Modern Era
Frederick Taylor: Father of Scientific Mgt
Mech Engr – invented high speed steel cutting tools
Got opportunity to know:
First Hand Problems & Attitude of Workers.
How to improve Quality of mgt.�Major Concern�
To increase efficiency in production, to lower cost,
Raise profits through higher productivity, possible increase in pay.
To be Contd.
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• “Concept of Economic Man”, - worker is motivated primarily by economic gain & o/p maximized only thru financial incentives.
• Differential Piece-Rate system, -workers receive higher rate of pay per piece produced after.
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Taylor�s Message of Productivity
• Various pay plans based on output for �surplus�.
Give People their best opportunity to be productive, reward workers for individual productivity.
Increase labor productivity not possible w/o:
• a) providing ample reward,
• b) adequate training,
• C) or managerial help.
Careful advance Planning by Manager
Managers to design work systems for worker to do their best.
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Summary Of Taylor�s Message
1. Replacing rules of thumb with science -organized knowledge.
2. Obtaining harmony in group action, rather than discord.
3. Achieving cooperation of human beings,rather than chaotic individualism.
4. Working for maximum output, rather than restricted output.
5. Developing all Workers to fullest extentpossible of their own & their company’s highest prosperity.
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Fredrick Concluded:
�Low productivity is matter of ignorance on part of labor & mgt�.
Ignorance? �Fair day�s work� & �Fair day pay�
Not enough inc in surplus to get more compensation.
productivity enhancement � answer to hi wages/profits.
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Henry L. Gantt
Need for developing mutuality of interests between mgt & labor, a “harmonious cooperation”.
Stressed importance of �Developing understanding of systems both for labor & mgt.�
Appreciating that “In all problems of mgt human element is most important one�.
Graphic methods of describing plans better managerial control.
Importance of time & cost, in planning & controlling work
Famous Gantt Chart � forerunner of (PERT).
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Problem faced in LDC is problem not of
underdevelopment but rather of under mgt.
Actually productivity is most serious challenge confronting mgt.
Peter Drucker
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Contd�Productivity can be improved:
1. By increasing outputs to with same inputs.
2. By decreasing inputs but maintaining same output
3. By increasing outputs & decreasing inputs to change ratio favorably.
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Productivity-Manager�s Perspective
• Use accounting ratios in achieving objectives of general mgt, which is usually interested in productivity measures that enable it to easily assess the present profitability of the company.
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Productivity-Engineer�s Perspective
• Seek measures of Physical assets & other resources, such as
• �Production per hr.,
• man hrs. per unit,
• material requirements per unit,
• machine utilization,
• and space utilization�,
but they may fail to relate these to overall productivity.
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Productivity-Behaviorist�s Perspective
• View productivity of people in organization, in terms of �time they spend at work vs. total time available�.
• A misleading measure.pd
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Productivity-Accountant�s Perspective
• Costing & budgeting approach to productivity.
• When budget figures, rather than optimum achievable values, are used as standards,
• Could be a false impression of high productivity.
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Productivity-Economist�s Perspective
• Partial measures, such as labor productivity, Primary measures employed by economists.
• Total Factor & total productivity measures proposed, but again definitions do not agree.
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Productivity Management
• Handling entity for improvement.
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Productivity Management
• Formal management process involving all levels of reducing the
cost of manufacture, distribution, & selling of a product or service through an integration of the 4
phases of the productivity cycle, namely, productivity measurement,
evaluation, planning & improvement.
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Misunderstanding about Productivity Myth # 1
Profitability is Measure of Productivity.Profit � Difference of some calculation of output value & some calculation of input costs.
Function of several factors:-
a) Status of demand & supply:
b) Value of output:-Value of output can rise because of hi market prices resulting from more aggressive marketing, improved quality of product, influence with buyers.
c) Input Costs:-
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• Profit is not solely result of increased production efficiency. At expense of the LT objectives, it can be obtained by curtailing:
• (a) training / HRD, (b) Maintenance, (c) Advertisement. (d) SHE (e) QWL (f) BMR
Company may raise profit by:
• (a) Production building monopoly power,
• (b) Bribing purchasing agents,
• (c) Hypnotizing consumers,
• (d) Undermining a union or getting public subsidy. /export rebate
Conclusion : Profitability can not be equated with productivity.
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Myth # 2When you increase Quality,
You decrease Productivity as Cost of Input increases.
Quality & productivity go hand in hand
•Deming circle
•Quality is a specific dimension of productivity.
•A high productivity is not outcome of lowered specifications of products manufactured or services rendered.
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Quality & Productivity Go Together
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Productivity & Managerial Performance
Productivity is a summary measure of the quantity & quality of work
performance, with resource utilization considered.
It can be measured at the individual,
group, or organization level.pd
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THE QUALITY PRODUCTIVITY RELATION SHIP
Contd�
LessRe-Work
MoreProductivity
Improve Quality
LessonRe-workpd
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Deming’s Chain Reaction Deming’s Chain Reaction
Improve Quality
COST DECREASEBECAUSE OF LESSREWORK, FEWERDELAYS, BETTER USE OF RESOURCES
PRODUCTIVITY IMPROVES
CAPTURE MOREBUSINESS WITH BETTER QUALITY AND LOWER PRICE
STAY IN BUSINESS
JOBS, BETTER SOCIAL LIFE, STRONG HEALTHYPOPULATION
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Quality is All Consuming Focus
Org which seeks to decrease costs, improve productivity, decrease prices, increase market share & increase return on investment - without first building quality into systems – is gambling its long-term survival for short-term advantage.
Improvequality
Provide jobs& more jobs
Increasemarket
Decreasecosts
Return on investment
Stay in business
Improve productivity
Decrease prices
Deming�s Chain Reaction
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Positive Relationship b/w Quality & Productivity
Reduced productivity is caused by quality defects, rework, & scrap.
�Improvement of quality transfers waste of man hours & of machine
time into manufacture of good products & better service�.
(Dr. Edward Deming)pd
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Positive Relationship Between Quality & Productivity
Reduced productivity is caused by quality defects, rework, & scrap. �Improvement of quality transfers waste of man hours & of machine time into manufacture of good products & better service�.
(Dr. Edward Deming)
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Certain �hidden� & �Non-productive Plant exists to rework & repair defects & returns, & if quality is improved, this hidden plant would be available for increased productivity.
Any Quality Improvement that reduces defects - improvement in productivity.
Same can be said, for services & for those firms in services businesses. Cost of quality improvement rarely exceeds savings from increased productivity.
(Feigenbaum)
Contd�
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Myth # 3
Productivity Can Be Judged by Output
•Output may be rising without increase in productivity e.g. input cost risen disproportionately
•Increase in o/p compared with last year should also consider like price hike/inflation.
•Such an approach is result of being process oriented at the expense of paying attention to final results.
•Most common in LDC�s bureaucratic system.
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Myth # 4
Productivity is Applied only in Manufacturing & Production alone. pd
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Myth # 5
Cost cutting always improves productivity
When done in an indiscriminately make matters worse in long run
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Myth # 6
Productivity is �Labour Efficiency or Labour Productivity
False assumption - single factor productivity analysis.
•1976-82, UK Productivity in Agri Labor :
•Rose to 60% due to breeding, fertilizers sprays, land & tech (yield/hectare also increased)
•One Unit of Energy (fertilizer) grew less wheat in 83 than 1963. (Surprise)
•More appropriate yardstick of efficiency is then yield produced for each monetary unit spent.
•Productivity - much more than labour alone & take into account cost of energy, raw material & concern for unemployment / QWL.
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Myth #7
Productivity improvement requires billions of Rs and millions of trained persons.
•Common sense
•Short courses/formal train.
•Top level commitment
•Principles of TQM
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• �Greatest opportunity for increasing productivity is surely to be found in knowledge worker itself, & especially in mgt�.
• Peter F. Druckerpd
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Financial & social benefits of productivity improvement strategy should be greater than implementation cost, in
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Definition of Effectiveness & Efficiency
Productivity implies effectiveness & efficiency individual & organizational
performance.
Effectiveness is achievement of objective.
Efficiency is achievement of ends with least amount of resources.
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•Efficiency is concerned with
means
•Effectiveness with ends.
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Efficiency is ratio of actual
output attained to standard output
expected. Example
Output of machine is 120 units per
hours while standard rate is 180
pieces per hour, machine's
efficiency is 120/180 = 0.6667 or
66.67 percent.
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Efficiency
• Extent of useful output compared to input.
• Least amount of resources must be used to achieve useful output.
• Wastage reduction.pd
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Efficiency
• Management’s concern with minimizing resource costs without possible failure.
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Effectiveness
• Selection of proper objectives & their extent of achievement.
• High attainment.
• Performance.
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Effectiveness
• Management’s concern with completing activities.
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• Efficiency -relationship between inputs & outputs and its comparison . If you get more output for a given input, you have increased efficiency.
• Managers deal with input resources that are scarce money people, equipment they are concerned with the efficient use of these sources.
• Mgmt- concerned with minimizing resource costs. (Efficiency).
• Mgt concerned with getting activities completed-(effectiveness).
• When managers achieve their org goals-effective.
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Balancing Effectiveness & Efficiency
Effectiveness entails promptly achieving stated objectives.
Efficiency enters picture when resources required to achieve an objective are weighed against what was
actually accomplished.
Mgrs are responsible for balancing effectiveness & efficiency.
Too much emphasis in either direction leaders to mismgt.
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EffectivenessDepends upon when, how & to whom a manager
applies a style.
Mgmt styles & practices influence:
(a) org design, personnel policies,
(b) job design,
(c) operational planning & control,
(d) maintenance & purchasing policies,
(e) capital cost (working and fixed capital),
(f) sources of capital,
(g) budgeting systems &
(h) cost control techniques.
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Efficiency & Effectiveness
Mgt, is concerned with minimizing resource costs w/o chances of failure.
Efficiency is �doing things right�.
Mgt is also concerned with getting activities completed, so it seeks effectiveness.
Effectiveness is:
“Doing right things�
So efficiency is concerned with means & effectiveness with ends.
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• It is easier to be effective if one ignores efficiency. Some federal govt
agencies are reasonably effective
but
extremely inefficient.
• They get their jobs done, but at a very high cost.
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Mgt is concerned, then not only with getting activities completed (effectiveness), but also with doing so as efficiently as possible.
Can organizations be efficient & yet not effective?
Yes,
By doing wrong thing well !
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Management Seeks Efficiency & Effectiveness
Ends:Effectiveness
Means:Efficiency
GoalsHigh
attainmentLow
Wastepd
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Effectiveness/EfficiencyPeter Drucker
• Effectiveness
– Doing the right thing
• Efficiency
– Doing things right
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Productivity Index=
Output Obtained Input expended
= EffectivenessEfficiency
Productivity Index= f (Effectiveness)F (Efficiency)
Performance achieved
Resource consumed=
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• Efficiency & effectiveness are interrelated.
• It is easier to be effective if one ignores efficiency.
• Federal Govt. in Islamabad are reasonably effective -extremely inefficient jobs done but at a very high cost. pd
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Productivity at National Level Improves Economic Performance
• Increased Productivity can result in:
– Rapid Economic Growth.
– Higher Standard of Living.
– Improvements in Nation’s balance of payments.
– Inflation Control.
– Less capital investment.
– Increased employment opportunities.
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Major Issues of Productivity in Pakistan
• Inability to understand the basic concept of productivity.
• Inability to measure & manageproductivity of white collar employees-main reason for PS inefficiencies.pd
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Major Issues of Productivity in Pakistan
• Considering productivity enhancing initiative as an additional overhead.
• Across the board Rewards / benefits disregarding - equivalent in productivity.
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Major Issues of Productivity in Pakistan
• Diffused and unclear authorityunder institutional setup & inefficiency in complex organizations, cause delays and time lags.
• Low labor productivity in Pakistan is causing –”competitive imbalance”.
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Major Issues of Productivity in Pakistan
Exports -stagnant for past 12 yrs as -less competitive in world market due to low productivity.
• Increased “legislative intrusions or obsolete laws� result in constrained management options & prerogatives. No comprehensive attempt ever made by any institution to measure productivity at some higher and macro level in Pakistan.
• Pakistani industrial sector needs to reorganize itself to meet new global challenges, which can be possible through productivity measurement
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Major Issues of Productivity in Pakistan
• manufacturing -we are losing competitiveness, due to higher costs of production as customers turn to low cost product.
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Productivity in Pakistan:Issues & Lessons
• Increased National productivity not only means optimal use of resources,
but helps create
a better balance b/w economic, social & political structures in society.
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Productivity in Pakistan:Issues & Lessons
• Financial & social benefits of Productivity Improvement Strategy are far
greater than implementation cost in the long run.
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Increasing Productivity can break Vicious Circle of
Poverty, Low Productivity & Unemployment
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Low Productivity Trap in Pakistan
Conditionalities of donors.
Low productivity growth (compared with input prices esp. labor and energy).
Rising prices (domestic and export goods).
Rising per unit (labor and energy) costs.Sluggish sales (in domestic
and foreign markets). Unintended inventory in warehouses.
Lower utilization of domestic plant capacity.
Lagging capital formation (insufficient capital-labor ratio).pd
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Low Productivity in Pakistan
• This vicious cycle of poverty & unemployment can be broken by increased productivity.
• Increased productivity results in:– Optimal use of resources.
– Better balance between different stakeholders of society.
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Productivity Improvement in Pakistani Environment
• Productivity improvement will cause direct increase in standard of living.
• Pakistani GNP can grow without adding more input factors when productivity is improved.
• Productivity improvement will trigger economic growth.
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• In Singapore, increase in per capita GDP is attributed to labour productivity, which increased 400% from 1966~1983.
• Japan’s prosperity in 1980s is due to growth in manufacturing productivity.
• From 1979~1986, Japan’s productivity increased at 5.5% annually.
• Majority of increase in Phillipines -output (97.7%) -1900~1960, is due to increases in the extensive factors of production (i.e. the use of more resources), & only 2.3% is due to productivity.
•Lessons for Pakistan
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Lessons for Pakistan
• Caterpillar has achieved 27% greater sales, through investments in productivity enhancement of its workforce & technology.
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Difference B/W Production & Productivity Production is concerned with the activity of producing goods and or services.
Productivity is efficient utilization of resources (inputs) in producing goods or services (output)
Production is the quantity of output produced; productivity is the ratio of the output produced to the input (s) used.
Efficiency is the ratio of actual output attained to standard output expected. Example
Output of a machine is 120 units per hours while the standard rate is 180 pieces per hour, the machine's efficiency is 120/180 = 0.6667 or 66.67 percent
Effectiveness is the degree of accomplishment of objectives.
How well a set of result is accomplished reflects effectiveness, whereas how well the resources are utilized to accomplish the results refers to the efficiency.
Productivity is a combination of both effectiveness and efficiency, since effectiveness is related to performance while efficiency is related to resource utilization.
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Efficient & effective use of resources – labour, capital, land, materials, energy, time, information, etc. in production of goods & services that meet users, needs & requirements.
�Productivity is combination of effectiveness & efficiency” while “Effectiveness is related to
performance & efficiency to resource utilization”.
Rising & improving quality of working life do tend to go hand in hand.
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Productivity
• Partial Productivity.
• Total Factor Productivity.
• Total Productivity.
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Types of Productivity
Total-Factor Productivity
Ratio of net output to sum of associated �labor & capital� (factor) inputs.
By �net output� we mean total output minus intermediate goods & services purchased. Denominator of ratio is make up of only labor & capital input factors.pd
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Productivity Analysis
• Should help in appraising effects of changes in various physical input-output relationships on specified performance objectives subject to managerial control.
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Finding of Survey in Different Industries
• Average, only 4.4 hours per day are used productively;
• 1.2 hours lost due to personal and other unavoidable delays;
• 2.4 hours are simply wasted because of management�s inability to effectively plan and control the worker�s tasks.pdfM
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Productivity Loss
35 percent due to poor planning & scheduling of work.
25 percent due to unclear & untimely instructions.
15 percent due to inability to adjust staff size & duties during peak and valley workload periods.
25 percent due to poor co-ordination of material flow,
Unavailability of needed tools, Excess travel time.
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How can Orgs Improve Their Productivity
Productivity is composite of people & operations variables.
To improve productivity, mgt needs to focus on both.pd
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Productivity does not just happen by �trying harder�. It must be planned.
But how do you plan for productivity, & what factors are involved?
Frank. E. Cotton, Jr.
Mississippi State University
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Task of mgt is to evaluate those factors with have
bearing on productivity & take appropriate measures
to use effectively.pd
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Raise productivity, & to reduce cost, we must eliminate bad
features in design & specs that cause excessive work content.pd
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Increase Productivity Is Key To Global Competitiveness
Japan’s prosperity in 1980s -due to growth in manufacturing productivity.
Between 1979-86
Japan’s productivity increased - 5.5%
U.S productivity gained only 2.8% annually.
US firms responded over in 1990s -dramatic improvements.
Caterpillar investments in productivity (workforce & its tech) resulted in:
Higher customer satisfaction.
Increasing market share
27% greater sales
With 29% fewer employees.
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Productivity Improvement In Services
Productivity improvement is not just doing thing
better.
It�s doing right things better.
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Critical Barriers/Problems Affecting Productivity Improvement
Application on South Asia
• Family-controlled industry leading to earning easy money.
• Some Segments have monopolistic market, some hi competitive one.
• Erratic inflow of orders.
• Lack of productivity/quality culture.
• Shortage of funds & codification are at low level.
• Automation is not encouraged.
Contd�
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Critical Barriers/Problems Affecting Productivity Improvement
Application on Pakistan.
• Low priority of marketing & commercial activities, poor after service.
• Complicated govt. policy, rules & regulations.
• Inadequate communication facilities, particularly road transport.
• Energy shortage.
• Poor working conditions (light, ventilations, safety, housekeeping).
• Non availability of some basic material & components (to be imported), unreliable suppliers.
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Causes of Productivity Decline in Org
Inability to measure, evaluate, & manage productivity of white collar employees. This causes shocking waste of resources.
Rewards & benefits given without requiring equivalent in productivity & accountability. This causes spiraling inflation.
Diffused authority & inefficiency in complex org, thereby, causing delays & time lags.
Org expansion that lowers productivity growth. results in soaring costs.
Low motivation among rising number of affluent workers with new attitudes.
Late deliveries caused by schedules that have been disrupted by scarce materials.
Contd�
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Causes of Productivity Decline in Org
Unresolved human conflicts & difficulties in teamwork, resulting in firm�s ineffectiveness.
Increased legislative intrusions or antiquated laws, resulting in constrained mgt options & prerogatives.
Specialization in work processes resulting in monotony & boredom.
Rapid technological changes & high costs, resulting in decline in new opportunities & innovations.
Increasing demand of leisure time causing disruption of time commitments.
Practitioner�s inability to keep pace with latest information & knowledge.
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Critical Barriers to Productivity Improvement
• Too many hierarchical levels.
• Poor utilization of old factory & machinery.
• Skilled worker shortage. Overloaded engineering & design groups.
• Lack of time for development work.
• Trade unions adversity to productivity.pdfM
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Critical Barriers to Productivity Improvement
• Inadequate human resource development.
• Poor industrial relations.
• High absenteeism.
• Inefficient materials-handling facilities.
• Rigid & authoritarian management style.
• Excessive diversification.
• Poor documentation of technical problems.
• High social orientation.
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Suggestions for Productivity Enhancement in Pakistan
• Government support for productivity through propagating Productivity Consciousness in society.
• Initiating long term policies for productivity growth in Pakistan.pd
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Suggestions for Productivity Enhancement in Pakistan
• Economic vision geared toward the global challenges to enter in the next century with honor.
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Contd�
Govts can improve tax policy, develop better labour legislation, provide better access to natural resources, improve social infrastructure, price policy – but individual org cannot.
Factors external can motivate certain actions, which might change enterprises behavior & it s productivity LT.
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Suggestions for Productivity Enhancement in Pakistan
• Productivity improvement cells in all industrial units and govt. ministries.
• Productivity awards for the public & industrial sector.
• A productivity culture could be produced with help from organizations like NPO, SMEDA, FPCCI, UNIDO, ILO, etc.
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Frank. E. Cotton, Jr.Mississippi State University
Productivity does not
just happen by
�trying harder�. It
must be planned.
But how do you plan
for productivity, &
what factors are involved?pdfM
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When productivity & quality are considered together, competitiveness can be enhanced.
(Institute of Industrial Engineering- IIE)pdfM
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Service Productivity The service process is a complex, adaptive on-going social system. Less tangible, difficult to measure.
The inter-relationship between labour, capital & socio-org environment are important in the way they are balanced and co ordinated into an integrated whole.
Productivity improvement depends upon how successfully we identify and use the main factors of Service Delivery System.
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There are two major categories of productivity
External (Not controllable)
Internal (Controllable)
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External Factors Affecting Enterprise Productivity
External factors include government polices and institutional mechanisms: political, social and economic conditions; the business climate; the availability of finance, power water, transport, communications and raw materials. They affect individual enterprise productivity, but the org’s concerned cannot actively control them.
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Internal Factors require different institutions, people, techniques & methods.
External Factors – during planning phase.
First step towards improving productivity in Services is to identify problem areas.
External Factors are internal to govts, regional institutions, associations & pressure groups.
Contd�
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Model of Internal Productivity Factors
Internal Productivity
Factors
Soft Factors Hard Factors
Service or Product
Plant and Equipment
Technology
Materials and Energy
People
Organization and Systems
Work Methods
Management
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Productivity Simple Rule# 1
Productivity is composite of people & operations variables.
To improve productivity, mgt needs to focus on both.
How can Organizations Improve Their Productivity?
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Maintain a work environment conducive to the well being and growth of all employees measure employee satisfaction. Satisfied employees are productivity pd
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Matching Job Specs with available human ‘’’’’’’’’’’’’’’’’’’’’’’’’’’
Every job requires multiple knowledge, skills and personality
Different people may have deficiencies in
different areas
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Current Issues in Pakistan
1. Three Classes
Management
Supervisors
Workers
Status, Salaries, Privileges Training
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Leading Practices For Enhanced Productivity
• Integrate human resource (HR).
• Involve all employees.
• Use suggestion and recognition systems.
• Emphasize and support team work.
• Empower individuals and teams.
• Investments in training and education.
• Maintain a work environment.
• Monitor the effectiveness of HR.
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Empowerment
• Empowerment means giving people authority to make decision.
• Five of Deming’s points emphasize on empowerment.
• Empowerment creates trust among people.
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Suggestion Systems
• This is the process of evaluating and implementing the ideas of employees.
– AT Toyota nearly 3 million ideas generated every year out of which 85% are implemented.
– Cadillac asked teams to tear apart the Seville and rebuild it. They returned with 330 suggestions of how to improve it.
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Training and Education
• Training is given to employees to enhance their effectiveness.
• Xerox invested more that $125 million on its employees training.
• Motorola provides at least 40 hours of training to it’s employees.
• Training is a large cost in total quality initiative. But it repays manifold.
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Teamwork
A team is a group of people committed to a single purpose
Many types of teams are:
• Quality circles
• Problem solving teams
• Management teams
• Project teams
• Virtual teams
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Developing Successful Teams
The 10 ingredients suggested by Peter Scholtes are:
• Clarity in goals
• Defined roles
• Clear communication
• Beneficial team behaviors
• Balanced participation
• Well defined decision procedures
• Established rules
• Awareness of group process
• Use of Scientific approach
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Compensation and Recognition
Compensation and recognition refer to all aspects of pay and reward, including promotions, bonuses, and
recognition either monetary or non monetary.
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Leading Practices For Enhanced Productivity
• Integrate human resource (HR).
• Involve all employees.
• Use suggestion and recognition systems.
• Emphasize and support team work.
• Empower individuals and teams.
• Investments in training and education.
• Maintain a work environment.
• Monitor the effectiveness of HR.
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Current Issues
• Education is mostly subject-wise and not profession wise
• Education not directly driven by business and industry
• Weak infra – structure for HRD
– Weak HRD orientation
– Little orientation to collectivism
– Low buying power results in product prices
– People available all around
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Current Issues in Pakistan
• Employees attitudes
– Professional goals vs commercial goals
– Living very difficult with initial 5 years salaries
– Switch jobs when trained
– Win-lose rather than win-win attitude
– Little organized trainers
– Little orientation to systems
– Weak hiring skills
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Characteristics of Org for 21st Century• Action oriented
• Learned about needs of their customers
• Promoted managerial autonomy & entrepreneurship
• Achieved productivity by paying close attention to needs of their people.
• Driven by company philosophy often based on values of their leaders
• Focused on business they knew best
• Had simple org structure with learn staff
• Centralized as well decentralized, depending on appropriateness.
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Productivity Thru Motivation in Technoservice World
• Respect, appreciation, involvement
• Job security
• Removal of non-functional symbols of authority.
• Team bonus reinforces cooperation
• Individual bonus an be counter productive
– Reinforces servility & insecurity
– Destroys teamwork
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Contd�
• Measure term contribution to profit, to improvement of processesor produce, & to CSI rather than to narrow local or personal goals.
• Encourage experimentation with improvement ideas, accept risk of failure.
• Everyone is needed; each person makes differencepdfM
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Prudential identified five critical success factors that must beconsistency implemented well in order to widen its lead over competitors.
• People recruitment & retention
• Training
• Creative use of information tech.
• Accessibility to customers
• Performance measuring & monitoring
• Recognition for superior performance
• Customer satisfaction monitoring
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One Air force Gen pointed out value of personal visits “when I go to unit, I always stop by Battery Shop. It is fun for two reasons. First, I get watch how he tries to find Col.
Second, look on young airman’s face is always delight. You see, that young airman have dirty, dangerous job & my visit lets him
know that I do care.
That’s important to him & me.
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Management Styles
In some countries management is responsible for 75 percent of productivity gains, due mgmt is responsible for effective useof all Resources under enterprise control.
85 percent of quality & productivity problems in US common problems of the system that lie within province of mgt.
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Cadillac’s People Strategy Structure
Employees
People strategy teams
HRM Operating Committee
HRM Policy Committee (Executive Staff
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Top 5 Employee Needs
These top 5 needs are:
• Interesting work
• Recognition
• Feeling “in” on things
• Security
• Pay
Managers however believe pay to be number one.
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• Performance efficiency is a measure of the resource cost associated with goal accomplishment.
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o Action Oriented.
o Leaned about needs of their customer.
o Promoted managerial autonomy & entrepreneurship.
o Achieved productivity by paying close attention to needs of their people.
o Were driven by company philosophy often based on values of their leaders.
o Focused on business they knew best.
o Has simple org structure with lean staff.
o Centralized as well as decentralized, depending on appropriateness.
Contd�
Characteristics of Excellent Technical Enterprises:
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• Now, productivity could be considered as comprehensive measure of how orgs satisfy following criteria.
• Objectives: degree to which they are achieved.
• Efficiency: how effectively resources are used to generate useful output.
• Effectiveness: what is achieved compared with what is possible. Comparability: how productivity performance is recorded over time.
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•THANKS
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