Productivity

The prosperity of nations and organisations alike is recognized as being dependent upon their comparative productivity. In times of increasing competition, this has been brought sharply into focus. Today, managers, supervisors and workers alike are all under constant pressure to raise productivity. WHY? This is because HIGHER PRODUCTIVITY provides opportunities for raising the general standard of living including opportunities for:

a) increased real earnings. b) Improved working conditions and a shorter working week. c) Larger outputs at lower cost per unit, and therefore lower prices. d) A strengthening of the economic foundations of human well-being (less industrial strife).

Productivity may be defined as the ratio of output over input. Frequently measures as the output per machine-hour or output per man-hour. However one should determine the key factor in productivity ratios by considering the resources that make up the greatest percentage of total costs. It is the productivity of these factors that has to be improved upon to substantially affect the entire situation in the firm as a whole.

Productivity in industry

In industries where labour costs are low compared with material costs or the capital invested in plant and equipment, better use of materials or plant will give greater scope for cost reduction. On the other hand, in those industries where labour costs are high compared with capital costs, it becomes important that the highest output per worker is achieved.

Material productivity

The relative importance of each resource varies according to the nature of the enterprise, the country in which it is operating, the availability and cost of each type of product and process. There are many industries in which the cost of raw materials represent 60% or more of the cost of the finished product, the balance of 40% being divided between labour and overhead costs. Under such conditions, the productivity of materials becomes a key factor in economic production or operation. Materials productivity measures materials costs in terms of output. This should be carefully monitored by VALUE ANALYSIS. Material productivity reflects materials used and material cost.

Plant productivity

When an enterprise is machine dominated, one has to calculate plant productivity.

Output in money value Machine hours

This measure of efficiency reflects a) downtime b) output rates c) throughput

Management performance can be measured by the use of Value Added Index:

A.V.I. = Total Employment Cost Value Added

(Value Added is the difference between value of output and input)

Added value index measures management performance because: a) unlike profit, it is less affected by factors outside a manager's control. b) It focuses on a fundamental task of management - responsibility for employee productivity

The background to productivity:

To achieve the greatest increases in productivity, action must be taken by ALL sections of the community: government, trade unions, workers and employers.

a) Governments can create the conditions most favourable to employers and workers to raise productivity by:

- providing a balanced programme of economic development taking the necessary steps to maintain employment levels. - Creating training opportunities for anyone becoming redundant as a result of productivity improvement programmes. - Cultivating good industrial relations.

b) trade unions can improve the standard of living of their members by encouraging them to participate in schemes aimed at raising productivity.

c) management must create good human relations and obtain the cooperation of the workers, which is most essential for any success. It should strive to create that climate favourable for introducing productivity improvement programmes.

d) Workers - one of the greatest difficulties in obtaining the active cooperation of the workers is the fear that raising productivity will lead to unemployment. Resistance can generally be reduced to a minimum if everybody concerned is made to understand the nature of and reason for each step taken and has some say in its implementation.

The manager's role

Many studies have shown a relationship between high productivity and the manager/supervisor's interest in his subordinates as individuals. Employees look at their supervisors as a source of help; they are there to give them a sense of direction. Unless supervisors are aware of this fact, improvement in productivity cannot be achieved.

Every manager should be aware of the basic principles involved in METHOD IMPROVEMENT. If there's always a better way, how do we set about finding it?

METHOD IMPROVEMENT How the TOTAL TIME of a job is made up.

The time taken by a man or a machine to carry out an operation or to produce a given quantity of product may be considered as made up of:

1. Basic work content is the irreducible minimum time theoretically required to produce one unit of output. It is the time the product would take to manufacture or the operation to perform if the design or specification were perfect, if the process or method of manufacture or operation were perfectly carried out, and if there were no loss of working time from any cause whatsoever during the period of operation. 2. excess work content: added by defects in design or specification of product and by inefficient methods of operation or manufacture. 3. ineffective time: due to shortcomings on the part of management and/or worker.

HIGH PRODUCTIVITY is achieved where the EXCESS WORK CONTENT and INEFFECTIVE TIME for a job are small or have been eliminated, and the BASIC WORK CONTENT is a high percentage of the total time for the job.

Refer to management techniques on how to reduce work content and ineffective time.

No productivity improvement programme can succeed without:

- measurement. - Commitment. - Feedback. - Action.

All committed to IMPROVEMENT PROGRAMMES now. MANAGEMENT CHALLENGE OF THE YEAR 2000

PERSUADE HUMAN BEINGS TO CHANGE, TO DO AN UN-NATURAL ACT.

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