competitiveness through productivity special presentation ... 1 competitiveness through productivity...

Competitiveness Through Productivity

Special Presentation for NPO

By Dr. Ali Sajid

01 July 2005

alisajid61@yahoo.com

Tel: 051-287-1703(off),

Competitiveness & Productivity: Concepts:

Ignored Issue in Pakistan�s Industry

�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

• Nobody Could make a greater mistake than he

who did nothing because he could do a

littlepdfM

• 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�

EVERY THING THAT IS DONE IN

WORLD IS DONE IN HOPE.

MARTIN LAUTHER

Vision without Action is

A Dream

Action Without Vision is

An Activity pd

Minds are like Parachutes

They work onlywhen they are

Openpd

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.

What is Competitiveness?

Competitiveness

• Ability to get customers to choose your product or service over competing alternatives on sustainable basis.

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�.

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."

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

standard of living

Productivity

(Quality should exist)

Investment in productive facilities

(Factors, R&D, technology)

Competitiveness Pyramid

Source: Based on US Council on Competitiveness, 1995.

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

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�

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

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.

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)

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.

• 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

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�.

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�.

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�.

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.�

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.

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.

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.

• Higher productivity means accomplishing more with same

amount of resources

achieving higher output in terms of volume & quality for same

input.pd

• Relationship b/w results & time it takes to accomplish

• Time is often good denominator to since it is achieve desired result,

more productive system.

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.

� 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

Depends on:

� Sophistication with which companies compete &

� Quality of microeconomic business environment".

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.

• “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.

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.

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.

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.

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).

Problem faced in LDC is problem not of

underdevelopment but rather of under mgt.

Actually productivity is most serious challenge confronting mgt.

Peter Drucker

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.

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.

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.

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

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.

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.

Productivity Management

• Handling entity for improvement.

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.

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:-

• 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.

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.

Quality & Productivity Go Together

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

THE QUALITY PRODUCTIVITY RELATION SHIP

Contd�

LessRe-Work

MoreProductivity

Improve Quality

LessonRe-workpd

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

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

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

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)

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�

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.

Myth # 4

Productivity is Applied only in Manufacturing & Production alone. pd

Myth # 5

Cost cutting always improves productivity

When done in an indiscriminately make matters worse in long run

Cut on info Tech use, Ban on Training etc. pdfM

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.

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

• �Greatest opportunity for increasing productivity is surely to be found in knowledge worker itself, & especially in mgt�.

• Peter F. Druckerpd

Financial & social benefits of productivity improvement strategy should be greater than implementation cost, in

long run.pd

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.

•Efficiency is concerned with

•Effectiveness with ends.

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.

Efficiency

• Extent of useful output compared to input.

• Least amount of resources must be used to achieve useful output.

• Wastage reduction.pd

Efficiency

• Management’s concern with minimizing resource costs without possible failure.

Effectiveness

• Selection of proper objectives & their extent of achievement.

• High attainment.

• Performance.

Effectiveness

• Management’s concern with completing activities.

• 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.

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.

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.

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.

• It is easier to be effective if one ignores efficiency. Some federal govt

agencies are reasonably effective

extremely inefficient.

• They get their jobs done, but at a very high cost.

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?

By doing wrong thing well !

Management Seeks Efficiency & Effectiveness

Ends:Effectiveness

Means:Efficiency

GoalsHigh

attainmentLow

Wastepd

Effectiveness/EfficiencyPeter Drucker

• Effectiveness

– Doing the right thing

• Efficiency

– Doing things right

Productivity Index=

Output Obtained Input expended

= EffectivenessEfficiency

Productivity Index= f (Effectiveness)F (Efficiency)

Performance achieved

Resource consumed=

• 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

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.

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

• Considering productivity enhancing initiative as an additional overhead.

• Across the board Rewards / benefits disregarding - equivalent in productivity.

• Diffused and unclear authorityunder institutional setup & inefficiency in complex organizations, cause delays and time lags.

• Low labor productivity in Pakistan is causing –”competitive imbalance”.

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

• manufacturing -we are losing competitiveness, due to higher costs of production as customers turn to low cost product.

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.

Productivity in Pakistan:Issues & Lessons

• Financial & social benefits of Productivity Improvement Strategy are far

greater than implementation cost in the long run.

Increasing Productivity can break Vicious Circle of

Poverty, Low Productivity & Unemployment

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

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.

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.

• 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

Lessons for Pakistan

• Caterpillar has achieved 27% greater sales, through investments in productivity enhancement of its workforce & technology.

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.

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.

Productivity

• Partial Productivity.

• Total Factor Productivity.

• Total Productivity.

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

Productivity Analysis

• Should help in appraising effects of changes in various physical input-output relationships on specified performance objectives subject to managerial control.

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

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.

How can Orgs Improve Their Productivity

Productivity is composite of people & operations variables.

To improve productivity, mgt needs to focus on both.pd

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

Task of mgt is to evaluate those factors with have

bearing on productivity & take appropriate measures

to use effectively.pd

Raise productivity, & to reduce cost, we must eliminate bad

features in design & specs that cause excessive work content.pd

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.

Productivity Improvement In Services

Productivity improvement is not just doing thing

better.

It�s doing right things better.

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�

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.

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�

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.

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

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.

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

• Economic vision geared toward the global challenges to enter in the next century with honor.

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.

• 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.

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

When productivity & quality are considered together, competitiveness can be enhanced.

(Institute of Industrial Engineering- IIE)pdfM

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.

There are two major categories of productivity

External (Not controllable)

Internal (Controllable)

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.

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�

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

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?

Maintain a work environment conducive to the well being and growth of all employees measure employee satisfaction. Satisfied employees are productivity pd

Matching Job Specs with available human ‘’’’’’’’’’’’’’’’’’’’’’’’’’’

Every job requires multiple knowledge, skills and personality

Different people may have deficiencies in

different areas

Current Issues in Pakistan

1. Three Classes

Management

Supervisors

Workers

Status, Salaries, Privileges Training

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.

Empowerment

• Empowerment means giving people authority to make decision.

• Five of Deming’s points emphasize on empowerment.

• Empowerment creates trust among people.

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.

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.

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

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

Compensation and Recognition

Compensation and recognition refer to all aspects of pay and reward, including promotions, bonuses, and

recognition either monetary or non monetary.

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.

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

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

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.

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

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

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

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.

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.

Cadillac’s People Strategy Structure

Employees

People strategy teams

HRM Operating Committee

HRM Policy Committee (Executive Staff

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.

• Performance efficiency is a measure of the resource cost associated with goal accomplishment.

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:

• 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.

•THANKS

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