In the Caribbean we have been talking for a number of years of the need to increase our productivity. So here are my views on how to achieve it.
For a definition of Productivity from by Paul Krugman of the Organization for Economic Cooperation and Development (OECD) see http://www.oecd.org/std/productivity-stats/40526851.pdf
There are number of different measures but common ones are employee inputs (work hours) as a ratio to employee outputs (goods produced). Such measures don’t consider all the factors that go into producing a specific output. Moreover, many of these measures work well for Manufacturing Industries but are somewhat inappropriate for the Service industry where outputs sought may be ‘increased in the number of room occupancies’ or X products sold. In such cases more hours doesn’t necessarily generate more business. In fat in the Service Industry such measures can have negative consequences. For example, when I was in legal practice the focus was on inputs, i.e. total No. of ‘billable hours’, not just the hours you were at work but those you could charge the client for! This led to Attorneys seeking to clock hours however they could, whether or not the activities were really needed, and, without concern for quality. The result was unhappy clients who felt they were ‘price gouged’. This led to client’s asking for itemised bills, and instantly our professional service became a commodity based on price not value.
So what’s the answer?
Many new productivity measures have been added, including indicators that measure quality but does this go far enough? It is still grounded in the concept of outputs when in other areas of management we have moved away from focusing on outputs to focusing on ‘outcomes’. Outcomes are…..these are intimately linked with an organization’s strategic objectives in a way that productivity never is. Outcomes go beyond productivity to look at organizational performance.
“Organizational performance has been defined as: An analysisof a company’sperformanceas compared to goalsand objectives”.
Source: http://www.businessdictionary.com/definition/organizational-performance.html#ixzz2RFvxz147 [accessed 23.04.13]
When we look at measuring Organizational performance we look at a range of measures which may include productivity measures but will also look at Financial indicators, Human Capital Indicators, Technology Indicators or whatever indicators are relevant for your organization to fulfill its strategic goals and objectives.
A recent study by the Institute for Corporate Productivity identified five (5) key factors which have the potential to raise productivity within organizations, namely:
Effective leadership
Establishment of a high productivity/performance corporate culture
Employee engagement practices – whereby workers mentally and emotionally invest in their work and contribute to the organization’s success
Training and development
This study demonstrates that it is time for the Caribbean to move beyond a narrow focus of productivity. It is time to put our energies into driving organizational performance in doing so we will achieve productivity and much more.