Work hard or work well?

Many say the secret for a good life is ‘work hard and play hard’

Leila Hock, in an article for Career Contessa, disagrees – ‘work hard’ apparently “makes my eyes roll a little”

She believes we’ve become too preoccupied with “the grind” and it’s actually bringing us down – “It has a negative effect on productivity”

When people say they’re working hard they mean they’re putting a lot of time in – this mindset is because our economies once hinged on time:

  • Workers ran machines or performed rote tasks, and those machines and tasks would give a pretty static output per hour
  • Occasionally, someone would find a way to increase output per time unit but, usually, more time spent led to more productivity

 

Nowadays, developed economies have transformed into knowledge economies, and they require brainworkers/ thinkers to produce new/ better ideas, decisions and results

The problem is that appropriate performance measures to monitor their progress at work have not been developed – instead, the old familiar industrial-age measures and thinking continue to be used for the new economies

People still tie time to the value of work, not least because measuring time is easy – it’s a number and numbers can be easily compared

Hence, when most managers see someone arriving early at the office, leaving late and responding to emails at all hours of the night, they usually think said employee is committed to her work and trying hard – why would she spend all that time that way otherwise?

What most managers need to do is start measuring the value of employees’ work – and that means truly understanding why they were hired and what they were required to produce – and it’s not just the quantity but the quality of their output that now matters

Few managers do this at present, however, not least because it would take considerable time – and as hours input wins their attention more than productive work, such an exercise is deemed ‘a waste of valuable time’

Consider also the professions that still bill clients solely by their time inputs rather than ways which reflect quantifiable results achieved – and who value their employees by the hours/ days billed regardless of the value obtained by the clients – for example:

  • Lawyers
  • Management consultants
  • Accountants
  • Marketing and PR consultants

 

Leila ends up saying that, instead of such archaic thinking, what’s needed nowadays is a focus on ‘working smarter, not harder’ for the benefit of both customers and employees

Conclusions:

  • Success is no longer determined by hard work and long hours
  • Success comes from using time productively and being effective
  • That requires a focus on what one is trying to accomplish each day and week
  • And, once completed satisfactorily at least, one should relax

All nations need a National Productivity Centre

An article by Lalin Fernandopulle in Sri Lanka’s Sunday Observer, headed ‘Productivity policy vital for economic growth’, promotes the worth of all nations having a National Productivity Organisation 

Sri Lanka is the only APO (Asian Productivity Organisation) member country which does not have an NPO (National Productivity Organisation).

Company director Sunil Wijesinghe says: “Setting up a fully-fledged stand-alone NPO is the way forward for industrial and overall economic growth in Sri Lanka”

He said their National Productivity Secretariat (NPS) is still only a unit under a Ministry while in Singapore and Malaysia they are powerful statutory bodies.

The USA was the most productive nation at the end of the World War 2 – Japan realised Asian countries lagged behind in economic growth and initiated the Asian Productivity Organisation (APO) in 1961 with Asian member countries – Sri Lanka too joined, albeit a few years later

Most other Asian countries had open economies at that time, and developed their productivity programmes fast

For example, the Japanese Government carried out a massive program to inculcate good productivity habits and promote productivity techniques and practices in the 1960s through radio and TV programmes but later it was the private sector that carried it forward through the Japanese Union of Scientists and Engineers (JUSE) and the Japan Productivity Centre for Socio Economic Development (JPC-SED).

At the start of the National Productivity decade in 1996 Sri Lanka started emulating Singapore but later the focus changed.

Singapore claims their productivity programmes have helped economic growth substantially – they had the highest patronage with former Prime Minister Lee Kuan Yew initiating the programme when the annual productivity theme was launched each year – the initial focus of the program was to make government institutions more productive.

A few Sri Lankan enterprises have adopted good productivity practices while others lag. We need a massive re-launch of productivity enhancing programmes in Sri Lanka.

Not only industrial growth but also overall economic growth can be influenced by productivity because productivity improvement techniques can be applied not only in factories but also in offices, plantations, schools, government offices and even homes

Sri Lanka lags behind in industrial growth since economic policies are not consistent – frequent policy changes wreak havoc on the strategies of private companies.

What is needed is for policy makers to prepare a comprehensive medium-term strategic economic plan, in a similar way to strategic corporate plans – Singapore prepared a Strategic Economic Plan in 1990 and stuck to it.

Thereafter we need to communicate it to the people using tried and tested change management programmes so that the population buys in to it.

The ideal would be economic policy stability even with changes of government.

During a productivity study tour to Singapore in the 1980s, and following a briefing at the then Singapore Productivity Board, one of our Sri Lankan colleagues visited the wash room and, having seen a notice there which said “20 dollar fine if you don’t flush”, came back and asked the Director conducting the briefing how they could identify who the culprit is. His response was: “How come only Sri Lankan visitors ask this question? The notice in the toilet is a mere deterrent,” he said.

He said having observed the happenings in Sri Lanka, Singaporeans believe that Sri Lankans are overly legalistic, and this hampers progress.

Today every newspaper, radio and TV channel gives pride of place to (anything other than) coverage of management, productivity, or economics

We should focus on building up our economy and improving the productivity of our enterprises

And setting up a properly resourced NPO would be a good start

N.B. The same void exists in the UK where there is no well resourced/ well-known UKPC – Why?

UK industrial strategy

The UK government’s ‘Industrial Strategy’ for making the UK more competitive and the economy better-balanced essentially involves ways to increase R&D investment, and workers’ skills

In particular, it covers five areas for productivity improvement – Ideas, People, Infrastructure, Places and Business environment

Four “grand challenges” are also recognised:

  • Artificial intelligence and machine learning
  • Clean growth
  • Future mobility
  • Ageing society

 

UK Prime Minister Theresa May has since confirmed her commitment to raise R&D spending to 2.4 % of our national income – an increase of £22 bn over the next 12 years when it increased by just £6.6bn over the last 12 – her aim is to “help the UK become the ideas factory of the future”

So is the strategy working?
The biggest challenges for smaller (SME) manufacturers are said to be poor cash flow, high energy costs, reduced margins, competition from Asia, lack of skills and an ageing workforce i.e. not those listed in the grand strategy

Enter the HVMC – High Value Manufacturing Catapult – and Innovate UK – the national innovation agency:

  • The HVMC is a network of seven centres who work with industries, large and small, to prove and de-risk technologies that can be adopted in their own factories to improve productivity and quality
  • It’s funded through the BEIS – Business, Energy and Industrial Strategy Department – and Innovate UK
  • It’s tasked with engaging SMEs and measuring the impact of the Catapult on improving SME competitiveness

 

It’s also where Siemens CEO  Jürgen Maier’s “Made Smarter” programme comes in by facilitating the adoption of digital manufacturing technologies such as robotics and automation, augmented and virtual reality, artificial intelligence and machine learning which could unlock big improvements in productivity

Linking “Made Smarter” to existing growth hubs, however, is seen as a risk. While it may eliminate duplication, its success will depend on getting people in post who understand industrial digitisation and the challenges of change-averse business cultures

Universities are also being pushed into this frontline – increasingly they will have to share their knowledge, expertise and other assets for the benefit of the economy and society

Last, an independent council has been set up to oversee the delivery of the strategy, headed by Andy Haldane, chief economist at the Bank of England i.e. he’s not a manufacturer but ‘familiar with monitoring government performance on key economic indicators’ – the council will scrutinise R&D spend, seek to keep the UK economy on track and assess whether the Industrial Strategy’s aims are being delivered

So the UK has a plan, albeit one which addresses only 15% of the total UK economy i.e. the manufacturing sector alone – expert advisers are in place, professional monitors are watching key indicators and targets have been set

What could possibly go wrong?

Financial cardinals needed

Of the many financial measures available, only three qualify as financial cardinals – the ones whose alarm bells must ring to prompt action in good time

They are total revenue, total cost and profitability

They’re ‘catch-all’ measures covering all outputs, outcomes and inputs:

  • Total revenue covers net outputs sold and outcomes the customers took into account before making their purchases
  • Total cost covers the mix of costly input resources used
  • Profitability covers how well those input resources were used – a ‘total productivity’ measure in effect

 

Trends in each one need to be regularly monitored

In the private sector, the three must be monitored together – otherwise managers might be tempted to make themselves look good by boosting one at the expense of another

For instance, senior managers have been known to buy other companies to boost their revenue and profits growth record – however, their capital employed will also have increased so profitability, not profits, may well have fallen

In the public sector, there’s only one financial cardinal – total cost

Overall, if something goes wrong, it may not show up in the financial cardinals – minor failures can be cancelled out by minor successes when results are aggregated

But, if something goes badly wrong ‘below decks’, it should be noticed not only by the manager responsible but also his peers – transparency and honesty between them all are key

And once understood, quick action will be vital – hence, financial cardinals must always be presented in good time, not months later as many are

To quote Dr Devi Shetty, chairman of the Narayana Cardiac Hospital in India: “If you get the profit and loss at the end of the month, it’s a post mortem, the patient is dead – if you get the profit and loss daily, it’s a diagnosis and you can treat”

Financial metrics are not enough

  • How do you know if an organisation has performed well?

 

  • If it’s a private company, financial results will reflect customers’ valuations of what they were offered and translate them into revenue and profits

 

  • If it’s a public sector unit, the tax-paying public will judge quality and service levels received – actual costs are not their concern unless their taxes become unacceptably high – until then, they leave it to service unit managers and government ministers to manage resources needed and so costs

 

  • Currently, there’s a glut of financial measures available and, confusingly, more than one definition for some of them – they include:
    • Free Cash Flow – FCF
    • Net Assets – NA
    • Capital employed – CE
    • Return on Sales – RoS
    • Return on capital employed – RoCE
    • Asset turn
    • Added value – AV
    • Economic value added – EVA
    • Gearing
    • Working capital
    • Liquidity

 

  • The problem, as Peter Drucker once pointed out, is: “Financial accounting is an X-ray of an enterprise’s skeleton but most of the diseases we commonly die from such as heart attacks, cancer or Parkinson’s disease do not show up in a skeletal X-ray – a loss of market standing or failure to innovate does not show up in an accountant’s figures unless the damage has gone beyond repair”

 

  • Hence, financial measures have their limitations

 

  • And they don’t drive results – they’re the results of actions already taken – they show where an organisation has been, rather than where it’s going

 

  • Warren Buffett famously described them as ‘rear mirror, not windscreen’ measures

 

  • Using them alone would be like steering a boat by watching its wake and hoping there are no dangers ahead

 

  • That said, there are some financial measures which are vitally important – the financial cardinals, detailed later