↑ Return to Productivity

Why important for organisations

  • Productivity improvement has had an enormous impact on most people’s lives, at least in the G7 nations – office workers and carpenters, teachers and taxi drivers, all earn on average so much more than they do in India or Africa, say

  •  In the middle of last century, over 40% of G7 family expenditure went on food and clothes – today, it’s only 10 to 15% for such basics – productivity thus also increases disposable incomes to buy non-basic things – stuff one would ‘like-to-have on top of  ‘must-have’  

  • Manufacturing has had spectacular success in reducing unit costs and so prices of most household items whilst greatly improving quality and service levels offered viz:
    • Consider the cost and quality of modern motorcars, white goods, staple food or table wine versus 50 years ago – they’re affordable to all and not just a few
    • Watch container ships at any port, each one carrying over 15,000 containers, equivalent to over 1,000 small freighters in the olden days
    • See how personal computers now have infinitely more power than the huge air-conditioned mainframes of the 60s, and at a fraction of the cost – Moore’s Law (from Gordon Moore, co-founder of Intel) states that “the performance of computers per unit cost – the bangs per buck – doubles every two years”

 

  • In private sector services, similar successes include:
    • The media, where the number, reception and quality of TV and radio channels and programmes has been improved by quantum leaps in the last 50 years – and expensive time-consuming typesetting has been replaced by computer technology in the last 30
    • The telecommunications sector, where new technology has transformed people’s access to information, music and each other in the last 20 years
    • The retail sector, where supermarkets offer far more at better prices, quality and convenience than their ‘high street’ competitors ever did – customers already order goods from home and have them delivered the next day

 

  • Sadly, the same does not appear to be happening in other sectors – their unit costs keep rising faster than inflation – they lack any significant competitive pressure to increase their productivity and get their costs down – for example, in the UK alone, the general view is that:
    • The law is too expensive, too long-winded and too risky for most people
    • The police are considered to be “poor at dealing with crime”
    • Local governments “vary widely in their performance levels” – many are thus not serving their local people well
    • Passports from the Home Office can take far too long to renew
    • Taxation errors by HMRC run into millions
    • The National Health Service shows “little improvement in productivity” according to the ONS

 

 ·  If true, the public deserves better

 

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