Productivity

  • Why should a department head, marketing or branch manager, chief constable or fire officer, CEO or government minister bother about productivity?

 

  • Because, in the private sector, productivity determines sales revenue and profit margins, and hence the number of jobs available, the pay levels possible and the national tax-take potential

 

  • In the public sector, productivity determines unit costs and so the volume and quality of services that can be provided for the limited tax-payers’ money allocated

 

  • And, nationally, productivity determines the standard of living and quality of life of everyone living there

 

  • Little wonder, then, that Paul Krugman, Professor of Economics at Princeton University and Nobel Prize winner said: “Productivity is not everything but in the long run it’s almost everything”

 

Introduction

Productivity improvement has become a complex subject embracing most management disciplines, made even more complex by its measurement becoming more difficult as economies develop and services come to dominate   The upside of widespread productivity improvement is a vast increase in national economic growth rates and standards of living – mostly achieved by reducing unit …

Productivity Improvement steps

There are three steps for making big productivity improvements: Short term  = Cut waste Short/ Medium term = Optimise mix of costly resources and methods used Longer term = Invest in new skills and technology   “Productivity improvement will start a virtuous cycle of growth as goods and services offering better value provide for rises …

Why important for individuals

In the middle of the last century, nearly half of G7 family expenditure went on food and clothes – today, average families spend less than 15% on such basics Productivity improvement has not only increased incomes but also released more discretionary income to buy non-basic stuff – goods and services that people ‘like to have’ …

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 …

Why important for nations

National productivity is the single most important gauge of an economy’s health – nothing matters more for long-term living standards than improvements in the efficiency and effectiveness with which an economy employs and combines its capital and labour And national productivity growth is the only sustainable source of improvement in the standard of living – …

What scope to improve?

In G7 nations, the evidence suggests there are many more organisations performing below rather than above the median   Not only that: 80% never seek to improve by much at all Most of the other 20% only target the next performance level up and, once that is achieved, elect to do little more   The …

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