For most of us, we look at productivity as being a goal post of sorts. We strive to be more productive by getting more widgets manufactured in a given shift, in using less metal to make those widgets and by deploying fewer resources to operate the machines that produce those widgets.
The formula for being more productive is pretty simple too. Make more by using less. Through some advanced algorithms, JIT distribution and continuous evolution of processes, we can tweak the productivity even more…to a point.
Many companies have looked at productivity as being their differentiator in their industry, and to a certain level, they can exploit this advantage and reap the rewards…again, to a point.
Once the processes have been streamlined, and the resources are working optimally, and the manufacturing equipment maximized, where do you look next for more productivity?
Before we can have a wholesome discussion about productivity, let me define, in this context, the two definitions I am using:
Productivity: The effectiveness of productive effort to transform inputs into outputs that have a higher value than the inputs individually. Calculating productivity traditionally follows:
Productivity = Output Volume / Input Use
Example: It takes 100 units to create 50 widgets. Meaning your productivity ratio would be equal to 0.5. The ration results don’t mean a whole lot until you compare your productivity ratio against your industry standard or your direct competition. If they are above .5, you know they are producing more or using less to create the same volume. Likewise, if their value is below .5, you know you are producing at a higher capacity or with fewer input units.
The equation reflects that if your volume increases, using the same or fewer inputs, you will be more productive. It also shows that managing your resource contributions more effectively (cheaper labour, better costing, more efficient or cost-effective distribution/storage), will have a positive impact on your productivity, and by default, your bottom-line.
This equation might be eye-opening for some, and it might be a ‘so what’ for others. The point being, you need to understand where you are in ‘your’ ecosystem before you can look at ‘how’ to be more productive. If you don’t measure, you don’t know if you are getting better or worse at managing your productivity and your outputs. Sales volume doesn’t help, nor does product turns in your warehouse.
With measurements, we can see how changes in our approach to input management can impact our volume, but what other considerations come to mind?
Considering Deming and others have created a plethora of materials that everyone can leverage to streamline and evolve their ‘productivity’ from an input and output point of view, let’s take a look through the common denominator for more opportunities. In this case, it’s your people.
Focusing on your people, we can look at efficiency and performance and see how exploiting those opportunities can create a more engaged and involved team. That engagement, in my view, is much more valuable in the long-term than only looking at ‘productivity’ adjustments for all the answers.
Looking at the efficiency definition, we get: ‘The measure of the ability to avoid wasting materials, energy, efforts, money and time in doing something or in producing a desired result.’
We can see how being more efficient links directly to our input equation and creates opportunities to be more productive. Efficiency nevertheless isn’t a product of time or space; it’s a product of people and engagement.
Active engagement of resources is the key. Many organizations miss out on the opportunities personal involvement can provide because of the culture and structure of their management functions. Authentic engagement requires open, non-judgemental discussions, where you park agendas at the door, and a blanket of honesty without reprisals is applied.
Many studies have shown that the development of engaged employees has a direct and measurable impact on those employees’ productivity and performance and has been linked to increased value when it comes to discussions related to improving processes and activities. After all, it’s better to get feedback from the people who perform the task on how to make it better than to make assumptions based solely on academics and gut feel.
If engagement has the potential to have a measurable impact on performance (and productivity by default), then how do we increase the engagement? Inc.com provides a prescriptive approach to increase engagement, with a warning that increasing engagement isn’t a quick fix, nor is it for those who struggle with applying leadership principles in their daily lives. Inc.com outlines the approach as:
- Lead by example: consistently show others what is acceptable through your actions. When you see others following your lead, support and praise their efforts, others will follow once they see its ‘OK’ and rewarded
- Make new settings for communications: find new locations for meetings and discussions, find new ways to drive engagement (don’t just ask your stars to attend group discussions, ask others who have opinions and find ways to encourage them to open up)
- Reward honest dialogue: People will do what is measured and rewarded. Make them feel their input has value and reward when they drive engagement
- Encourage teamwork: encourage your employees to work together. No one has all the answers, and many times, new ideas are born from those who don’t always operate in the same ‘box.’ Encouragement helps break down ‘group-think’ challenges and opens the floor for new directions
- Show people how to offer honest feedback: one challenge many organizations face is when people confuse candor with confrontation. Set the guidelines, practice with your teams and continually show them how to structure their discussions to be candid and open and not confrontational and angry
Though you might get faster performance and productivity changes from the adjustment of your processes and pricing models, your long-term productivity advancements will come from your company culture and employee engagement.