Productivity is output per employee -- and much more. Processes, technology, functions and suppliers are major contributors to productivity, but many organizations fail to include them in their evaluations of productivity and efficiency. Significant savings can be realized by examining productivity across several key leverage points:
- Productivity measurement
- Process efficiency
- Technology deployment
- Internal customer service/value
- Supply chain management
- Functional silos
- Workforce cross training
- Talent management
- Innovation
- Organizational learning
Productivity has been a key benchmark of economic health and prosperity ever since the industrial revolution. It is an important highlight in Alan Greenspan's discussions with Congress regarding the nation's future economic outlook. And while productivity is a "leading" indicator" -- or predictor -- of economic health, it is also a lagging indicator that has been decisively affected by other indicators such as investments in technology, training, research, political decisions, and cultural values at both the country or local level.
The economy is made up of many companies, organizations and individuals that contribute to, influence, or drive productivity. At the company level, productivity is usually driven by a number of leading indicators such as employee competencies, motivation and focus, process efficiency and effectiveness, technology deployment, innovation, organizational learning, and others.
How productive is your organization? Take a look at these common symptoms of productivity failure:
If your organization is characterized by …
- Weak or missing measures of productivity drivers and results. Typical culprits: inadequate cause-and-effect thinking, and measurement-review processes.
- Mediocre to poor process efficiency leading to weak outputs or deficient performance. Typical culprits: lack of an integrated approach and process redundancy.
- A lack of ROI on technology deployment. Typical culprits: hurried implementation and ineffective training programs.
- Internal customer service failure. Typical culprit: a focus on activities rather than the value provided to the end user.
- Misaligned supply chain objectives. Typical culprits: customer/supplier strategies are not mapped to the organization's strategy, vision, and values.
- Misaligned customers and suppliers. Typical culprits: Chasing the wrong customers, providing excessive service to non-priority accounts, supplier failure to conform to quality and delivery standards.
- Productivity bottlenecks. Typical culprits: employees with narrow skill sets, low adaptability, and limited cross training.
- Learning lag. Typical culprits: inability to effectively accelerate individual learning and transfer knowledge across the organization.
- Fuzzy innovation output. Typical culprits: inability to measure innovation, manage new idea development, and capture and apply learning to new products, improved processes, and smarter use of skills.
If these symptoms sound all too familiar, then chances are your organization has suffered the typical consequences: time and cost overruns, excuses -- and lot of them -- for missed objectives, oversights that create gaps in deliverables, high cost of rework and poor return on investment. Is there a common root cause for such common maladies?
Productivity improvement is too often addressed like any other change initiative: in shotgun fashion. In the early 1990s, many people attempted to "reengineer" every process. While some reengineering efforts yielded quick, short-term results, they often failed to provide longer-term benefits because of the disruptions in technology and processes, resistance from functional silos, lack of employees understanding of how their roles and accountabilities fit in with the business strategy, and an absence of incentives and motivation to change.
The root cause of so many failed change efforts: a lack of measurement within a strategic context. Many organizations began such efforts without having clearly defined the gap between strategy and implementation that, if closed, would have the most significant impact on productivity, and without clear measurable goals that were linked to strategic outcomes, such as customer retention. In addition, most change efforts had limited measures of the effectiveness of the improvement effort, and fewer still had measures of the impact of such changes on other key strategic objectives, especially those being managed by a "competing" silo. And finally, only the enlightened few had measures of short and long-term impact.
Metrus Group approaches productivity holistically, knowing the importance of applying different solutions for different productivity gaps. To do this, a productivity diagnostic must detect gaps in an organization across processes; employee motivation, focus, and competencies; in cross-functional coordinating; and in structure, culture, technology, and resources. Such an across-the-board diagnostic facilitates closing gaps faster and implementing strategy more rapidly. The same must be done for external touch-points, such as interfaces with partners, suppliers, regulatory agencies, and customers throughout your supply chain.
Metrus Group deploys a productivity diagnostic that identifies your company's productivity drivers and can identify their relationship and impact on important business outcomes, such as customer satisfaction, earnings and margins. You come away with a clear, holistic, pinpointed picture of the productivity picture -- strengths, weaknesses, gaps, along with a roadmap for action planning.
The accompanying diagram shows key linkages and why it is important to understand the full picture before beginning any initiative, productivity improvement included. Without such an understanding, changes made with one driver will adversely affect outcomes on another key driver or desired result.
A comprehensive and balanced scorecard that focuses on the few, important competencies of an organization can provide substantial insight to productivity opportunities. The scorecard includes:
- Better measurement of interface points of functional hand-offs and/or joint accountability for outcomes
- Better measurement of key productivity drivers
- Better measurement of productivity indicators
- Measures that focus on the value of a process outcome rather than the activity itself
- Collective accountabilities for outcomes
Metrus Group is a strong proponent of focus and deploys a highly targeted productivity improvement process that engages teams and individuals in a rifle-shot approach to closing gaps that influence productivity. In addition to strategic performance measurement, one way we provide such focus is through a "mini-game" approach which is built on four premises:
- Employees need to understand business as much as they would their favorite game
- People play to win; many employees do not have the business acumen to jump in the "game" effectively
- People need a process that rivets attention and improvement in short bursts
- People need a stake in the game
For more information on this approach, click here.
By carefully diagnosing which drivers have the greatest positive impact on productivity -- without the typical unintended consequences -- targeted rather than shotgun improvement initiatives can be launched with demonstrated benefits:
- Lowered implementation costs
- Higher customer satisfaction, loyalty, and retention
- Higher employee satisfaction, competencies, buy-in, and retention
- Lower capital invested in raw materials
- Reduced cost of goods sold
- High output per labor dollar
And importantly, the cost of implementing such a solution is insignificant compared with the savings.
- The Metrus Group organizational performance audit
- The free Metrus People Equity ROI calculator
The following articles are available at our Recommended Reading page:
- Managing Costs Through Strategic Measurement, by William Schiemann,
- Building Supplier Partnerships: The Role of Measurement, by David A. Zatz
- Measuring People and Performance: Closing the Gaps by Brian S. Morgan and William A. Schiemann, Quality Progress
We also recommend:
- The Strategic Measurement Collection: A trio of articles focusing on different aspects of strategy execution through measurement, available at a reasonable cost.
Also available on this Web site:
We also recommend the critically acclaimed Bullseye! Hitting your strategic targets through high-impact measurement, available through Amazon.com and other fine resellers.
Productivity Improvement Support