I first wrote this blog in November 2008 with the economy diving quickly toward the worst recession in modern history. As is the trend over the past several recessions, employment drops but productivity rises. It doesn’t take a genius to rationalize that white-collar workers bear this gain in productivity. Anyone who can work added hours without increasing the cost of the product or service.
To me this an extremely dangerous trends facing businesses today and the question is “whether an organization should chase productivity or efficiency?” Most see productivity as the low hanging fruit and while I agree it is the low hanging fruit, it is, at best, a near-term patch, but at its worst, it is a short-sighted view and mis-guided view of impacting cost.
When it comes to work, a lot of us have a little problem: We don’t know when to say when. Or worse still, we can’t. Nearly half of American workers put in more than 50 hours a week on the job and a quarter of them work all year without taking a vacation. Those are the findings from Joe Robinson, author of Work to Live: The Guide to Getting a Life.
Joe’s research reflects a culture in the US that encourages overwork. “The layoffs of the late 1990s have been survived only to find the survivors saddled with multiple jobs. So the survivors, to protect those jobs, put in late nights, long weekends, and defer comp time or time off. So we become, if not workaholics, then lousy employees: tired, depressed, mistake prone, resentful and eventually burned out.” This scenario has all too often become the vaunted “Great Productivity Gains” in America and as such is not a sustainable business model.
I met with a firm to discuss providing program management services. This firm had experienced almost a 100% increase in business. The result was severe issues with product delivery, quality and customer satisfaction. The growth resulted in doubling their workforce and what had been a tightly knitted group of staff became an unwieldy group; containing a lot of new faces. These new faces were not accustomed to the “ways of doing business”. So when I met with them I immediately saw the need to improve the delivery system, to make them more efficient, to close the workflow gaps and cut the cycle time for administrative task that no one wants to do but are critical to the success of the company.
But instead, they began seeking ways to get the staff to work longer hours and not complain (good luck on that one!). So I pressed the concept of tying up those loose ends in their work flow but they were not buying it. I wished them well but realized this firm has a very rocky road ahead of them. Realistically how long did they think they could push the staff? And how will that impact the already questionable quality of their deliverable?
Productivity has for years been a key performance indicator (KPI) using unit cost to decide if the firm was doing well. The problem with that KPI is two things:
1.It reflects the symptom not the problem, and
2.It is at the end of a process without solving the problem(s)
So while we can do productivity by reducing cost, the real question remains unanswered; that question is “Am I maximizing human and other corporate assets?”
The increased efficient use of human and other assets means making a process more efficient. It means working smarter not harder. It means using the savings to grow the business.
So there lies the challenge for organizations today; become more efficient and do more with the same and thus open up the organization to grow by maintaining cost while increasing output. The alternative is to become more productive by reducing cost. One is a solution for the 21st century, the other is a business model we have followed for more than 100 years and in this global marketplace, is no longer a valid approach for growth.
