Crash Course in... boosting productivity

You've visited one of your rivals and been astonished to find that they're taking the same market share as you with half the people. It's time to take a look at your productivity.

by Alexander Garrett
Last Updated: 31 Aug 2010

Define it. Your productivity is the ratio of your inputs to your outputs. 'Identify your most important inputs and outputs,' says John Heap, director of the Grimsby-based National Productivity Centre. 'In labour-intensive businesses, the key input might be hours worked; in a steel plant, the capital cost of equipment.' There are lots of ways of looking at productivity, so it's useful to convert what you are looking at into monetary units to represent a common currency.

Benchmark. To improve productivity, you must first measure it and then monitor it regularly. Join a benchmarking club to find out where you stand versus competitors.

Invest. 'Most productivity growth comes from existing firms that add to the ratio of capital per worker and adopt new technology,' says Kevin Mole of Warwick Business School in his DTI report on SMEs and productivity. Training can make people more effective and innovative and reduces mistakes. Identify technology that lets you cut headcount or make a step change in output.

Evaluate processes. 'One of the areas where most organisations can make productivity improvements is in moving things around,' says Heap, 'whether that's components in a manufacturing context or documents in an office. You want them to be in the right place at the right time as quickly as possible.' Use a right-first-time approach to reduce the cost of putting tasks down and picking them up again.

Design for effectiveness. Managers tend to focus on cutting costs to boost productivity, but there's greater upside in designing an environment that encourages greater output, says Paul Bartlett, chairman of the Office Productivity Network. 'Check the basic hygiene factors first (lighting, heating, ventilation, adjacency) then look at how your offices might be more effective - eg, by providing break-out areas and small meeting rooms that encourage interaction.'

Involve your people. Those who do the work often know best how it can be done more efficiently. Try methodologies such as kaizen to establish teams that take responsibility for continuous improvement.

Target incentives. Productivity can be a dirty word for staff if it's seen as turning the screw on the workforce. And wrongly applied financial incentives for improved productivity can backfire. 'If you pay people according to particular measures, you'll get the behaviour that supports those measures,' says Heap. It's no use handling more customers if satisfaction plummets. Take a broad view of outputs you want to improve.

Do say: 'We're going to invest in the tools and the people that will allow us to work smarter and be more competitive.'

Don't say: 'I'm delighted to tell you about our important new productivity initiative - you're all going to work an extra hour a day for the same pay.'

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