MT Masterclass - productivity

What is it? It all depends, as Professor Joad used to say, on what you mean by productivity. You can measure it per capita or per hours worked.

Last Updated: 09 Oct 2013

Are we talking about manufacturing, or services too? Overall US productivity is high because Americans work such long hours. But per hour worked, French productivity is far superior. And beware 'productivity miracles' where the graph starts from a low base. We all know what productivity looks like, but it's hard to analyse. Said business academic Walter Aigner: 'Productivity is a belief in human progress, and a state of mind which aims at perpetual improvements.'

Where did it come from? In 1776, Adam Smith published The Wealth of Nations, a ground-breaking book of economic theory. Smith observed that it was 'the division of labour' that made greater productivity possible.

Allocating separate tasks among many people resulted in far higher output than having each individual perform a sequence of tasks. Frederick Taylor's Principles of Scientific Management (1911) took this analysis further.

Scientific management would boost workers' productivity while removing their fear that greater efficiency would mean fewer jobs. Time and motion experts - we now call them management consultants - have worried about this stuff ever since.

Where's it going? Politicians and business leaders still get tied up in knots over productivity. In an economy dominated by the service sector, how do you measure meaningful productivity? Should a call centre operative get a bonus for 'processing' calls more quickly, even if few result in a sale? The public sector is wrestling with this too: larger class sizes lift teachers' 'productivity'; discharging patients more quickly drags NHS productivity up the league tables. We urgently need to find useful measures.

Fad quotient (out of 10) Eight.

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