Understanding and managing productivity is a key skill

How often do you come across the word ‘productivity’? The word is used quite liberally in the our economic environment, but I find that a surprising number of managers and supervisors attending my training courses have only a vague notion of what it really means.

What are we paying for?

The picture says it all . . .

The picture says it all . . .

In Australia we are in the unfortunate position where we pay staff for attendance  — that is, we pay wages for the number of hours the staff member is present, irrespective of the work done during that time. If I asked you to design a remuneration system to base our economy on, would you pay staff to attend? I hardly think so — it’s really quite bizarre when you think about it.

Productivity can be expressed as a percentage. For example, a productivity of 75% means that for each 8 hours paid for, there are 6 hours of actual work performed. The percentage represents the ratio of work performed against time present. Some of you would be shocked to discover what your staff productivity really is. Unfortunately, accurate figures are difficult to establish because it is necessary for you to monitor all staff activity and log the results using a stopwatch to work it out accurately.

Australian research tells us that the average productivity for our industry is in the range of 45-55%. This may seem low, but apart from the obvious time wasters such as social conversations, unscheduled smoke breaks, astral travelling and the like, you have to consider the nature of your trade. We tend to have concentrated peaks of activity followed by quiet times during which there is a reduced sense of urgency.

Some scary maths

If you don’t understand the maths here you’ll pour a lot of money down the drain

If you don’t understand the maths here you’ll pour a lot of money down the drain

The financial implications of staff productivity are profound. Let’s say you hire a kitchen hand for $20 per hour. By the time you add the on-costs and other costs associated with employment your kitchen hand costs you double the base rate — a total of $40 per hour, just to be there. If you roster him for an eight hour shift and he’s 85% productive it will cost you $52 per hour to get real work done; if he’s 50% productive the cost goes up to $80 per hour; and so on — just to get basic work performed.

It is unrealistic to ever expect to achieve 100% productivity from any staff, but 85% is possible and is a good target to aim for. This gives the average business owner a potential for a 30% increase in staff productivity across the board. If you have ever thought you are understaffed, think about this: if you can gain an extra 30% productivity, you gain the equivalent of one new staff member for every three you’ve already got on the payroll.

Increasing productivity

Productivity is not about supervising; it’s about managing.

Productivity is not about supervising; it’s about managing.

The obvious question is: How do you lift your staff productivity? The answer involves the use of a number of different leadership skills; some of them advanced.

The first involves understanding the preliminary steps to the recruitment and selection process. Before you advertise a position, the responsibilities and duties within that position should be carefully defined. This may involve you rationalising existing jobs and reallocating duties to different people in order to efficiently group appropriate tasks.

Next, you must analyse the time and motion aspect of the position. Your procedures and the physical layout of your workplace must be arranged to minimise wasted effort. Perhaps in your work environment you have remote storerooms or other necessary facilities which could be rearranged to waste less time? Whenever you or your staff move from A to B it’s a dead economic loss to your business. Eliminating unnecessary movement increases productivity dramatically.

Choose your staff carefully and train them

You can also enhance productivity by careful staff selection. A person who wants to do the job or who has a talent for the kind of tasks required will generally have a much higher rate of productivity than one who does not. The extra time and cost taken to attract and select high quality staff will be repaid many times in terms of improved quality and efficiency.

Once you select staff you have to train them properly. Someone said that the purpose of training is not simply to adorn the mind, but to direct the will. Good training fosters and builds positive attitudes and solid work ethics. Before you train a person you should attempt to ascertain standard times for each task and challenge the trainee to meet these times. The simple provision of goals and targets goes a long way to increasing work output — the average person likes to compete with themselves and with others.

Motivate, don’t dominate

Negative leadership destroys productivity

Negative leadership destroys productivity

Finally, the standard of your supervision has a great bearing on your ultimate productivity. If you understand the process of motivation and can get staff to want to perform for you, your productivity will be far higher than if you rely on authoritarian discipline. All your staff need to know your general business plan and how you want them to fit into the scheme of things. They should be allocated responsibilities, not tasks. If your staff regularly have to come to you or your supervisors and ask: ‘What do you want me to do now?’, you should re-examine the way you lead — they should know what is expected and how long it should take, without having to ask. Every time they ask they are fracturing their work flow as well as yours.

An amusing aspect to the whole subject of productivity is that I keep seeing business owners who staff their operations with what we call warm bodies; i.e, those who spend little time recruiting, those who pay the low wages and provide little or no training. They think they’re saving money, but they often have the highest labour costs — the result of poor productivity.