You, and I, and the people in your company want to know what is expected of them (and their group and the company) and how well they do against expectations. Measure productivity and see how well you produce results.
In this economy, people are more apprehensive than usual, so expectations and measurement and communication are even more important.
One of my good bosses, and I have been blessed to have a few, gave out wall plaques that said Results Count. I believe that once you learn that lesson it stays with you forever.
One of my good clients, and I have been blessed to have a few, asked me to set up an incentive system for his construction supervisors. And we did, but he really wanted, first, to establish a reporting system of work done, blocks laid and slabs poured and time lost, as a visible record that highlighted problems and usually solutions.
What results do we measure? Aim for a total productivity measurement
Generally when "Productivity" is discussed, we really mean "Labor", the people side of the manufacturing enterprise. But if we measure only labor we get information that is useless at best and misleading at worst. One company may be highly automated, so their labor productivity is very good compared to a more manual company. But the automated company may be unprofitable because it has so much money invested in equipment, or runs higher expense to maintain equipment. Delphi in 2005 sought bankruptcy protection at the same time that many of its factories were winning Lean Manufacturing awards.
Measure total productivity in an organization to capture the comprehensive effect, but also individually measure labor, executive prowess, waste, equipment utilization, inventories, effective automation, employee input, sales and marketing, new products introduction, product quality, customer service. See how the result tracks with the bottom line of the P&L and other financial results in use already.
What result is a good productivity index? What is bad?
Is it possible to look at one productivity number and learn if it represents an acceptable rate or not? No. There is not one magic number because are too many variables involved. One can at best measure productivity over a period of time and determine how much it changes. Even then, an arithmetic result does not indicate what actions caused the change.
Just because there are complicating factors to productivity measurement, do not stop the effort to measure. Recognize that answers may not be perfectly accurate, but still can be a good indicator of productivity change. And you can fine tune the initial mechanism to yield ever better results.
Units of measure
You will probably need to apply different units of measure, because the groups being measured are different, and their output is expressed differently. If possible, relate units to the business of the entity, tractors produced per man hour, insurance policies written, ads sold, packages delivered. Measure a factory by units of tractors produced per man hour, but the sales organization by tractors sold, and the customer service group by tractors maintained.
Results comparisons over time periods
A productivity value as stated has no meaning alone. Measure again in a month using exactly the same procedures, or last year, and the values start to have significance as they are compared.
Apples to apples
Comparisons tend to be inaccurate unless they are "apples to apples", with factors the same from one comparison to another. Yet comparisons over time seldom involve purely identical sets of variables. We all know that does not happen, even on this morning’s breakfast or trip to work. Don’t obsess over the lack of absolute consistency because you will never have it; merely state assumptions, calculate carefully, check answers, and use what you find.
One significant variable in productivity measurement is sales volume. Sales volume will always affect productivity measurement; incrementally more volume will cause more direct cost of materials and labor, but usually no more plant managers or corporate aircraft or receptionists. Most companies will therefore convert added sales to better productivity, as well as better overhead absorption and better profits. Incrementally less volume will have the opposite effect.
Busy versus productive
A group may be busy but not productive. If output is measurable but has no value to the business entity, then the group that generates such output may have 100% busy-ness but zero productivity.
Another group may not be always busy but at the same time contribute extensively to the productivity of their overall organization. Examples are maintenance people who keep their equipment in good repair so that they can stand by while operators produce. A busy maintenance person usually means the equipment is not at work and that is bad.
Other groups who should be idle for good overall productivity are security guards, police and firemen.
Preventive maintenance hours may take the place of demand maintenance, and crime prevention and better building codes may take the place of emergency reactions. Costs may be shifted but still be present.
Caveat
Be advised that the results of any measurement, productivity or otherwise, can report only part of the story, the final result; it does not report what caused the result. For instance, the much emulated Toyota Production System emphasizes personal development of line workers and supervisors, which is usually accomplished by training. In a productivity measurement result, training will appear to be unproductive time but would shortly lead to even higher productivity as learned lessons are put into effect.
Jack Greene, Jackson Productivity Research Inc.
Set expectations measure and communicate Results Count - To learn more about this author, visit Jack Greene's Website.
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Jack Greene
(Visit Jack's Website)
Jack Greene is president of Jackson
Productivity Research Inc. Productivity
is our Middle Name.
Jack has implemented dozens of
productivity improvement, work
measurement, cost reduction, and layout
projects in the US and internationally for
companies both large and small.
Adept in all aspects of facility planning,
Jack has successfully completed more than
three dozen manufacturing, distribution
centers, R&D, and administration projects,
reaching cost effective expansion,
relocation, acquisition, consolidation,
site search, and capacity increase
objectives.
He has headed division or corporate
industrial engineering for three Fortune
250 companies; ITT, Abbott Labs, and
Bausch & Lomb.
Emphasizing individual, boutique
attention, JPR can also provide scalable,
comprehensive, on-site project management
through it’s network of well qualified
domestic and international associates.
jack@jacksonproductivity.com jac
ksonproductivity.com
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