The term crisis is intended to mean large troubles that are not necessarily fatal to organizations. A crisis requires major changes in organizations. It demands strategies, approaches and solutions that management has never before applied.
Productivity crisis in USA
The rate of productivity growth in the United States was 3.1 percent between 1960 and 1974. In some foreign countries it was double this figure. Productivity in local governments was growing at 1.5 percent only.
The chapter covers
1. Different views of productivity
2. Definition of productivity
3. Frustrations of organizations in the area of improving or managing productivity
4. Changes in environment that affect productivity management
5. Benefits of productivity improvement effort
Four Different References for Productivity
1. National Reference Point
2. Industry Reference Point
Measures productivity for specific industries.
Isolates the factors that affect productivity of specific industries like aerospace, automotive etc.
3. Individual Firm
4. Individual workers
The productivity of an individual is affected by the work environment, available tools, processes, equipment and motivation. Motivation for productivity is influenced by the group of which the individual is a member, the interplay with other groups and the reasons why the individual works.
The author explicitly stated that the books focuses on the individual firm and worker.
What is Productivity
Productivity is the measure of how well resources are brought together in organizations and utilized for accomplishing a set of results. Productivity is reaching the highest level of performance with the least expenditure of resources. - Paul Mali (page 6).
George Kuper, acting executive director of the National Commission on Productivity and Work Quality says - to determine productivity one must ask both whether a desired result was achieved and what resources were consumed to achieve it. The measurement of the output (performance achievement) and input (resources consumed) is crucial in improving or managing productivity.
Productivity Frustrations in Organizations - Illustrations
Manufacturing Industry
1. A glass manufacturing plat instituted a cost control program with full backing of top management. But it seriously reduced revenues, which meant incidence of indirect cost on goods sold went up substantially and created losses.
2. In an auto manufacturing plan in Ohio, employees went on strike against a well thoughtout plan to increase the speed of assembly line. The plant was closed in the end.
3. A Connecticut hardware manufacturing company could not make changes in plant and equipment to improve productivity due to the opposition of the union.
What is Different about Productivity Management Today?
Human expectation: Workers are placing a higher value on themselves than they formally did. A strong current now is developing for improvement in the quality of life at work.
New and Changing Technology: The technological innovations are far ahead of application. The users find it nearly impossible to understand and keep up. Consequently, the use of these technological innovations is limited compared to what it could be.
Accountability is Still Limited.
Benefits from Managing Productivity by Objectives (MPBO)
1. MPBO provides score keeping data for evaluating organizations, departments or programs
2. MPBO sets up an accountability framework for scarce resources.
3. MPBO sets up incentives for both unions and management.
4. MPBO forces a search for unutilized opportunities.
5. MPBO gives an accurate assessment of value of capital outlay.
6. MPBO provides a focus for cost-benefit analysis.
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