# The Formula That Is Generally Used To Measure Productivity Is Productivity Improvement For Tough Times

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## Productivity Improvement For Tough Times

One solution in tough economic times is to “do more with less.” That’s what productivity improvement is all about. They used to call it “more bang for the buck.” And with fewer bucks to go around, managers are looking to productivity improvement to help them cope.

A QUESTION

Would you rather have twenty employees producing 1,000 “widgets” a day or ten workers producing seven hundred and fifty?  The answer is pretty clear. While the twenty employees are making 50 units each, the ten employees output, at 75, is 50% greater!  This can mean the difference between loss and profitability; between survival and failure.

THE FORMULA

The productivity formula is a simple one: P=O/I.  Productivity = Output divided by Input.  The more input required to produce something, the lower the productivity.  Conversely, more output realized from the same or lower input results in greater productivity.

MEASUREMENT

The first key to productivity is measurement.  The manager must know what the employees are doing.  What are they supposed to be producing?  Admittedly, this can be more difficult than it seems. Employees produce something. Is it reports, customer contacts, completed service calls, product sales, etc.? Frequently it is several outcomes/deliverables. Determine the basic outputs for each employee. This will require some analysis and thought, as what the employee is currently producing may not be what they should be producing.

STANDARDS

The second key is establishing “standards.”  Once we know what the employee should be producing, how much of it should they be producing, and in what time-frame?  Establishing standards is essential and will enable some measure of control and evaluation.

BENCHMARKING

Can you compare what your employees are doing with what other employees are doing in similar companies within your industry?  If so, your task is easier.  You will be able to make comparisons.  This factor alone will provide some objectivity to the process. Sometimes these reports cover only a few types of jobs, and do not take into account all of the unique factors of your particular environment. In any event, adjustments will be required.  However, you will have meaningful starting point for this part of your analysis, and industry comparisons provide useful leverage in dealing with employees.

EVALUATION

The data which you have secured thus far must be analyzed.  Tweaking the criteria, measurements, standards, data collection procedures and reporting will be necessary.   If the outcome is not what you expect or need, and it cannot be adequately explained by system deficiencies or measurement difficulties, then you must take action.  For example, if your workers are 15% below the industry average, why?  If they’re twenty percent above, why?  If they’re “right on,” why?  Your analysis should include what you may be doing “right,” as well as areas that cry for improvement.

IMPROVEMENT TARGETS

When your monitoring system is in place, and you’re satisfied that you’re measuring the right things, measuring them accurately, and you have an ongoing capability to do this-it’s time to consider improvement targets.  The concept of “continuous improvement” is based on the premise that “nothing is perfect,” and there is always room for improvement.  You will need to establish moderate, realistic, attainable targets.  Remember the S.M.A.R.T. goal-setting criteria.  Goals need to be: Specific, Measureable, Attainable, Realistic, and Timely.

CONSISTENCY

You’re not done yet. Successful organizations not only implement the above steps, they consistently apply these principles, techniques, procedures, analyses, and processes aimed at creating a more productive enterprise.

DON’T FORGET QUALITY

Yes, productivity is important, but not at the cost of sacrificing quality.  Shortcuts can be taken, processes streamlined, more “widgets” produced, but quality standards must be maintained.

A reputation for low quality will quickly negate any cost efficiencies realized through productivity gains.

WHY IS THIS IMPORTANT?

Productivity improvement may be more important at this time than at any point in recent history.  Current economic conditions necessitate cost reduction to maintain profitability.  However, many companies are using a “meat axe” approach to the problem.  They are cutting the payrolls by laying off employees.  Sure this reduces costs, but without a more methodical approach, any long-lasting gains may prove elusive.

Tough times call for tough measures, but productivity management is simply a good business practice that is more important now than ever.

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