April 19, 2017

Productivity Management - A Top Management Challenge

Productivity Management - A Top Management Challenge

Managers have important role to play in increasing productivity. All management activities are applicable to the process of productivity improvement. Planning, Organizing,Resourcing, Executing and Control have to be done in the productivity improvement process.

The boundaries of productivity move outward or production from the same resource input will increase, when engineers and managers innovate and implement more effective and efficient ways of producing goods and delivering services and when designers and engineers create new and better products and services. For example, in the United States, Wal-Mart contributed to a retail-productivity boom in the late 1990s through managerial innovations that increased the sector’s competitive intensity.

Pushing out the productivity boundary or frontier will require a willingness on the part of managers and the organization to make significant changes in business processes and organizational structures, as well as trade-offs between mature businesses with healthy cash flows, on the one hand, and disruptive (often digital) business models, on the other, with the potential for self-cannibalization even as they offer a transformative productivity potential. This is a management  decision based on foresight and vision.

Digital business models have transformative productivity potential.

Labor productivity management may be become critical for world economic growth in the coming years.  In the world as a whole, the United Nations forecasts an average of just 0.03 percent annual growth in the number of employed persons during the next 50 years, compared with 1.8 percent in the last 50. Thus, for global economic growth to match its historical rates, virtually all of it must come from increases in labor productivity. But labor productivity improvement requires capital deepening as capital equipment productivity increase.

Research related to Productivity Management

Stefan Bender, et al.


NBER Working Paper 22101, March 2016


Recent research suggests that much of the cross-firm variation in measured productivity is due to differences  in  use  of  advanced  management  practices.  Many  of  these  practices  –  including monitoring,  goal  setting,  and  the  use  of  incentives  –  are  mediated  through  employee decisionmaking  and  effort.  To  the  extent  that  these  practices  are  complementary  with  workers’ skills,  better-managed firms will tend to recruit  higher-ability workers and adopt pay practices to retain  these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with  longitudinal earnings records for their employees to  study  the  relationship  between  productivity,  management,  worker  ability,  and  pay.    As documented  by  Bloom  and  Van  Reenen  (2007)  there  is  a  strong  partial  correlation  between management  practice  scores  and  firm-level  productivity  in  Germany.  In  our  preferred  TFP estimates only a small fraction of this correlation is explained by the higher human capital of  the average  employee  at  better-managed  firms.  A  larger  share  (about  13%)  is  attributable  to  the human  capital of the highest-paid workers, a group we interpret as representing the managers of
the firm.  And a similar amount is mediated through the pay premiums offered by better-managed firms.  Looking  at  employee  inflows  and  outflows,  we  confirm  that  better-managed  firms systematically  recruit  and  retain  workers  with  higher  average  human  capital.    Overall,  we conclude  that  workforce  selection  and  positive  pay  premiums  explain  just  under  30%  of  the
measured impact of management practices on productivity in German manufacturing.


Research on Productivity by McKinsey Company

Well-managed firms have higher productivity. Our research further indicates that more than 80 percent of all productivity variation occurs within a given sector for a given country and that there’s a “long tail” of persistently badly managed firms in all countries and across all sectors.

The possible solutions our research suggests include transplanting superior management practices between countries by rotating key managers, both inside companies and outside them. Rotation boosts productivity performance over time by ensuring that a larger number of operations benefit from the leadership of more productive managers. The weak managers are to be identified and have to be developed in better managers. They may be even demoted to their earlier roles where they were more effectve.


February 21, 2017

Japan Petroleum Exploration Co., Ltd.
JAPEX named “the Excellent Enterprises of Health & Productivity Management ~White 500~”

Japan Petroleum Exploration Co., Ltd. (JAPEX) was selected as one of “the Excellent Enterprises of
Health & Productivity Management ~White 500~” which is a program conducted by the Ministry of
Economy, Trade and Industry (METI)and Nippon Kenko Kaigi to award large enterprises to pursue efforts for health and productivity management.  “The Excellent Enterprises of Health & Productivity Management ~White 500~” is a new program established in fiscal 2016, which is going to certify 500 excellent enterprises  by 2020 in view of making excellent practices for health and productivity management collaborating with their insurer such as health insurance society. Health and productivity management is a practice in which enterprises focus on and strategically carry out efforts with regard to their employees’ health from a management perspective. By the establishment of this program, enterprises are expected to recognize their own efforts  objectively and improve their top managements’ awareness to health and productivity management.
JAPEX positions  HSE (health, safety, and environment) as the priority of the core CSR themes, and we have been promoting to secure occupational HSE collaborating with the human resource department, health insurance society, and occupational health staffs. In recent years, we have conducted follow up programs after medical checkup or stress check test, support programs for prevention or improvement of lifestyle related diseases or smoking-cessation, health seminars to help keeping and promoting employees’ health. Moreover, we also have strived to optimize employees’ working hours and secure their work-life balance through recommending days to have paid leave, holding time management seminar and others.  JAPEX continues to promote measures concerning employees’ health as a company-wide important priority and will pursue to further increase our corporate value.

Management practices and productivity among manufacturing businesses in Great Britain: Experimental estimates for 2015

Productivity in the Modern Office: A Matter of Impact
May 08, 2013

Margret Borchert, Stefanie Klinkhammer, Eva Koch

Strategic Productivity Management in Small and Medium-Sized Service Enterprises Using the Service Navigator

Enterprise Modelling and Information Systems Architectures, Vol. 7, No. 1, November 2012

In general, traditional productivity expresses the ‘yield of the combination of operational factors’ (Gutenberg 1958, p. 28) and addresses the question of how usefully the resources of an enterprise are combined and used. Unproductive activities and thus a low productivity are linked with inappropriate use of resources, which may result in competitive disadvantages for an enterprise. For this reason, productivity is one of the most important performance parameters for enterprises (Nachum 1999, pp. 939f. Fricke 1961, p. 135).

The performance result (output) can be conceived as the products or services produced by an enterprise within a specific period (Corsten and Gössinger 2007, p. 132; Lasshof 2006,
p. 27; Chew 1988, p. 112). Hence, the output is the result of a transformation process and reflects the (quantitative) yield of the transformation process (Lasshof 2006, p. 27; Gerhardt 1987,
pp. 73f.). The input is transformed into the desired performance result during the operational
production process.

Customer satisfaction and the perceived service quality are therefore measures of effectiveness
that are relevant for productivity. However, these measures have not been identified as outputs
in the traditional definition of productivity.

Traditional Productivity  Output/Input

Strategic Productivity
x  Cause-Effect Relationships among Inputs, Processes and Outputs
x  Consideration of Efficiency and Effectiveness Parameters
x  External (e.g. Customer Satisfaction, Service Quality)
x  Internal (Parameters related to Processes,People, Partnership and Leadership)

Productivity Management from a Super Competent Perspective
Laura Stack , 2009

Organizational Linkages
Understanding the Productivity Paradox
Washington, D.C.

Top Management Challenges

This article is part of #AtoZChallenge 2017 for Blogging Posts. My Theme for the Challenge is Top Management Challenges - Full List of Articles  http://nraomtr.blogspot.com/2016/12/a-to-z-2017-blogging-challenge-top.html

To Know More About A to Z Blogging Challenge


  1. Whew! This is very scholarly. :-) Is this the field you work in, Naranyana? http://nraomtr.blogspot.com/2017/04/productivity-management.html

  2. Thank you. Yes. I work in an industrial engineering institute. My Phd is in stock market analysis and returns. I am going to present my principles of industrial engineering in the annual conference of Institute of Industrial and Systems Engineers in Pittsburgh, USA in May this year.