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.
Stefan Bender, et al.
NBER Working Paper 22101, March 2016
Abstract
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 related to Productivity Management
Stefan Bender, et al.
MANAGEMENT PRACTICES, WORKFORCE SELECTION AND PRODUCTIVITY,
NBER Working Paper 22101, March 2016
Abstract
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.
http://www.mckinsey.com/global-themes/employment-and-growth/a-productivity-perspective-on-the-future-of-growth
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.
http://www.mckinsey.com/global-themes/china/why-management-matters-for-productivity
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
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/experimentaldataonthemanagementpracticesofmanufacturingbusinessesingreatbritain/experimentalestimatesfor2015
Productivity in the Modern Office: A Matter of Impact
May 08, 2013
http://knowledge.wharton.upenn.edu/article/productivity-in-the-modern-office-a-matter-of-impact/
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 2012In 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)
https://www.emisa-journal.org/emisa/article/view/94/69
Productivity Management from a Super Competent Perspective
Laura Stack , 2009
http://www.theproductivitypro.com/FeaturedArticles/article00136.htm
Organizational Linkages
Understanding the Productivity Paradox
NATIONAL ACADEMY PRESS
Washington, D.C.
1994
https://www.nap.edu/read/2135/chapter/1
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
http://www.a-to-zchallenge.com/
Blog Posts visited during the day
https://shirleycorder.com/plan-purpose/ Good advice to bloggers.
http://deeply-trivial.blogspot.in/2017/04/p-is-for-p-value.html Posts on statistics in this A to Z Challenge.
http://thoughtsbygeethica.com/2017/04/p-perseverance/
Blog Posts visited during the day
https://shirleycorder.com/plan-purpose/ Good advice to bloggers.
http://deeply-trivial.blogspot.in/2017/04/p-is-for-p-value.html Posts on statistics in this A to Z Challenge.
http://thoughtsbygeethica.com/2017/04/p-perseverance/
Whew! This is very scholarly. :-) Is this the field you work in, Naranyana? http://nraomtr.blogspot.com/2017/04/productivity-management.html
ReplyDeleteThank 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.
ReplyDeleteWhy Productivity Management?
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