Productivity: A Matter of Approach – Hard Way or Easy Way?

By Larry Coté, Managing Director, Lean Advisors Inc.

The debate on productivity enhancement is constant throughout companies/organizations as well as entire countries. It's a critical ingredient for competitive advantage and expansion, yet there's variance in what constitutes productivity and its measurement.

At the national level, countries may assess productivity based on gross output. Businesses might gauge success and competitiveness by overall production. While this metric offers some insight, its real value emerges when you consider the output relative to the workforce size of the assessed entity.

Authentic 'productivity' hinges on the output per total cost. This ratio reveals a clearer understanding of a company or country's performance.

Take Greece's recent policy, where the government increased work hours in the private sector to boost 'productivity' and raise overall production. Greece's Prime Minister defends the policy as "growth-oriented," citing the dwindling workforce and skilled labor scarcity—a crisis likened to a "ticking time bomb" due to both a skills gap and population decline.

This approach serves as an innovative response to their production challenges, potentially leading to higher production volumes, sustaining product demand, and maintaining prices and delivery timelines. However, the impact, both short-term and long-term, of adding hours to the work week remains contingent on various risky factors:

• Worker fatigue.
• Pushback against changes in lifestyle among employees.
• Slowing of work pace because workers feel they have more time.
• A potential decrease in industry quality due to employee tiredness.
• Additional expenses, like overtime pay for longer working hours.
• Organizational Changes.

These elements, among others, will need to be factored in. They challenge the notion that simply extending work hours will linearly increase output and the true meaning of productivity. It will be interesting to watch as Greece goes through this initiative.

Businesses should follow a different path than Greece (adding hours to increase amount of output and productivity).

A more viable and effective alternative is reducing hours to make the product or deliver the service faster, with less labour (less cost) and better quality. Why not strive for productivity enhancements the straightforward and much simpler way? Optimize current assets—staff, facilities, equipment!

Do More with What You Have! Refining existing processes for greater efficiency presents itself as the less complicated, quicker, less risky, and less costly path with support from all levels of the organization. You will build more products and increase service to clients, and it will be faster and less costly.

This easier method ensures streamlined operations, cultivates a more productive and competitive atmosphere, and substantially refines organizational culture and function.