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Productivity- A Behavioural Perspective

Some preliminary observations : The role of productivity in increasing national welfare is now universally recognized. In every country, developed or developing, with a market economy or a centrally planned economy, the main source of economic growth is an increase in productivity. Inversely, slackening of growth, stagnation and decline entail a slow-down in productivity improvement. Both the developed and the developing countries have to deal with two questions simultaneously : to try to use both human and capital resources more effectively. The real problem, in every country, is to find the optimal balance between intensive and extensive methods of economic development. The development of modern equipment and the development of human resources must go hand in hand. Therefore, it is important to note that productivity improvement or the effective use of available resources is the best, indeed the only way, for future development in any kind of society. Some may think that effective use of resources can mean simply the development of technology and organization, but it is often more important for total productivity improvement to contribute to human development in its broadest sense.

Productivity is the point where human skills and interests, technology, management, and the social and business environment all converge. Even highly efficient and committed managers and workers will not survive if the organization cannot adapt to its constantly changing environment. The understanding and management of change have a vital role to play in productivity improvement. The organization must learn how to adjust to change and how to learn during change. What Is productivity ? Productivity is defined as the relationship between the output generated by a production or service system and the input provided to create this output. Thus, productivity is defined as the efficient use of resources – labor, capital, land, materials, energy, information – in the production of various goods and services. Productivity can also be defined as the relationship between results and the time it takes to accomplish them. Time is often a good denominator since it is a universal measurement, and it is beyond human control. The less time taken to achieve the desired result, the more productive the system. However, it is important to separate productivity from intensity of labor, because while labor productivity reflects the beneficial results of labor, its intensity means excess efforts and is no more than work “speed up” The essence of productivity improvement is working more intelligently, not harder. Real productivity improvement is not achieved by working harder : this results in very limited increases in productivity due to man’s physical limitations. Productivity is not only labor efficiency or “labor productivity” although labor productivity statistics are still useful policy – making data. Productivity is now much more than just labor productivity and needs to take into account the increase in cost of energy and raw materials along with a growing concern for unemployment and the quality of working life. Some also think that it is possible to judge performance simply by output. The latter may be rising without an increase in productivity if, for instance input costs have risen disproportionately. Moreover, increases in output compared with previous years should take into account price increases and inflation. Such an approach is often the result of being process oriented at the expense of paying attention to final results. The third problem is confusion between productivity and profitability. In real life profit can be obtained through price recovery even though productivity may have gone down. Conversely, high productivity does not always go with high profit since goods which are produced efficiently are not necessarily in demand. Hence there is one more misunderstanding - confusion of productivity with efficiency.

Efficiency means producing high – quality goods in the shortest possible time. But we have to consider if these goods are needed. Improvement factors People A set of values conducive to higher productivity should be developed in order to bring about changes in the attitude of managers, engineers and workers. Motivation is basic to all human behavior and thus to efforts in productivity improvement. Material needs are still predominant, but this does not mean that non-financial incentives are not effective or have no place. Workers’ success in increasing productivity should be reinforced immediately by rewards, not only in the form of money, but also by improving recognition, involvement and learning opportunities, and, finally, by the complete elimination of negative rewards. Labor productivity can be tapped only if management encourages workers to apply their creative talents by taking a special interest in their problems and by promoting a favorable social climate. Organization and systems One reason for the low productivity of many organizations is their rigidity. They fail to anticipate and respond to market changes, ignore new capacities in the labor force, new developments in technology and other external (environmental) factors. Rigid organizations lack good horizontal communication. This slows down decision – making and inhibits delegation of authority close to the point of action, encouraging inefficiency and bureaucracy. Management styles : There is a view that in some countries management is responsible for 75 percent of productivity gains, because management is responsible for the effectiveness use of all resources under enterprise control. One productivity expert and consultant to many leading Japanese companies believes that as much as 85 percent of the quality and productivity problems in United States industry are common problems of the system that lie within the province of management, not the individual worker, to correct. Productivity improvement in an enterprise is a function and a result of management efficiency, synonymous with good management. It is a prime management objective and responsibility to increase productivity and maintain its growth. In fact, creating the conditions for higher performance is the essence of productivity management. At the same time, productivity improvement is a process of change. To improve productivity it is therefore necessary to manage change ; this means motivating, inducing and generating change. In a productivity improvement process there is a significant need to gain full human commitment to the changes. That is why managers of good productivity programs use two main inter – related and mutually supportive groups of activities : motivational and technical.

Much recent research on management styles confirms that participatory, worker centered methods are effective in enhancing productivity and that democratic supervision leads to higher productivity than authoritarian supervision. Comparison between cultural influences and traditional management styles reveals the main differences between the American and Japanese approaches : Traditional American management style – Maximized return on investment through technological and individual efficiency. Workers dislike work but may be motivated by money if tasks are closely supervised. American (traditional) management approach Individual Competition Us/Them Compliance Adversaries Blame Suspicion Turbulence Policeman Reactive Now Implementation Segmentation Human costs Traditional Japanese management style – People are seen as the most valuable asset in achieving company goals. Organization and workers’ goals are therefore seen as congruent to group goals. Japanese (new) management approach Group Co-operation We Consensus Partners Responsibilities / opportunities Trust Planned changes Planner / “facilitator” Proactive Future Planning Integration Broad, systems view Human capital investments Management of people A high quality workforce is characterized by productive behavior. Only the on-the job behavior of an operative, engineer or manager can actually produce things in a more or less productive way. This behavior in its turn, is the result of complex, but quite distinctive, combinations of personal and organization characteristics such as : - work attitudes : - knowledge and skills : - opportunities Thus, in order to change the behavior of a workforce to make it more productive, we have to influence all three of these characteristics in a balanced and coordinated way. A key to productivity is the attitude of people who work together. It is quite clear that a lack of commitment is a very serious impediment to productivity improvement. Attitudes themselves reflect the interplay of many long – term and short – term factors including motivation, culture, management systems, nature of the work and very individual and delicate things such as personal value systems and life objectives.

Many managers reject the idea that it is important or even possible to manage attitudes. “I,m managing results, not attitudes: or I’m managing behavior, not attitudes” are frequent statements. Some managers even ignore the existence of attitudes: “You can’t see attitudes, you can see behavior” Some consider that a person’s attitude is his own business and that trying to influence it constitutes an invasion of privacy. The Four Variables of Performance Ability Ability – Ability refers to what a person knows and can do if he or she so chooses. It comprises aptitude interacting with learning. Aptitude describes a person’s natural tendency or inclination / quickness or learn or understand. Method of tenacity – Tenacity is based on a person holding on to a belief, or tradition, because he “knows” it is to be true, has always knows it to be true, and will often cling to this “knowledge” even when faced with conflicting facts. Fortune magazine goes so far as to say that an organization’s most valuable asset is its intellectual capital and states. “Business pioneers are finding surprising ways to put real dollars on the bottom line as they discover how to measure and manage the ultimate intangible knowledge. Motivation Motivation is what a person will do .Ability is of little use if a person is unwilling to apply it. Motivation requires expending effort (physical and / or mental ) being persistent, and applying the expended effort appropriately. Many times a person will become enthused about something and put a lot of effort into it. However, when things go wrong, or obstacles crop up, he or she loses enthusiasm and will be said about applying effort appropriately when the third variable of performance, clarity of expectations, is discussed. Clarity of expectations : Clarity of expectations is the third interactive variable of performance. While ability is what a person can do, and motivation is what a person will do it is clarity of expectations that provides the direction concerning what is to be done. In an organizations, it is the planning process that should provide this direction. The much-written about importance of a mission / vision is essential as a framework for agreed-upon goal setting, which in turn is the starting point for crafting a strategy standing exactly how the goals are to be achieved.

Opportunity :Opportunity is the fourth and final interactive variable of performance to be considered here. While ability, motivation and clarity of expectations are necessary for performance, a person must also be provided the opportunity to perform. It is essential that resources be allocated commensurate with expected goals and objectives. If there is a shortage of allocated resources in relationship to expected achievements, the individuals affected are being deprived of the opportunity to perform. Organizational Performance High performing organizations usually are leaders in their industry. They are typically at the top, or near the top, of their industry on Fortune’s annual list of admired companies discussed earlier. They tend to score highly on most of the eight key attributes of reputation : innovativeness, quality of management ; employee talent, quality of products / services, long – term investment value, financial soundness, social responsibility, and use of corporate assets. High performing organizations consist of a high – performing management team and a large percentage of high performing employees. There is an old saying that like has a tendency to beget like. This certainly applies to top performing companies, because any company is only as good as its people make it. Cisco systems is one of the top three companies in five of the eight attributes in Fortune’s Most Admired Companies. Skills and abilities can be upgraded through proper manpower planning, selection, job placement and rotation, training and development. These are all good management practice and strategy. Finally, opportunities to use manpower resources effectively depend upon sound management of organizational structure and culture, equipment and technology.

Behavioral aspects of productively. Mental illness • 87 % of the Medical Directors, in USA, Personnel Directors and Employee Assistance Program Directors surveyed claimed stress, depression and anxiety impair their employees’ ability to function effectively on the job. • 57 % of Ohio small business executives surveyed claimed their companies have suffered productivity losses due to emotional or personal problems of their employees. 34 % claimed their companies’ overall efficiency dropped due to substance abuse. • Substance abusers were found to be 25 – 33% less productive than non-substance abusers • 84% of individuals with panic disorder surveyed reported a decline in their quality of work due to panic attacks or associated phobias. Mental illness increases the chance of employee injury • Stress accounts for 10% of all worker compensation claims. • 80% to 90% of all industrial accidents are likely related to personal problems and employees’ inability to handle stress. Mental illness increases employee absenteeism • Medical Directors, Personnel Directors, and EAP Directors surveyed in USA noted that employees suffering from stress, anxiety and depression suffered an average of 16 lost work days per year. • In a year study of a large corporation in USA, 60% of employee absences were found to be due to psychological problems. • Individuals with major depression were found to be over 4 times more likely to take disability days than non – depressed employees, and 3 times more likely to miss time from work. Due to its higher prevalence in the workforce, minor depression with mood disturbance may account for 51% more disability days than major depression. Psychological services can improve work productivity • A review of clinical trials of 11 panic disorder treatments and combinations of treatments ( mostly for Panic Disorder with agoraphobia), including both pharmacotherapy’s and outpatient psychotherapies, found cognitive – behavioral therapy and cognitive therapy with graduated exposure to be the most efficacious. These two treatments had 90% and 87% success rates, respectively, and also had the lowest relapse rates, of 10% and 5% respectively. • A review of 58 studies of the effectiveness of psychotherapy for depression found that 77% of depressed patients treated scored significantly better on post treatment evaluations than depressed patients with no treatment. 80% of the treated group scored better than wait-listed controls. On the average, treatment was completed in only 9 sessions. Psychological services increase a Company’s Productive capacity and quality of products and services • The Stress Management Program at Safeway’s Bakery Division has reduced lost work days due to employee injury from 1,740 days in 1977 to 0 days in 1990 (Spotlight : Managing stress in the Workplace, 1991) • Over a four year period, the McDonnell Douglas Corporation’s (MDC) Employee assistance Program reduced termination for those in substance abuse programs by 42%, and for those in mental illness treatment by 28% when compared to those in the traditional health plan (McDonnell Douglas Corporation, 1990) Brain Re- Engineering Another area of importance to the company is the latest research on brain re- engineering which focuses on the more effective use of brain hemispheres and the training of top down and bottom up processing of information more effectively. This is more in line with working smart and not hard view. Focus is also made on Linear Vs Circular modes of logic and a systems approach to organizational issues, and the variation of brain waves from Beta to Alpha and Theta as the situation demands. This is also in effect a holistic view of modern man where the effective mind-body co-ordination will help him become a more focused, productive individual. It is also said that productivity is proportional to CET ( Conscious encouragement of thoughtlessness).

This would have been a baffling statement many years ago – but with the latest research we now know how best such a state could be used for more creative and innovative inputs.

Author : Prof.Lakshman Madurasinghe

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