Anytime there is a merger of two companies, the news rhetoric always mentions standard statements such as “economies of scale,” “increased productivity,” and “cost savings.” Economies of scale and cost savings are reasonably easy to explain and understand, but what exactly does increased productivity mean?
What Is Productivity?
A very simple question, but one which many people, especially those in management, can find difficulty in explaining. Productivity is a statistical relationship between the number of outputs divided by the number of inputs. In simple terms, if two companies are producing very similar widgets, at the same cost, then the company who can produce more at the same expenditure could be deemed to be the more productive company. However, things are not quite as simple as that equation might suggest.
The Quality Of The Product
Let’s imagine that inside a factory there are two workers, both doing the same job. Worker A produces 100 widgets every day; worker B produces 60. On first glance, it would appear that worker A is the more productive employee. However, if we add a second piece of information to the discussion, which is that 50% of everything worker A produces is faulty or substandard compared to worker B, who always produces perfect widgets, then worker B would be the more productive employee. That is one of the reasons why it is so difficult to measure the productivity of an organization; there are simply so many variables. As an owner of a company, once you identify this issue, it is important to raise the issue with worker A and explain that maybe if they slow down, their product quality could improve. Provided this is handled delicately, worker A will benefit from this advice and ultimately become a more valuable employee.
Explain The Company’s Goals And Targets, And Link Your Employees Efforts To The Results
There are many jobs that could be repetitive and monotonous. Many managers go to meetings and talk about out-of-the-box thinking and the company’s vision, but to an associate employee, that means nothing. The key to improving an employee’s productivity is to make them feel a part of the company, to feel the vision, and understand how they fit into the equation. When they see and feel a direct correlation between the work they are entrusted with and the company goals, they are much more likely to feel motivated to perform with renewed vigor and enthusiasm, which will inevitably increase their productivity.
Choose Appropriate Key Performance Indicators
The next thing to consider is your Key Performance Indicators (KPIs). The most important thing to consider when choosing these is only to pick indicators that you have direct control over. Let’s imagine that you own a business that caters to the tourist industry in a city renowned for excellent skiing conditions. Although the weather is a key factor for your business, it is not a KPI because you do not have control over it. To ensure that the store remains productive regardless of the weather conditions, you could make sure you had a variety of activities that cater to all weather conditions. This would be an excellent key performance indicator as it is something over which you have total control.
Measuring Service Productivity
Perhaps one of the most challenging roles to measure regarding productivity is people engaged in customer service. Unlike sales, where it is relatively easy to measure how many items are sold, customer service is a lot more challenging. A perfect example might be the customer service agent who deals with 15 people every hour. His colleague may only deal with 5 people an hour, but there is no guarantee that the first person is more productive. If every customer that he speaks to is left feeling abandoned or poorly treated by the agent, then what benefit does he bring to the company. Likewise, if the other agent successfully deals with their callers, who all leave with a positive viewpoint of the company, then surely the second agent is much more productive and beneficial to the company. Sales are all about growing the client database, but customer service is all about retaining that database. Many companies are unaware of just how vital good customer service is. It is also essential to remember that in the drive for increased productivity, you do not contribute to a decrease in productivity. Certain companies, for instance, ask their staff to either log every task that they complete, or to produce a record of work at the end of every week. This could cause the employees to be so consumed in logging every possible task they complete, and could possibly take time away from completing other items. That is why there is a delicate balance to be struck between measuring productivity and achieving the ultimate goal of increasing it.
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