6 productivity management

7/21/2019 6 Productivity Management

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Productivity Management

Dr Jitesh J Thakkar

Department of Industrial Engineering & ManagementIndian Institute of Technology (IIT) Kharagpur

West Bengal, India


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Productivity

Productivity is the relationship between the amount produced by agiven system during a given period of time and quantity of resourcesconsumed to create or produce those outputs over the same period oftime.

InputsManMachineMaterialMethod etc.

Transformations

System

Outputs

Goods & Services


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In The New Palgrave : A dictionary of Economics , Eatwell andNewman define productivity as a ratio of some measure of output tosome index of input use

Productivity = Output/Input

Basic concept of productivity does not change with perspective

Based on perspective size ,type and scope of system does change

Concept of measuring productivity does not depend on system , forevery system relationship will be the same :Output/Input

Productivity is the only source of real economic growth and progress


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Perspectives on productivity based ondiscipline

1. Ones discipline will largely determine the

types of systems one in interested in

2. Ones discipline tends to narrow views not

only on what productivity really means butmore importantly on what should be doneto improve it


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Effects of increasing and decreasing Productivity

Productivity decrease

Cost per unit increase

Less competitive

Market and sales decline

Profitability declines

Negative effects onCapitalMaterialsPeople

Productivity increase

Cost per unit decrease

More competitive

Market and sales increase

Profitability increase

Positive effects onCapitalMaterialsPeople


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In almost all sectors of the economy the level of productivity in UnitedStates exceeds the other developed nations

But in terms of relative rates of growth productivity for the United Statesis poor compared to other developed nations

Productivity in selected industriesLow productivity performance in many industries is simply a reflection ofpoor, inappropriate or antiquated policies

In U.S. during the years 1973-1981 farming industry was the leader in

terms of productivity growth because of technological advancements,larger and better managed farms and the national cooperative agriculturalextension service.


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In manufacturing industry low capital productivity growth can beexpected because of relatively lower rates of capital investment

Capital investment unlike labor costs is not susceptible to easy or quickchanges during dynamic periods , so during dynamic and turbulenteconomic times we can expect most productivity growth to come fromthe labor side

The manufacturing sector of the Japanese economy had led the world ,one factor contributing Japans success is its focus on improvingcompetitive capability, efficiency and striking power in strategicallyselected target industries

Japanese operationalizes the Boston Consulting Groups theory onproduct mix and diversification management.


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Boston Consulting Group theory suggests development of a portfolio ofproducts that optimize the performance

Low productivity and Highgrowth

High productivity and Highgrowth

Low productivity and Lowgrowth

High productivity and Lowgrowth

Productivity performance

P r o

d u c t i v i t y

g r o w t h


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Difference between Productivity andPerformance

Productivity is the output of a certain task and Performance is the quality ofthe work

Productivity Management

Management of productivity requires pragmatic ,effective, participativeplanning

Measurement is an important part of management

Measurement necessarily precedes evaluation control and improvement


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Standard of living

The extent to which a person is able to provide the things thatare necessary for sustaining and enjoying life .

Standard of living of a representative family differs greatly indifferent parts of the world.

What is considered a necessity in one part of the world could be considered a luxury in the other.

Basic necessities of a minimum decent standard of living:Food, clothing, housing and hygiene. Also, security andeducation also considered constituents.

Greater the amount of goods and services produced in anycommunity, the higher its the average standard of living .


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Standard of living

There are two ways of increasing the amount of goods andservices produced:

- Increase the employment and investment in creating jobs. Sothat more people are producing goods required for the society.

- Increase productivity . Same amount of labor produces moregoods.

We want: More and cheaper food by increase in agricultural productivity

More and cheaper clothing and housing by increased industrial productivity

More hygiene, security and education by increasing overall productivity .


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Productivity

Ratio between output and input. Arithmetic ratio of the amount produced to the amount of any

resources used in the production.

The resources may be: land, material, plant, machines, tools,labor. It could be combination of all! Over a period of time, one can say that productivity has

increased . How?

Combination of improved technology, better planning, greaterskills etc.


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Productivity

Note that, increased production does not mean increased productivity .

Higher productivity means that more is produced with thesame expenditure of resources; that is, at the same cost interms of land, material, machine, time or labor.

Alternatively, same amount is produced at less cost in terms ofland, labor, material etc; thereby releasing some of theseresources for the production of other things.


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Productivity and standard of living

If more is available at the same cost, or the same amount isavailable at lesser cost the whole community benefits .

As per the ILO, higher productivity provides ways for raisingthe standard of living by:

1. Larger supplies of both consumer goods and capital goods atlower cost and prices

2. Higher real earnings

3. Improvement in working conditions , e.g. by reduced workinghours4. In general, strengthening of the economic foundations of

human well-being.


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Productivity in industry

Many factors affecting productivity of each organization; also,they are dependent.

Depending on the individual environments, decisions are to bemade.

Industries where labor and capital costs are low compared tothe material costs, better use of material and plant gives thegreatest scope of cost reduction.

In countries where capital and skilled labor are in shortagecompared to unskilled labor, one should look to increase theoutput per machine or per skilled worker.

Increasing the number of unskilled workers may be beneficialif by doing so an expensive machine or skilled craftsmen areenabled to increase production.


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Governments responsibility

Government can create conditions favorable to raise productivity. It can:

1. Have a balanced programs of economic development2. Take steps necessary to maintain employment3. Make opportunities for employment . Last step is specifically important for a developing country

like India. Government should make provisions for workers who are

going to loose jobs because of technology improvement training and education programs. Example: Indias First Five -Year Plan (1952).


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Managements responsibility

The main responsibility for raising productivity in anindividual organization lies with the management.

It can implement productivity programs.

It can create a positive environment and obtain co-operation ofthe employees. Trade unions should encourage its members to provide such

co-operation when the productivity program is beneficial toworkers, as well as the organization on the whole.

We will look at managements role in increasing productivityof individual resource:


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Productivity of material

At the design stage: Ensure least consumption of material, Purchase equipments and plants such that consumption of

material is economical.

At the operation stage: Use of correct process Right use of the process Operator training Proper handling and storage of products at all stages Proper packaging to reduce damage in transit


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Productivity of land, machines and manpower

Effective utilization and maximum productivity is animportant source of cost reduction.

Reduction in the original specification, before the land is purchased saves capital outlay (as well as interest expenses)

A savings in material which has to be imported saves importduty and excise.

Productivity of manpower and machines is typically measuredin terms of time ( man-hours; machine-hours ).


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Factors tending to reduce productivity

Work content added due to the product for a manufacturing firm: The product or its components are designed such that it is

impossible to use most economical manufacturing processes. Excessive variety or lack of standardization. Incorrect quality standards. Excessive amount of material removal required.


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Work content added due to process Incorrect production process (and/or machine) used Process not operated properly

Non-optimal layout with wasted movements. Working methods of operation causing wasted movements,

time and efforts.


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Ineffective time due to management Marketing policy which demands unnecessarily large number

of products. No standardization of components between as well as within

products. Failing to meet customers requirement from the beginning. No plan for flow of work. Improper supply of material, equipment. Improper maintenance of plant and machines. Insufficient safety measures. Improper working conditions resulting in interrupted work.


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Ineffective time within the control of worker Taking time off without good cause: by lateness, by idling at

work etc. Careless workmanship causing scrap or rework. Failing to observe safety standards.


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Productivity is the quotient (ratio)

obtained by dividing output by one ofthe factors of production. Thus, it is

possible to speak productivity ofcapital, investment of raw materials

according to whether output is being

considered in relation to capital,investment or raw materials, etc.


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EXAMPLE#1A company is manufacturing 24,000components per month by employing 100workers in 8 hour shift. The company getsadditional order from government to supply

additional 6000 components. Themanagement decides to employ additionalworkers. What will be production and

productivity level when the number ofadditional workers employed are:i) 30 ii) 25 iii) 20


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Eff t f P d ti V l d W k


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Effect of Production Volume and Workers onProductivity


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PRODUCTIVITY, EFFICIENCY AND EFFECTIVENESS


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TYPES OF PRODUCTIVITY INDEX

ff f l


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Different Forms of PartialProductivity

EXAMPLE#2


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EXAMPLE#2


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EXAMPLE#2

EXAMPLE#3


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EXAMPLE#3


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EXAMPLE#3


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WAYS TO IMPROVE PRODUCTIVITY


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Means to improve productivity for differentplanning horizons


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Sumanths total productivity model This model defines a total productivity measure

which includes all the output and input factors. The TPM is based on tangible output and tangible

input elements. Although intangible elements such as quality,

goodwill, concern for environment are not explicitin this model, the TPM reflects the impact of suchintangibles rather directly.

The TPM takes both a total systems view as wellas a subsystems view.

It is both diagnostic and prescriptive in nature.


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Productivity ManagementA process that entails strategic and actionplanning and a critical focus on ongoing andeffective implementationManagement of productivity requirespragmatic ,effective, participative planningMeasurement is an important part ofmanagementMeasurement necessarily precedesevaluation control and improvement


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Productivity Management Process

This process includes the following:

1. Measuring and evaluating productivity

2. Planning for control and improvement of productivity based oninformation provided by the measurement and evaluation process

3. Making control and improvement inventories

4. Measuring and evaluating the impact of these interventions


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Energy,human

capital ,data ,materials

Transformationprocess

Energy,human

capital ,data, materials

Sales ,profits,customer

satisfaction,growth ,survival

Procurem

entfunctions

Distribution

functions

Task

environment

Task

environment

Planningprocess

Inputvariables

Outputvariables

Outcomevariables

P iI

P iOQ iI

Q iO

Productivity measurementprocess

AttributesScaling

Output measure(s) , Q iO

Input measure(s) , Q iIOutput measure(s) t 1 / Output measure(s) t 1

Input measure(s) t 2 / Input measure(s) t 1Surrogateproductivity

measures

standards standardsstandards

Productivity evaluation ,planning ,control ,improvement

Measures

Static productivityratios

Dynamic productivityindexes

Multifactor Multifactor Partial factor Partial factor

(Modification of measures ,ratios ,indexes ,and process itself )

Basic Productivity Management Process

Where

Q iI = quantities ofinputQ iO = quantities of output

P iI = Price or cost ofinputsP iO = Price or cost ofoutputs


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Productivity MeasurementThe selection of physical, temporal, and/or perceptual measures for both

input and output variables and the development of a ratio of outputmeasure(s) to input measure(s)

There are two basic categories of productivity measures1. Static productivity ratios : simply measures of output divided by measures

of input for a given period of time2. Dynamic productivity indexes : essentially a given static productivity ratio

at one point in time divided by the same ratio at some previous period intime

There are also three types of productivity measures1. Partial-factor2. Multifactor3. Total-factor


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Productivity Improvement

1. Achieving more output for the same input2. Achieving the same output from less input3. Achieving much more output for slightly more

input4. Getting slightly less output for much less input


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Organizational system resource flow component1. When discussing productivity it is essential to clearly define the

organizational system boundaries2. When the boundaries are defined the unit of analysis or scope of the

measurement system defined3. An organizational system procures inputs at price4. Once input variables are procured the costs of those resources often

become either obscured or temporarily irrelevant until budgetedexpenditures are compared to actual costs

5. Quantities of energy, capital, data, materials and human labor aretransformed into outputs

6. Output is distributed: sold, delivered, received etc.

7. Prior to these goods or services distribution functions assess anddetermine a unit price for each output

8. This unit price is arrives at using either simply a cost recovery process or acost recovery plus profit margin process


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Energy,humancapital ,data ,

materials

Energy,human

capital ,data ,materials

Glass box

Black box

Pro

curementfunctions

Distri

butionfunctions

Other

functions

Support functions

Other

functions

Inputvariables

Outputvariables

Q iI

P iI

Q iI

Q iO

Q iO

P iO

Transformationsprocesses

Environments

Environmen

ts

OutcomesSales

Customersatisfactions

WhereQ iI = quantities of inputQ iO = quantities of output

P iI = Price or cost of inputsP iO = Price or cost of outputs

Organizational System as a General Systems Model: Resources Flow Component of BasicProductivity Management Process

d


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Productivity Measurement Component

Input variables Output variablesTransformationprocess

Q iO/Q iI

Procur

ement

Dist

ributi

on

Surrogateproductivity

measures

Output measure(s) , Q iO

Input measure(s) , Q iIOutput measure(s) t k / Output measure(s) t k

Input measure(s) t j / Input measure(s) t j

Measures

Static productivityratios

Dynamic productivityindexes

Multifactor Multifactor Partial factor Partial factor Total-factor

Total-factor

(To productivity evaluation and controlcomponent)

Q iI

P iI

Q iI Q iO Q iO

P iO

Organizational SystemBoundary

Environments

Envir

onments

Envir

onments

Productivity Measurement Component of the Basic Productivity ManagementProcess


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Productivity Measurement is not easy as itseems because most of the organizational

systems :

1. Have multiple products or services

2. Are faced with continual price and cost changes3. Are redesigning products, services, and processes on

an ongoing basis4. Must consider other performance measures

5. Have a variety of categories, types and levels of inputresources, each of which has specific costs and othersignificant characteristics that must be considered


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Major Difficulties with Productivity Measurement

Determination of the boundaries of the systemor the unit of analysis to be measuredDetermination of what to put in the numeratorand what to put in denominator


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Lack of consensus definitions of productivity, causing confusion as towhat productivity really is, how to measure it, and how to improve itDifferences in perspectives among various academic disciplines.

These differences, apparent in the literature, cause confusion on thepart of practitioners, who have a very focused view of productivitybased on the organizational systems they are managingTechnical measurement issues, such as aggregation of unlike outputsand inputs, changing output mixes, price and cost inflationcontamination, work in process data input problems, and length ofmeasurement periodOperationalization of the productivity concept in the areas ofprofessional, white-collar, management, service-type activities in

which measurement of outputs is particularly difficultDifferentiation of productivity measurement systems for control,improvement, planning etc.

Integration of productivity measurement with otherperformance measurement systems


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Productivity Evaluation and Improvement Component

Once a productivity measurement system is developed, the system can beoperationalized, and standards can be generated

Standards can be generated using at least the following methods

1. Estimation

2. Engineered approach

3. Comparison, previous period, or historical

4. Normative

Pl i g


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Inputs outputsTransformation

process

Procurement

Di

stri

buti

on

Planning,strategic, tactical,

operational

Productivitymeasurement process

Envi

r onments

Envir onments

Management processes

Improvement interventionsoutcomes

Surrogate measures Ratio(s) Index(s)

Productivity evaluation and improvement

Productivity planning

Standards

Q iI

Q iI

P iI

Q iO Q iO

P iO


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Classification of Performance Control SystemsWe can classify control systems with respect to the resource they aresupposed to manage

We can classify them with respect to the type of organizational systemperformance they are attempting to control or manage

Measures of Organizational System performance1. Effectiveness2. Efficiency3. Quality4. Profitability5. Productivity6. Quality of work life7. Innovation


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Effectiveness : it is the degree to which the system accomplishes what itset out to accomplish

Three criteria need to used to evaluate degree of effectiveness1. Quality2. Quantity3. Timeliness

Efficiency: it is the degree to which the system utilized the right things. Itcan be represented by the following equation

Efficiency = Resources expected to be consumed/Resources actually consumed


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Quality: it is the degree to which the system conforms to requirements,specifications or expenditures .

Profitability: it is a relationship between total revenues and total costs

Profitability = total revenues/total costs

Following financial ratios can be used to assess the financial health of a firm1. Liquidity ratios

2. Leverage ratios3. Activity ratios4. Profitability ratios5. Growth ratios6. Valuation ratios


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PROFITABILITY RATIOS

Profit margin on sales = Net income(after taxes)/Sales

Return on total assets = Net income/Total assets

Return on net worth = Net income/Net worth


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Productivity: it is a relationship between quantities ofoutputs from a system and quantities of inputs into thatsame system

Quality of work life: it is the way participants in a

system respond to sociotechnical aspects of that systemInnovation: it can be defined as applied creativity. It isprocess by which we come up with new, better, morefunctional products and services


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Productivity Process Modeling

Step 1: Select an organizational system of interest. Clearlydefine the boundaries of the system

Step 2 : Identify task environment organizations on theinput and output side. Note that for some organizationssystems, suppliers and customers are internal to theorganization or firm itself


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Step 3 : Identify major goals of the organizational system. This data should beavailable from the strategic planning process, if it exists

Step 4: Identify major subcategories of input resources to the organizationalsystem

Step 5: Identify major transformations that take place within the organizationalsystem to convert inputs to outputs

Step 6 : Identify major outputs of the organizations system. These outputs maybe goods or services

Step 7: Identify expected or desired outcomes to be realized from theorganizational system that has distributed the outputs

Step 8 : Identify and prioritize performance criteria or measure for theorganizational system


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Step 9: Identify and prioritize output to input ratios that ifdeveloped, measured, monitored and evaluated would

provide a manager with additional useful insights as tohow well the organizational system is performing or hasperformed

Step 10 : Identify and discuss the evaluation, feedbackcontrol and improvement planning process.


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Goals, mission Planning Process Desired, expected,actual outcomes

Task environments Task environments

MFPMMNPMMMCP/PMTSurrogate

Quantityquality

QuantityqualityTransformations

Intermediateoutcomes

procurement

Distr

ibution

Performance measurement and evaluation

Effectiveness, efficiency, quality, quality of work life, innovation, profitability

1

2

4

3

7

65

8

1

8

9

10

3

Productivitymeasurement

Productivity Process Model


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PRODUCTIVITY

MEASUREMENT MODELS

Productivity Measurement Techniques


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Productivity Measurement Techniques

1. Normative Productivity Measurement Methodology(NPMM)

2. Multifactor Productivity Measurement Model(MFPMM)

3. Multi Criteria Performance/Productivity Measurement Technique(MCP/PMT)

Two important processes used in NPMM are1. Nominal Group Technique (NGT)2. Delphi Technique (DT)

NP program h i

NP planning,management

ti

Recycle, refineevolve to more

Dynamic planning and adjustmentOptions for program continuation


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NPantecedent

or casualconditions

providingmotivation

for thisactivity

NP implicitassumption for

topmanagementsupport and

legitimization

Productivitymeasurement

strategicplanning

championleadership

preparation,organizational

preparation

Productivity

analystintervention

Review andrefinement

Integration and

implementation

Monitorand

feedback

sophisticatedmeasurement

system involvement

Evolve frommeasurement focus

to improvementfocus once controlconcepts andmeasurement

systems areestablished and in

place

Focus on refiningand integration into

performance

appraisal system,MBO or managing

productivity byobjectives systems,

or intoincentive/gainsharin

g/reinforcementsystems

Do nothing

Improvement

focus

Othermeasurement

technique

Key

decision

NGTorDTNPMM

Stage 2Stage 1 Stage 5Stage 3 Stage 4

Milestone t1Managementsupport(1mo-

2yr)

Milestone t2Productivity

measurementstrategic

planning(1mo-1yr)

Milestone t3

Decision to useNPMM(1day-1mo)

Milestone t4Planning

preparation,managementpreparation,

organizational

preparation

Milestone t5

Structured groupprocess(SGP)

(1mo-1yr)

Milestone t6

SGP output analysisand

development(1mo-1yr)

Milestone t7

Feedback toparticipants(1mo)

Milestone t8

Integration of otherperformance

measurementsystem(6mo-2yr)

Milestone t9

Operationalize,monitor, evaluate,

feedback(continues)

Milestone t10

A productiveorganization

On the far left side of the chart and at the outset of a productivity measurement system


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development , it is assumed that a necessary precondition would be same reasonablystrong desires, interests, and motives for beginning such a program

Another necessary precondition is the existence, selection and involvement of aprogram director, leader, coordinator and so forth

On the bottom of the figure a time line attempts to provide with general guidelines asto milestones or critical events in this program development and a range of duration for

a particular organizational system to reach this milestone

There are five different stages and ten milestones:The first milestone t1 has to do with level of management support achieved. This isparticularly critical milestone. This milestone could perhaps in the best organizations be

established in a month.

Milestone t2 represents development and approval of the productivity measurementsystem strategic or master plan

Milestone t3 outlines the sequence of activities that actually constitute the five stage


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q y gNPMM

Milestone t4 specific NPMM planning preparation, appropriate management

preparation and organizational system preparation is a critical necessary preconditionthat will strongly moderate the success of the NPMM application.

Stage 1 and Milestone t5 involves execution of the NGT or DT as a mechanism forgenerating a prioritized list of measures for each specified unit of analysis

Stage 2 and Milestone t6 requires intervention from productivity analysts

Stage 3 and Milestone t7 requires a briefing, review, discussion, potential revision andeventual approval of the draft operating system for the productivity measurementprogram

Stage 4 and Milestone t8 requires consultative or managerial intervention

Stage 5 and Milestone t9 represents the continues monitoring and feedback process


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g p g p

Milestone t10 represents a decision mode of sorts.

Nominal Group Technique

The NGT is one of the many structured group processes that have been designed anddeveloped.

It is a special purpose technique useful for situations where individual judgments mustbe tapped and combined to arrive at decisions that can not be reached by one person.

The NGT is a problem solving or idea generating strategy not typically used for routinemeetings

The NGT takes its name from the fact that it is a carefully designed, structured group


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process that involves carefully selected participants in some activities in some asindependent individuals, rather than in the usual interactive mode of conventionalgroups

It is well developed and tested method that is fully presented in the work of Delbecq,Van de Ven and Gustafson

The NGT has four phases in addition to an introduction and a conclusion

First Phase :This is known as Silent Generation and takes about 10 to 15 minutes. During this phasethe group members are instructed to write their responses to the task statement

Both the facilitator and assistant also write during this period.

Second Phase


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This is known as Round-Robin Phase. The facilitator interrupts the process yetemphasizes that there is no need to stop generating

The facilitator calls on participants one by one to state one of the responses they havewritten

Participants may pass at any time any may also join in on any subsequent round

A participant may propose only one item at a time and either the facilitator or anassistant records each item as it is offered

This phase goes on until all the ideas generated by the group are listed and displayed

The Round Robin phase permits the leader to establish an atmosphere of acceptanceand trust

Third Phase


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This phase is known as clarification Phase

Once all the items have been recorded the facilitator goes over each in order toascertain that all participants understand the item as it has been recorded

Any participants may offer clarification or may suggest combination, modification,deletion

Pace is important to this step and the facilitators job is to keep the group movingrapidly through the list of items

Fourth Phase


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This is known as Voting and Ranking Phase that provides the participants with anopportunity to select the most important item and to rank those items

The participants are provided with between five and nine blank 3*5 cards.Each participant is asked to select the eight most important items from the list displayedbefore him or her. Typically the list will contain 20 to 30 itemsTo avoid the confusion in handling their judgments participants are asked to write theitems out one per card in abbreviated fashion in the center of the blank cardsWhen all have completed this step they are asked to spread the eight cards out in frontof them and to rank and weight them

Typically they are given the following instruction

From the eight cards choose the most important item write the number 8 with a circle around itin the lower right hand corner of the card and the set the card asideFrom the remaining seven cards choose the least important item write the number 1 with a circlearound it in the lower right hand corner of the card and set the card aside

From the remaining six cards choose the most important item write the number 7 with a circlearound it in the lower right hand corner of the card and set the card aside


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The process continues in this fashion until all the cards have beenranked. At this point of the process tabulation of the votes takes

place. The facilitator has three alternative

1. Invite the participants to take a ten minute break while he or sheand the assistant tabulate and display the results

2. Invite the participants to watch the tabulation process take place

3. Invite the participants to fill out a brief questions that has been

prepared by the coordinator for the specific purpose ofevaluating the reaction of the participants to the process,obtaining suggestions from the participants as to next stepsdetermining the likelihood of implementation


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Multifactor Productivity Measurement Model (MFPMM)

The multifactor productivity measurementmode l (MFPMM) is a comprehensive andanalytical to measuring

change s in productivity. This model use sthe techniques to break the total variationinto price effects and productivity effects .The analyses c an be done on both inputsand outputs in more flexible forms .

Therefore the MFPMM offers a validproductivity model.


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Nine Basic Components of MFPMM


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Key Insights


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Key Insights The normative productivity measurement methodology

(NPMM) is a process by which measures (surrogate), ratios,and/ or indexes of productivity can be participativelyidentified and developed into a measurement, evaluation,control, planning and improvement system.

The multifactor productivity measurement model (MFPMM) isactually a decision support system model that operates withorganizational system data on prices/ costs and quantities ofoutput (goods and/or services) and input resources.

The NPMM appears to be best suited for smaller units ofanalysis, such as the group level, and in situations wheredecoupled productivity measurement systems are appropriateor desired.

h


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Key Insights The participative character of the NPMM facilitates linking the

measurement and evaluation activities to the planning,control, and improvement activities.

The MFPMM, on the other hand, appears to be best suited for

intermediate units of analysis, such as division, plant, or firmlevels. The model provides an integrated and, therefore,coupled measurement system and perspective. It is much lessa process in which persons in the organization can become

involved and much more a decision support system formanagement of the particular organizational system.

Multicriteria Performance/ Productivity Measurement


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Multicriteria Performance/ Productivity MeasurementTechnique (MCP/ PMT)

If one were to capture all the output data and all the inputs inthe model, then essentially the MFPMM becomes a Total -Factor Productivity Measurement Model (TFPMM)

Development of partial-factor ratios and indexes will result in

a disaggregated and likely decoupled productivitymeasurement system.


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PRODUCTIVITY # PERFORMANCE


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Measure of performance for an organizationsystem include at least seven components

EffectivenessEfficiency

QualityProductivity

Quality of work life

ProfitabilityInnovation (product and process)


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PRODUCTIVITY CONTROL &

IMPROVEMENT: A TAXANOMY


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PRODUCTIVITY CONTROL AND IMPROVEMENTS:TECHNIQUES AND APPROACHES


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Quality X Acceptance = Effectiveness


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Theory X


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y Man inherently dislikes work and

will avoid work Because he dislikes work, man must

be coerced, controlled, directed,

threatened with punishment to gethim to work toward achievingorganizational goals

The average man prefers to bedirected; he wishes to avoidresponsibility, he has little ambition,he wants security

Theory Y


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y Work is as natural as play External control is not the only way for

bringing about effort towardorganizational goals. Man will exercise

self-direction and self-control in theservice of objectives to which he iscommitted

The average man seeks responsibility.

His avoidance of it is generally aconsequence of past frustration andcaused by poor management fromabove

Theory Z


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Ouchi (1981) has proposed Theory

Z Suggest a typology of American

management models, A and Z

Type A is bureaucratic in structure,and supported by individualism andcompetition and often areaccompanied by alienation and a

lack of productivity Type Z organizations are more

organic, cooperative and productive


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MOTIVATION

Difficulties of Managers


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Constraint imposed on managers in terms of the type

and availability of rewards or incentives that can beadministered to employees Continued inability on the part of managers toe

effectively and consistently apply and implementmotivation techniques

Increasing dynamic and complex nature of employeeneeds, demands, desires and expectations of the

organization and the job


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Motivating employees may notbe the only way to improveindividual, group and evenorganizational performance;

however, it probably is anecessary condition forimproving performance inmost organizations in thelong run.

The analysis of motivation


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The analysis of motivationshould concentrate onfactors that arouse orenergize a persons activities.These factors include needs,

motives, and drives Motivation is process

oriented and concerns

behavioural choice, direction,goals and the rewardsperceived for performing


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Performance = f (Ability X Motivation)


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APL & MPL


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APL (Acceptable Performance Level): Level ofeffort close to an engineered standard. It is thatlevel of effort that the organization (supervisor ormanager) at least subjectively views as being

acceptable MPL (Motivated Performance Levels): Present

when incentives, recognition, awards, autonomyetc. are given. It represents levels of effort abovethe 100 percent level for an engineered standard


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APL and MPL levels ofeffort convert to APL andMPL levels of performance

only if capacity,opportunity, andleadership (GOAL setting)are executed correctly


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Management needs tolearn how to obtain andmaintain APL, which is what

it is paying for, before ittries to increase therewards in an attempt toachieve MPL


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TECHNIQUES FOR IMPROVINGMOTIVATION AND PERFORMANCE


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REINFORCEMENT THEORY


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BEHAVIOR MODIFICATION

Behaviour Modification


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All behaviour has consequences, which may bepositive (satisfying), negative or neutral

Behaviour is a function of its consequences. Positiveconsequences increase the probability of the

behaviour. Negative consequences decrease theprobability of the behaviour. And neutralconsequences decrease the probability of thebehaviour slowly.

What follows a behaviour is more important thanwhat precedes it


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Job Design, Redesign, Enrichment


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PARTICIPATION: EMPLOYEEINVOLVEMENT

PARTICIPATION: EMPLOYEE INVOLVEMENT


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A voice in problem solving

Consultation, consensus seeking Consent in final decision Disciplined, structured, systematic attempts to capture and

utilize individual and group wisdom Shared decision making Effective delegation Shared conceptions of problems and appropriate action steps An opportunity to create winning situations and attitudes A mechanism for improving labor-management cooperation

6 productivity management

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