Chris Champion, the CEO of Raelco Products, Ltd., a fast-growing distribution company, looked at her company’s recent financial statement. The company, while having great margins, was constantly running in the red. The biggest expense item, as with most companies, was payroll. Chris looked over several recent hiring requests. She felt vaguely annoyed and frustrated as she reviewed the situation. Although Raelco’s headcount and payroll expenses grew during the last three and a half years, the number of completed projects and action plans decreased. The dilemma, it seemed to her, was that despite the growing level of workers, less work was actually getting done while supervisors demanded to hire more people.
Doing a quick calculation, Champion noted that if Raelco reduced its payroll-related costs by 20%, the company would achieve a profit level similar to its nearest competitor. The more pertinent question was: “What are the impacts of cutting our staff by such a drastic amount?” If Raelco’s excellent customer support or leading-edge inventory management processes were negatively impacted by such cuts, the company would be “shooting itself in the foot.” However, Raelco’s Board of Directors had made it clear to Chris that the bottom line had to match industry norms, or Champion’s job would be in jeopardy.
Champion did not fear the loss of her job because she had confidence in her abilities. Any fear she felt grew out of the potential damage to Raelco’s reputation and the employees’ dedication to the company. If she left now, Champion knew she would feel that she had not finished what she started. Due to her leadership, Raelco had grown from the last place in the market to the market leader. The final sticking point, in her vision for Raelco, was the net profit.
As she prepared for her executive staff meeting, Champion thought of two questions she would put before her team. She knew that finding the answers would be difficult, but the correct answers would drastically improve Raelco Products’ profit picture. She wrote:
- Are we productive?
- If we are not, how can we improve everyone’s productivity?
What is Productivity?
The U.S. Government defines it as the value of output generated divided by the number of workers. It issues the national level of productivity once a quarter to show trends.
In The Age of Paradox, Charles Handy defines productivity this way: “Productivity means more and better work from fewer people.” In Management Tasks, Responsibilities, Practices, Peter Drucker wrote that productivity is, “Better utilization of resources [and] …that balance between all factors of production that will give the greatest output for the smallest effort.”
Productivity is one of those terms that business people think they understand, but they mistakenly reward perfectionism over efficiency. This person feels that workers must do things correctly or “right.” Modern managers and executives know that it is far better for people to do the right things instead of people doing things right.
For example, an accounting manager I worked with insisted that every work document prepared for him had to have the total underlined with a dollar sign next to it, and it had to be completed on green ledger paper with a complete explanation of the worksheet. This manager insisted that this was the right way to prepare a work document. Even though he received documents containing incorrect arithmetic, and/or incorrect assumptions, the documents met his requirements! In effect, the work was a waste of time because while they met his standards, they did not add value to the accounting process. Although this example may sound extreme, every organization has people in management positions who demand that doing things “right” is most important.
Another manager I worked for used a different philosophy. He requested that his employees focus their attention on the purpose of what they were doing. He cared more about the purpose of what the person was trying to accomplish than on whether it conformed to a particular format or superfluous method.
Principle number one of productivity is that the employees are doing the right thing, instead of spending time on things that don’t add value, even if the work is done correctly.
The second principle of being productive is a concept we are all very familiar with: the last minute. Isn’t it amazing what you can accomplish when the deadline is approaching? I find that I get more done in the three days just prior to a vacation than I do in any five “normal” work days. The reason we are able to get so much done in a short amount of time is because we are focused. We know what must get done, the most critical tasks. We also keep distractions to a minimum so that we can get those tasks accomplished. Often, two of the motivators behind accomplishing so much at the last minute are guilt and embarrassment. When faced with getting work done at the last minute, especially when we had lots of time to do it, we do the work so that we do not lose face.
By removing the feelings of guilt and embarrassment from this, we get the second principle behind productivity: focus. When employees are focused, they can accomplish more work than usual. When employees are able to concentrate without distractions, they accomplish the task quickly. One of my employees started each day with a list of what she was going to get done that morning. Nearly every day, she sequestered herself in her office and completed her long list of tasks within a few hours. Using her skill of staying focused, her productivity amazed me.
My definition of productivity combines these two principles together. Productivity is doing the right things while staying focused. The “right” things are the work, projects, and activities which will help the organization accomplish its mission and strategic objectives. This definition includes the views of productivity by experts Charles Handy and Peter Drucker, that productivity is getting the most from the least. Through productive people, we receive the most, that is to say, the best quality work because the attention is on what is important, and done in a focused manner.
You get what you measure.