Evaluation of the productivity concept

Productivity

Unintended effect on results

The previous point stressed the need to consider resources other than labor, but managers, even when considering labor, are often apt to be overly concerned with labor's use of the 'hardware' in a business, whereas labor should be viewed more of a resource in its own right, the 'software' of the organization.

Some of the partial measures of productivity in their desire to encourage the service of the hardware ignore almost completely the personal goals of individuals in organizations.

Donald Roy (1952) showed how incentive schemes based on direct work measurement can actually serve to hold down productivity, as when employees did not disclose 'loose' rates and by working at lower performances than those at which 'tight' rates made bonus payments marginal. In the same study he also showed how individual employees worked out for themselves their own satisfactions from the job, regardless of the objectives of management.

Another related angle is that by emphasizing those aspects of work, which are readily measured, and by rewarding improvements in those aspects, the importance of other aspects of the work, such as discretion, initiative and flexibility, will diminish. Roy (1953) showed this quite clearly. For example, by focusing attention and financial reward on speed, effort and efficiency, the employee is discouraged from using discretion or initiative.

Finally, one effect of measurement based on direct work, especially where it is tied to a bonus payment, is to increase the amount of activity, but not necessarily to increase the amount of useful work done. Financial benefits do not always equate with cost savings. In service operations, where there is no clear output measure, become subjective. For example one sewage works, which was studied, showed a substantial increase in 'productivity', but this was obtained from a growth in relatively useless work, for example cutting the grass three times a week rather than once. There is no financial benefit to the organization from such 'productivity' improvement.

Mechanistic approach to measurement

Measures based purely on the productivity of labor produce a very mechanistic approach to performance evaluation. The whole process of work study is, by its nature systematic, and this is exemplified by the way work is designed and measurement is conducted. Over the years, the approach has resulted in narrow focus of operation, which is part of the criticism of the scientific approach to management, Study after study, from Elton Mayo (1949) onwards, shows examples of cases where performance potential remains undisclosed.

Nevertheless, the scientific management principles abound and are nowhere more prevalent than in traditional work study, even though work study is often synonymous with productivity in peoples minds. Parris (1979) has identified many of the problems with this mechanistic scientific approach

Performance indicators

Many measures of individual productivity, especially those tied to incentive bonus payments and particularly those based on work study, incorporate compensation for poor performance by the individual which is caused by others in the organization not doing their jobs properly. Thus employees receive compensation if they do not have an adequate supply of parts for their work, if their machines break down, or if there is a hold up in the supply of work.

Often this compensation takes the form of time being allowed for these holdups in the calculation of their productivity. Consequently, the individual productivity figure does reflect fairly the extent to which the individual has been expending effort in performing the job, so long as the compensation adjustment is realistic. But by aggregating such figures to give an overall departmental or organizational productivity average one is subsuming, within a so-called productivity figure, allowances for all the inefficiencies resulting from poor organization or administration. This is a false figure for overall productivity.

Productivity measures, other than company-wide ones, almost always allow compensation for disruption beyond the control of the individual or group, and there is a large discretionary element in these allowances which allow the workforce, supervision, and management to adjust the figures in such a way as to produce the answer they think is correct.

Frequently the productivity measure is an inadequate reflection of the effort expended by the workforce, and this is recognized intuitively by managers, supervisors, and employees. Adjustments to allowances are usually made in the interest of what is regarded as fair or acceptable, and is usually done in order to make the system operate more smoothly. However, it does lead the individuals concerned into a situation where they are possibly falsifying records about the work done, and this does not contribute to a healthy climate of relationships at work.

The missing perspective

The preoccupation of organizations for what Minzberg (1978) calls 'the greatest measurable benefit for the measurable cost' sums up the missing perspective. If one accepts this statement then the whole obsession with goal achievement and the rigid adherence to measurable goals regardless of moral or social consequences can be questioned as managers and teachers of business: we are taught to measure things until an attitude develops that suggests that if something cannot be quantitatively measured, it cannot be improved.

With this attitude efficiency ceases to mean the greatest benefit for cost, but instead, the greatest 'measurable' benefit for the 'measurable' cost. This philosophy is deep–rooted in our management culture and ingrained in managers from F. W. Taylor until the present day. This philosophy is summed up by Drucker (1974), one of the most popular postwar management writers, who states in identifying a task, "it can be defined, goals can be set and performance can be measured and then business can perform".

Minzberg (1982) sees three consequences of this approach.

  • That some costs can be more easily measured than others.
  • That it will lead to adverse social conditions.
  • Because it is costs rather than benefits that are often measured, the economy is reduced.

Managements preoccupation with measurement

In the management services field there has been great emphasis and effort on achieving measures of efficiency by the use of techniques such as work measurement, rather than promoting efficiency by concentrating on methods and procedures. This has, in the eyes of employees in many organizations, led to:

  1. A concentration of effort, spent on reducing the ineffective time within the control of the direct worker and ignoring the usually greater potential for savings from management where the measures of performance are more difficult to obtain and evaluate.
  2. The use of the technique of work measurement, not simply to provide the essential data for other essential management functions, such as costing, planning, production control, personnel, forecasting and sales, but often as a means of providing data to justify staffing reductions, thereby leading employees to believe work measurement is purely a device for controlling earnings and employment opportunities.

In addition, method study and work measurement is often used as a means of implementing productivity bonus schemes for direct workers and sometimes, indirect workers. The attraction of focusing on payment system design is that it places a large share of the responsibility for organizational success or failure on the workforce, in the belief that the organization will succeed if only the employees can be motivated to perform their jobs better. Sometimes the payments system has very little bearing on the real problems in an organization.

Potential for productivity improvement, however, comes from many areas. In the longer term it will relate to the productivity of plant and equipment and the utilization of the correct materials, technologies and the trained people to operate them. In the short term the use of whatever resources are available in as efficient a manner as possible is the way to improve productivity.

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