Productivity is a fundamental concept central to the survival and development of any enterprise and to the prosperity of its employees. Adam Smith outlined in The Wealth of Nations the direct relationship between the value a person produces and the wage to which this entitles them. He further explained that it was through continuously improving their capability that workers could produce increasingly greater value and thus increase their wages. Smith also warned that workers who did not increase their productive ability in their chosen occupation, or shift their occupation to one which was valued more highly, would see their wages decrease as time passed. As consequential as productivity is, it remains a concept that is not well understood by workers or management.

Productivity relates the cost input of all major resources involved in production to the value output they produce. By dividing the output of an operation by the sum or any one of its inputs, you get a numerical measure of the productivity for that input. Furthermore, productivity is a relative measure that requires comparison to relevant benchmarks in order to have appreciable meaning. To say that GM produced $175,000 in sales for each employee in 2002 is, without relevant comparative figures, virtually meaningless. However, this measure of productivity begins to have meaning when we compare it to GM’s 2001 productivity of $171,000 (which tells us that productivity increased for 2002) or Ford’s productivity in 2002 of $156,000 (which tells us that GM’s productivity is substantially better than Ford’s). Measures of productivity are less informative when compared to productivity measures for other operations, businesses, industries, or economies that are substantially different.

A typical enterprise, whether a business or government, inputs many resources—including people, facilities and equipment, money, materials, and vendor services—into their operations. There are also several outputs, including products and services, intellectual property, and goodwill. The essential goal for any enterprise is increased productivity. The most direct approach known to increase productivity is the innovation of process-level work methods that reduce resource consumption and increase quality, speed, efficiency, simplicity, and market innovation. Process innovation generally represents an investment which would be undertaken only if the projected net financial value of the initiative was positive and substantial and met a company’s investment criteria.

Organization Productivity

One of the most common measures of productivity is organizational productivity, or the average value created by each employee across an organization or some part of an organization, such as a business unit, process, or function. Businesses use organizational productivity as a measure of overall efficiency. It is well understood by executives that systematic and continuous increases in productivity are essential if a business is to remain competitive. Firms with extraordinary increases in productivity can increase profits, attract new sources of financial capital, invest in new operations, increase worker wages, and attain a significant competitive advantage in the marketplace. Organizations that cannot increase their productivity, at least to keep up with principal competitors, are doomed ultimately to financial failure. For government organizations, politics typically outweighs the importance of productivity and productivity improvement, unless of course productivity itself becomes an issue with political capital.

Since World War II, the emphasis on increasing organization productivity has been directed mostly toward the automation of tasks requiring factory labor. Starting in the mid-1980s, as management recognized the inherent limits to improvement at the task level of operations, companies shifted their focus up to the process level of operations to eliminate non-value-adding tasks. Process improvement initiatives, coupled with developments in information technology, enabled the automation and elimination of many white-collar work roles and added sophistication to those remaining.

Humaneering Technology

Problematic to many of these initiatives, the designers did not fully consider the human nature that is not only inherent, but also the ultimate source of value, in knowledge- and service-based work. Because of this deficiency more than any other, these initiatives failed or were compromised or resisted unnecessarily. Though the fundamental nature of work has shifted from machine-like production and logistics functions to more human-like knowledge work and service functions, process designers continue to plan their designs around engineering’s machine-based principles.

What process designers need to appreciate is the fact that engineering technology is very effective only in the design of machines and machine-like functions. Human work is another matter. Humaneering technology, which integrates and applies to work the principles of biology, sociology, and psychology, provides more accurate and helpful guidelines for the design of work ultimately dependent on people for value creation. If process and function designs are to achieve their potential and provide operations with the improvements and easy implementation desired, designers will be well served to utilize humaneering in their work.

pepitoneworldwide provides valuable knowledge and insight that can improve process design and implementation. As a support to reengineering efforts, we are able to bring a deeper understanding of human nature and the impact on human behavior of business processes, work designs, managerial policies, and information systems. This opportunity extends to the diagnosis of initiatives already compromised, whose performance can be improved with a greater understanding of the human nature inherent in the process.

Is the productivity of your organization not what you want? Let pepitoneworldwide maximize the productivity of your knowledge- and service-work operations. See Performance and Job Satisfaction.