Articles

Productivity starts at the top

In The board, UK productivity, Uncategorized on March 18, 2010 by Tim Aikens

I’ve mentioned the need to have productivity as a board issue and discussed why many boards of directors just don’t either get ‘it’ or in many cases don’t even go there.  How can we start to get the boards of UK plc thinking of productivity on a daily basis as a vital issue?  In a business context a successful business needs to have the right product in the right market at the right price.  But beyond that, a key element for long-term profitability will be productivity.  Someone will always come along (eventually) and make the same item  – or deliver the same service for less.  Not just  by migration of services to countries like India because unit wages are lower, but simply because the hourly output is so much higher.  The US for example has higher average hourly wages than the UK in many of not all areas, but still manages to produce goods and services more cheaply.

So, for the board directors out there here are the top three things you need to do as a start in terms of getting productivity on the agenda:

1. Have productivity as an agenda item on every board meeting from now on.
2. Make one of the directors responsible and accountable for productivity.
3. Make 25% of performance related pay dependent on productivity in ALL areas of the business, not just production.

Just doing this will begin to focus minds on the key productivity issues (especially the last one)

Of course, the productivity revolution does not have to wait for the board. Every one else can take the lead (but understand that state of mind – ‘why should I bother when the bosses don’t care?!’  There are lots of things that everyone else can start to think about and do:

1.  Managers set yourselves and informal target.  How can we do – whatever it is, better, faster, cheaper etc.
2.  Challenge those above you to seek improvements in how things are done.  Ask the big question WHY!
3.  Challenge everything.  Why this way, how can we do this differently, we’ve been doing this for years – is there a better way?

A wonderful example I saw on the net the other day. A UK firm who lays large concrete slabs for roads or runways. Once the concrete is set, you need to seal the gap with bitumen. The old way – man with bucket of hot bitumen, pouring a stream carefully by hand, often missing the crack, with lots of wastage and time spent refilling the bucket. The new way –  a man with a piece of kit on wheels, including an insulated bucket, hose and trigger system to inject just the right amount of bitumen into the gap, faster and virtually no waste.  How many more opportunities are there like this?

Lets have some comments on good examples of productive change!

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