Productivity – output per unit of input – is one of the critical concepts in economics. It measures how much people, companies, and countries can produce with a given set of land, labor, capital, and technology.
One economist described the concept's importance this way:
Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.
In his famous book Out of the Crisis, Dr. W. Edwards Deming outlined fourteen points that organizations of all sizes could use to increase output per unit of input.
Productivity is often thought about as a math problem – Xs and Ys – but I appreciate Deming's focus on leadership. It turns out that, with the right leader, people can spend less time on unnecessary audits, performance evaluations, and other soul-sucking tasks.
Deming's principles, listed here, are from a different era but withstand the test of time:
- Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
- Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
- Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
- End the practice of awarding business on the basis of price tag. Instead, minimise total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
- Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
- Institute training on the job.
- Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of an overhaul, as well as supervision of production workers.
- Drive out fear, so that everyone may work effectively for the company.
- Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
- Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
- a. Eliminate work standards (quotas) on the factory floor. Substitute leadership. b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
- a. Remove barriers that rob the hourly paid worker of his right to pride in workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
- b. Remove barriers that rob people in management and engineering of their right to pride in workmanship. This means, inter alia, abolishment of the annual or merit rating and management by objective.
- Institute a vigorous program of education and self-improvement.
- Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.