Productivity is the ratio of output generated to the inputs consumed. It is the increase or decrease of outputs or value-added generated from a production or service system by a given level of inputs. It focuses mainly on efficiency (doing things right) and effectiveness (doing the right things). A growth in productivity implies that either more output is produced with the same amount of inputs, or that less input is required to produce the same level of output. In effect, productivity becomes the attainment of the highest level of performance with the lowest possible expenditure of resources.

PRODUCTIVITY = OUTPUT / INPUT

All definitions of productivity are centred on “outputs” and “inputs”. Outputs tend to be in the form of goods (if visible) and services (if invisible). On the other hand, inputs are less 

easily defined and have to be classified into labour (human resources), capital (physical and financial), energy, data and materials.

Productivity as a concept can assume two (2) dimensions: total/multi factor productivity and single/partial productivity. The former refers to productivity that is defined as the relationship between the output produced and a combination of inputs (basic resources, most notably labour, capital goods and natural resources). The latter measure expresses how efficiently an entity is utilising a single factor of production within the production of its outputs. For example, if output is associated with man-hours or labour, this would be partial productivity or specifically labour productivity. It is not surprising that this is the most popular estimate of productivity because it relates output to the single most important factor of production – labour and also offers a proxy for how efficient the other inputs such as capital and technology are being used.

Depending on whom you are and what your role is within society, the idea of productivity will always be different from that of your neighbour.  Most business people see productivity as referring to ‘output per worker’, whilst others take a more philosophical point of view. However the truth is, productivity is a fusion of all of these ideas, as the concept can be put to work in different ways. Another way of viewing productivity is in the same way that The National Competitiveness and Productivity Council (NCPC) of St. Lucia would, and that is on a national scale. From this stand point; productivity is about creating more from the available resources present within any nation. These resources could include equipment, capital (assets, money, investment) and labour.  In other words, improved productivity is seen by the NCPC as being the culmination of different resources to produce goods and services that others (whether locally, regionally or internationally) would want to purchase.

So why does productivity matter and why must it be improved? Simply put, productivity is the mechanism through which all societies’ progress.  A country that has a higher productivity output has more national wellbeing options to choose from. National wellbeing including things like quality healthcare, education, increased income, lower prices, better roads and infrastructure and improved living standards

It must be understood however, that improving national productivity depends heavily on any given nation’s circumstances. Factors such as natural resources, their location, their institutional history and their culture must be taken into consideration. So saying, there will always be different strategies to be implemented to aid countries in improving their productivity. Yet, there still remain certain key factors that play an important role in any country’s productivity performance. These include:

• Open competitive markets for trade of goods and services both domestically and internationally, and an ability to take advantage from trade;
• A high quality low cost regulatory environment;
• Improvements in human skills through well directed public and private investment in quality education;
• Respect for the law and property rights, as well as the enforcement of contracts and low levels of corruption; and
• The ease and attractiveness of doing business, recognising the important role of business in creating a high-performing economy.

Therefore being knowledgeable about the issues that affect productivity is important for any nation.  There are many conditions that will have to be considered and a lot of research will have to be done before any specific direction can be taken.  Undertaking productivity improvement requires patience and perseverance.  It must be noted, however that even small increases in productivity growth, if sustained, can have a big impact on income and welfare.

Since the advent of the National Competitiveness and Productivity Council, discussions have prevalent within the public domain about what the benefits of productivity would be for any nation that chose to implement productivity strategies.

Internationally, one of the most successful competitive councils is that of the National Competitiveness Council of Ireland. Although there is a slight variation in this council’s name in relation to St. Lucia’s council, both entities were formed to meet the same objectives. As with all such councils worldwide, the main focus is to raise the nation’s economic wellbeing and to increase its capacity to compete globally.  This is done by implementing strategies that will raise national productivity, which in turn will result in the country reaching a higher level of competitiveness. Ireland’s success in doing just that over recent years, highlights how a shift in a nation’s productivity can result in positive social and economic benefits.  Ireland has gone from being labelled as ‘The Poorest of the Rich’ by The Economist in 1988, to a nation whose competitive presence is noted worldwide.

In their ‘Competitiveness Scorecard of 2012’, the council is quoted as stating that

‘(We) do not have to be the best at everything to be competitive, but we do have to have the best combinations of policies so that we create the right environment for long term sustainable growth.’

These policies in turn have been productive in nature and thus brought about benefits to employees, companies, consumers, the general public and to the country as a whole. Therefore, what must be noted from Ireland’s success story is that national efforts towards productivity enhancements usually result in benefits to all.

Implementation of productivity strategies does not yield overnight success however productivity improvements that will result in substantial benefits require reasonable length of time to source and identify. This is because they involve not just the studying of existing processes, but the exploration of new processes and the customisation of others.

In regards to any given company and its owner, what is notable is that the pursuit of productivity improvements, even though incur costs in the short run, would result in rewards for the enterprise. What is also significant is the long term benefit that businesses can derived from productivity improvements.

In the world of business,   productivity improvements can be asset-related or labour-related. Asset related productivity improvements can be realised through better machines, automation and improved technology. Labour related improvements require among other things, changes in mind-set, the training and retraining of staff, management and staff buy-in and all other conducive environmental and organisational cultures that encourage and reward staff for initiating and developing improvements in the work place.

Benefits from productivity improvements may at times seem elusive, whilst the costs of such improvements are all too real.  What must be remembered however is that improving the productivity of a company, the public service, or a country in time will yield rewards to all stakeholders.   Those rewards may include,

• Benefits to the employee- through a better quality of work life, job security, higher wages and improved working conditions.
• Benefits to the company- through Sustainable investment in people and technology, greater market share, higher profits and an increase in competitive structure.
• Benefits to the consumer- through higher customer satisfaction leading to an improved image of the nation, a high quality of goods and services and lower cost of goods.
• Benefits to the general public- through improved public services without the need to  increase  taxes, and
• Benefits to the country- through a higher standard of living, greater investment in infrastructure and a reduction of social inequality.

Improvements in productivity within a nation can generate a better competitive presence globally; Ireland is living proof of this. What must be remembered is that these improvements are not geared towards instant change as this is not the result that should be aimed for. Sustainable economic change should be the goal.

One of the best ways of improving employee performance is through productivity measurement. There are multiple reasons for this. Firstly, measurement provides quantitative and qualitative evidence on whether an employee is meeting the targets set by the company. Also, in relation to an employee’s job and their set tasks, measures have the potential to improve understanding of the concepts of quality, productivity and continuous improvement. It should be noted however that in measuring productivity, a lot depends on the approach the organisation takes to measure performance. If the right activities, behaviours and outcomes are captured through the approach, they can be effective motivational tools for employees as they demonstrate desired behaviours and important strategic tactics adopted by the organisation.

In their article, ‘Use Measures to Promote a Culture of Quality- Measures can help embed quality into the way employees work and think’, the American Productivity and Quality Centre (APQC) state, ‘Enterprise leaders cannot dictate  or mandate quality, but they can influence the culture of quality for their staff’.

So saying, within any organisation, a culture of productivity measurement should be cultivated in which a compass of performance is set by developing objectives, goals and targets. An organisation should then measure its performance in relation to these targets, as it is through them that managers are able to delegate performance expectations to their staff.  Today, performance measurement and the use of key performance indicators are considered organisation competencies and thus, it is expected that all managers implement them, especially those within human resources. HR Managers are accountable for the significant investments made by a company in its employees and therefore are required to be on top of their game when strategic questions are asked. There are differing ways that they can do this, but some of the most notable include;

Recruitment
The recruitment process is expected to be led by managers these days. Their job in doing so is to process and participate in the development of job descriptions which accurately reflect the duties to be performed by the employee and which meet organisation targets. They must also have a system for monitoring performance on a monthly and quarterly basis and maintaining the link between strategy and operations.

Training needs analysis and on-the-job training
In addition to having an assessment of their staff’s performance, managers and line supervisors must be able to provide researched advice on the training needs of their staff to match the future talent requirements of the organisation. In some cases, they are expected to deliver the training or know where to source the most appropriate technical and general training.

Employee engagement and motivation
Employees now expect that the organisational climate will meet employees own needs and motivate them to perform their duties within or even exceeding the expectations of the organisation.

Return on investment
Management will be keen to know whether the investment made in salaries paid, training conducted and occupational safety standards maintained is indeed yielding results evidenced by increased output, sales and profitability. The HR practitioner will be expected to conduct the analysis, using key performance indicators and other types of trend analysis, to respond to the questions.

Productivity measurement is not a practice that needs to be implemented at an organisational level alone however. The National Competitiveness and Productivity Council of St. Lucia commissioned a Productivity Study in 2014 that measured national productivity levels. This imperative endeavour commissioned by the NCPC measured productivity levels in the economy, as well as provided reasons for the current levels of productivity and is in the process of proposing key policy actions that will enhance productivity levels. The study,  focuses on the measurement of productivity throughout the economy for the period of 2000 to 2013 in;

• Restaurants
• Agriculture
• Manufacturing
• Construction
• Financial Services
• Education

 

The study also,

• Benchmarks Saint Lucia’s productivity performance within and out of the region, where data is available.
• Provides a detailed analysis of productivity levels and gives reasons for patterns or trends identified by engaging with stakeholders within the sectors.
• Provides policy recommendations by sector on the enhancement of productivity levels, and
• Provides an assessment of productivity in selected agencies within the Public Service and provides key recommendations for improving productivity and service to the general public.

The NCPC facilitated the productivity study through broad based consultations with key stakeholders in the sectors targeted, the public service and community groups throughout Saint Lucia.

It is apparent that whether the central focus is a local company or a nation at large, a measurement of productivity must take place. It is an evidence based activity which is vital to assessing whether or not goals and objectives are being achieved. Even though viewed at different levels, company managers and bodies such as the NCPC are seen as being accountable for the process of productivity measurement. However, even though a lot of responsibility does fall on their shoulders it is necessary for each individual in society to see productivity measures as being a concept which can be implemented a little closer to home.  It is important that a culture of measurement is entrenched within the population. This is essential, so that whether at work or at play each member of society should be able to measure and assess their own performance in helping to build a productive nation.