Improve Productivity – An exploration from Macro to Micro

Tony Ferraro | October 31, 2014

Contents

Ready to Improve Productivity?

The word “productivity” is pervasive in the business world to a fault. Sometimes, we even manage ourselves into tricky situations or troublesome employee relations for the sake of productivity, largely because we were wearing metaphorical blinders in our pursuit of it, letting other important considerations fall by the wayside.

Another common issue is a misunderstanding of productivity. While its dictionary definition is simple and easy to grasp, the reality of productivity in the workplace is one of a complex beast that has delicate interactions with nearly every other aspects of your operations.

A LinkedIn Lean Six Sigma group member, Eddie Au, posted just last week stating that Lean was a proven way to eliminate waste and asking whether or not other readers were using such strategies to eliminate their various types of waste. Au’s statement and follow up question weren’t anything extraordinarily ground breaking or thought provoking, but an article he attached to his post was.

Au linked to the McKinsey Group’s website, who had collected and extrapolated from data all kinds of insights about the productivity of the workforce on a much larger scale, a global one, in fact. Instead of looking exclusively at what individual successful workplaces were doing with themselves, they brought to the table examinations of global productivity over the past half century. This included looking at countries, regions, and even continents to evaluate how their productivity had varied over time.

While they did dig down to some individual ideas for what caused the observed changes, most of their findings were (appropriately) broad/large scale… and I think that’s a good thing! We as business owners, safety professionals, managers, and more spend all kinds of time fretting over the productivity of our own workplaces, and maybe even our competitors if you’re being proactive/perceptive, but we rarely zoom out much further than say our industry as a whole.

What I’d like to do is walk you through some of the key points of McKinsey’s write up on their research, therefore starting with the large scale before zooming in and thinking about how these principles are/can be reflected in Lean and other strategies we use on a smaller basis. Sound good? Let’s get to it.

Key Findings

In order to understand why such a study was even conducted, or the importance of its findings, it may be helpful to list out a few statistics that were found as a result of this research. In some cases, these may also be findings and facts that were not uncovered for the first time, but were mentioned in the write up and therefore may have prompted, contributed to, or been driving factors behind the research. Either way, if we’re talking about an exploration of the big picture, we’d better have a full idea of the situation we’re working with.

Growth in productivity per capita is important

When a population grows steadily, naturally so does its workforce over time. From this, we’d expect to see a country with more people producing more items, on average – but that assumption is only supported if productivity is equal. While population may contribute to the overall production numbers of a country, it doesn’t necessarily say anything about the productivity we’re concerned about.

For the purposes of their exploration, McKinsey looks at the GDP of a country per capita, which can help tell us how efficient and productive individuals are on average. For example, a country with a population of one million producing as many goods in the same amount of time as another country with two million people is probably better utilizing their workforce and has more productive practices in place.

The last 50 years and the next 50 years have their own unique characteristics with regard to global productivity.

According to previous research the group conducted, the global economy has expanded rapidly in terms of both GDP and GDP per capita. This has had a profound effect on the way we accommodate our workforce and the ways in and rates at which we are able to utilize goods produced.

That said, our forecast looks a bit different. According to McKinsey, research over recent trends and future projections suggests a sharp decline in the workforce over the next 50 years due to an aging population around the globe. In a nutshell, this means that, if we are to maintain our current levels of production, let alone grow, we need to improve productivity. Furthermore, it has to improve at a substantial enough rate to counteract the rate at which the workforce ages, retires, and therefore diminishes.

You’ve got some control, but not all of it

The write-up makes a point of saying that whether or not the potential for productivity growth is actually realized will depend largely upon a few key groups. While some of these groups encompass professionals in the workplace, other may be outside our grasp. This is particularly true with regards to international relations, where the ease of trade and collaboration between different nations could make or break our run at maintaining global production. The article itself puts it as such:

“Whether these opportunities are realized will depend on the reforms of policy makers and the ingenuity of managers and engineers, particularly in sectors with big productivity gaps.”

Solutions

So what do solutions to such a problem look like on a large scale? One pressing issue the article brings up is the engagement of women in the workforce. While a few outlier nations see equality or close to it in the percentage of men and women in the workforce, this is far from the case the world over. To varying degrees, countries all over the globe are missing out on large swaths of potential workers.

Another suggestion is the adoption of more and more technology, specifically “machine learning and artificial intelligence.” While I can’t claim to be any kind of expert on these, major improvements in productivity over the past half century can surely be attributed, to an extent, to new technologies being employed in production, so it makes sense that similar developments will be of help going forward. Technology over even the past ten or twenty years has progressed at a rate far greater than during any time previous; don’t expect this to slow down any time soon.

The Close Up

Of course, some of these out-of-your-control techniques aren’t immediately helpful to you until someone else implements them. Here are a couple of ways to use this information in your own efforts:

Lean: Yepppp. The article itself even mentions lean, specifically after address the potential for technology to improve productivity. In Lean, this could mean being able to gather more accurate data on waste and therefore help improve the precision with which we locate and remedy issues in production.

The point is also made that, with advancements in recycling products and materials, production efficiency could also likely improve by becoming more circular. This concept could further reduce production times, not just costs, as the technologies necessary to reuse more complex products and components is more mainstream, and thus able to be placed on-site; this would eliminate the need to ship items back and forth between plants.

Ultimately, we’re either able to be ahead of, level with, or behind the overall “production frontier” currently in existence. Going forward, this frontier will change, as will our position in relation to it. Our goal, then, should be to do our best to always be utilizing the tools available to us to improve productivity, and urging those with the power to make larger changes for the better to do so in order to improve industry, nation, or even worldwide productivity.