Just Do It

Some folk make new year resolutions.

For many, its the same ones every year ... the things they know they ought to do, but don't want to.

Business can be like that. There are things we know we should do to improve our productivity ... but something (we always have an excuse) stops us.  The time is not right, we have other priorities, it will disrupt production, and so on.

Well, for a change, this year ... think what you ought to do .. and put some time in your diary to actually do it ... or allocate the project to someone you know will deliver.

You know it makes sense!

The Model Employee?

Over the next 24 hours, millions of presents will be distributed to children around the globe by one man and a team of reindeer (admittedly with some help from elves in the supply chain).

Can we find out this man's productivity secrets ... and harness them in other areas?

Attractive productivity?

A recent research study of golfers on the US women's tour suggests 'attractive' golfers get lower scores and more prize money ... and suggests that this phenomenon of a 'beauty premium' is not uncommon in other sectors.

It also suggests that if an attractive female employee is better rewarded per unit of production than her less attractive co-workers, she might increase her productivity.

Does anyone have evidence of this phenomenon in practice?

Get the right things right

Lifting productivity and driving export growth is the focus of the (New Zealand) National Party's primary sector policy, says Agriculture spokesman David Carter.

"A key plank is increased water storage and irrigation, and National recently announced that it will provide up to $400 million from the Future Investment Fund to support the construction of well-designed irrigation schemes.

"Water is one of New Zealand's greatest competitive advantages, but we are not making the most of it. Developing water storage and irrigation has huge potential to unlock economic growth and prosperity for the primary sectors, and for all New Zealanders."

Who needs productivity?

Governments - especially European governments - are concentrating on climbing out of the pit of the financial crisis. All that is on their mind is quantitative easing (printing money), interest rates and debt reduction.

All this is necessary ... but not sufficient.  In the longer-term, the only solution to the problem is increased productivity.  But governments don't have time.  They are fighting the fire, not refilling the extinguisher.

No sex please, we are productivity experts

In the UK, a man was recently reported by his girlfriend for secretly filming their sex sessions.

His 'explanation' was that he was a 'time and motion expert' and was undertaking research.

 It shows my 'take' on the subject by the fact that what amazed me was the use of the term 'time and motion' ... a term I haven't heard used for many years.

 This profession of ours has been through many job titles ... and sometimes with some justification.

The term 'work study' was the wrong term when one realises that, often, the most important thing to look at is the 'non-work. It is generally 'systems', processes and procedures that are 'inefficient', not workers.

So, now we end up with industrial engineers and lean practitioners ... with slightly different toolsets ... but with the same general approach. The secret is to ask enough questions until you uncover and understand the 'truth' .. and then to start improving it.

Generally the people skills are much more important than the technical skills.

 So, call me what you want. I'm still going to have fun doing what I do.

Governments keep out!

Governments do have a role to play in improving national productivity.

But it is all about policy, infrastructure and direction. What governments must not do is 'meddle' at operational levels.

This was brought home to me (once more) by a recent report that the Nigerian Minister of Power, Professor Barth Nnaji directed the management of the 18 successor companies, created out of the Power Holding Company of Nigeria (PHCN) to start paying staff a 50 per cent salary increase effective from September, 2011.

In a memo to the Chief Executive Officers of the successor companies, the minister indicated that the Federal Government had agreed to pay the outstanding first three months of the new salary package which took effect from June 2011.

Now if there were a rational economic reason for this directive, it could perhaps be understood.

But it actually goes counter to earlier comments expressed by the same government a week earlier when they expressed dissatisfaction with the productivity of the PHCN workers, saying they generate less than half of their wage bill.

Of course, these successors companies are supposed to be independent, private companies with supposed liberty to formulate their own wage structures — based on fairness and productivity of staff.

But the government has crippled their decision-making ... and their future productivity.

So, my advice to other governments is ... do what you need to do at the macro level ... and you do need to do it ... then get out of the way.

Who knows?

I suspect that few people in the UK are aware that an energy act came into law recently which aims to boost energy efficiency in residential homes.

More than half of homes have insufficient insulation, and around 50 percent more energy is used to heat and power homes than is used to power industry, according to the Department for Energy & Climate Change.

"It is vital, therefore, that action is taken to address home energy efficiency," the department said.

"The coalition is doing all it can to bear down on energy prices, but insulation will provide the long-term help to manage bills," energy and climate change secretary Chris Huhne said.

DECC also said that the energy act would set in stone the legal framework for the 'Green Deal', which will be launched in autumn next year. "The Green Deal will . help people insulate against rising energy prices, creating homes which are warmer and cheaper to run," DECC said.

Climate change minister Greg Barker said that the Green Deal is "expected to attract capital investment of up to 15 billion pounds in the residential sector alone by the end of this decade and at its peak support around 250,000 jobs." The key elements to the energy act will remove the upfront cost of energy efficiency measures (like loft, cavity and external wall insulation, draught proofing and energy efficiency glazing and boilers) making expensive home improvement affordable. DECC said that the energy saving work will be repaid over time through a charge on the home's energy bill.

Roosting chickens

The typical American family now earns what it did in 1996 allowing for inflation - yet they have more/bigger cars, more/longer holidays, more/better technology .... because they borrowed on their assets (mainly their home).

The same is true across the western world.

 The result?

The current economic crisis as the 'chickens have come home to roost.

We can't spend money we don't earn (as individuals or as nations) and expect it to go on for ever. I bet your mum and dad told you that. Pity your government - and your bank - didn't!

I want to see the evidence

National health and safety reforms will deliver up to $2 billion a year in productivity gains, the Federal Government of Australia says. Workplace Relations Minister Chris Evans said the regulatory impact statement for the harmonisation of health and safety regulations found the economic benefit of a national system would result in productivity gains of $2 billion. The national system is set to be implemented by January 1, 2012 Well, I want to see the evidence on January 1st, 2013 that those savings have been realised.
Its not that I don't agree with health & safety legislation ... but I seriously doubt that $2billion can be saved by implementing such legislation.

It can be done!

DuPont’s recent 2011 Sustainability Progress Report shows the company’s environmental footprint continues to shrink DuPont delivered a 75 percent decrease in greenhouse gas emissions and a 6 percent reduction in absolute energy use since 1990, while increasing production 40 percent during that same period.

Increasingly, DuPont is focused on helping businesses integrate sustainability as a growth strategy, which is highlighted by an annual customer survey that shows an increased demand for products with environmental benefits. “While reducing our footprint continues to be important, our growing focus is on how to use DuPont science and innovation to bring new products to the marketplace that improve efficiencies and sustainability throughout the entire value chain,” said Vice President and Chief Sustainability Officer Linda J. Fisher. “We see DuPont having an expanded role to provide sustainable solutions to our customers around the world as population dramatically increases.”

A DuPont annual survey of more than 3,500 customers, conducted in August 2011, showed they want safer materials, a reduction in water and energy use in manufacturing and improved environmental profiles throughout the lifetime of their products.

Customers indicated a 7 percent increase in green job creation from the design and manufacturing of products with environmental benefits. Overall 28 percent said their business saw an increase in new green jobs over last year. And two-thirds believe that environmental benefits in products will continue to have a positive impact on job creation over the next five years Last year, DuPont generated revenues of $1.6 billion from products that help its customers and their consumers reduce greenhouse gas emissions.

Much of the increase came from revenue growth in key areas like photovoltaics and from engineering polymers used in light-weighting of vehicles. DuPont estimates that these products have reduced greenhouse gas emissions throughout the supply chain by more than 6.5 million metric tons between 2007 and 2010.

Since 1990, DuPont’s own energy reduction has declined 6 percent resulting in a $6 billion savings in energy purchases and enabled the company to exceed its 2010 goal to hold total energy use flat. The new goal for 2020 is to reduce non-renewable energy use by 10 percent per dollar of price adjusted revenue by 2020. DuPont is to be applauded. This shows what can be done when the mission changes to meet the demands of 'the new world' in which we all live.

Necessity really is the mother of invention

We all know the phrase ... suggesting that we often only think (really think) about things when we are forced to do so. I was reminded of that the other day when reading about recent developments in energy efficiency by a number of firms. The reports were quite impressive - suggesting that many firms are now looking seriously at their energy usage and costs ... and are finding ways of reducing them. Well, of course, they have had the opportunity to look at such costs at any time in the past - but only rising fuel costs and rising restrictions on emissions have turned a 'should do' into a 'must do'. So, thumbs up for the recent advancements; but thumbs down for the time it has taken for these firms to realise they should do something. Now what other savings should you be thinking about before you are forced into them?

Be Careful What You measure

Patricia F. White, a doctor for about 10 years, is seeking damages for objecting to having her pay based on the number of patients seen per hour. She is also alleging that her employers retaliated by keeping her from work. White's attorney, Gary Baker, called the practice "stopwatch medicine. Should we measure a doctor's performance on the quantity of work completed?

Enjoy Your Stay

Hotels will be able to contribute to mitigating climate change while rermaining finnacially strong under a new United Nations-backed ‘green’ scheme offering an online toolkit to evaluate energy consumption, find renewable sources and cut costs with improved energy efficiency.

The toolkit is from the UN World Tourism Organization (UNWTO) and its partners and was finalized recently after testing in more than 100 European properties in four different pilot destinations.

Although hotels and other types of accommodation account for only 2 per cent of the world’s global-warming carbon dioxide emissions, UNWTO says addressing this comparatively small yet important footprint is a priority for the tourism sector. Of the world’s 5.9 million hotel rooms, over half are located in Europe, where the project has been launched initially.

The Hotel Energy Solutions (HES) e-toolkit is the main 'product' of the Hotel Energy Solutions project and provides hoteliers with a report which shows their current energy use and recommends appropriate renewable energy and energy efficiency technologies and actions. It further sets out what kind of savings on operational expenses hotels can expect from their green investments through a calculator measuring returns on investment.

While Hotel Energy Solutions is a UNWTO-initiated project supported by the European Agency for Competitiveness and Innovation under the Intelligent Energy Europe programme, it is expected to be rolled out globally over the coming years. Once adapted for non-EU Member States, the project will benefit hotels worldwide.

The project has been implemented in partnership with the UN Environment Programme (UNEP), the International Hotel & Restaurant Association (IH&RA), the European Renewable Energy Council (EREC), and the French Environment and Energy Management Agency (ADEME).

Relearn once more

I have just read a dissertation from a student about the implementation of Lean practices in UK manufacturing industry.

Over-simplifying dramatically, it says lots of companies are trying it ... many are failing at it.

The reasons for failure? Everything that you would expect..

Lack of senior management commitment.
Lack of communication.
Failure to anticipate resistance to change
Unrealistic expectations.

These are lessons that are in every management textbook. Either managers don't read .. or they don't understand .. in which case, lots of writers and publishers of management texts are wasting their time.

Sometimes you get surprised

Sometimes your instinctive feel is just wrong. Sometimes things are counter-intuitive.

For example, in Bahrain, they have introduced a ban on outside work between noon and 4pm in the months of July & August. The ban was introduced in 2010 and repeated this year.

Not surprisingly, employers - especially those in construction - complained, saying it would lower productivity.

However, there has been almost total compliance and the government is claiming that workers have been performing better - more productively. A government spokesman says that several employers have indicated productivity increased after the rule was introduced.

Healthier and safer working often does mean higher productivity ... it looks as though this is the case here.

Safe Hands

I've just returned from an event in Ankara, Turkey organised by - and for - Turkish Industrial Engineering students. I have 4 comments to make ...

They did a great job of organising the event .... and looking after me. They engaged me in lots of interesting conversations, discussions and arguments (of the right sort).
I had fun!

... but most of all, I was impressed by their knowledge of IE approaches and - more importantly - the context and environment in which those approaches will have to be delivered. I think the future of IE is safe in their hands.

Work from Home and be more efficient

Allowing workers to work from home will not suit every company, but providing greater opportunities to staff to do so can have real business benefits. According to BT, while the London Olympic Games provides a timely business case to make the leap to greater flexibility, that decision has the potential to deliver returns that outlast the summer’s sporting triumphs. And BT’s research in the wake of the Vancouver Games found that a substantial 30 per cent of businesses would in retrospect have taken the chance to improve flexible working facilities for their staff.

This is an area in which BT leads by example, having encouraged flexible working for years. More than 70,000 of BT’s staff are equipped to work flexibly and around 13,000 work from home. The result has been harder work from employees. Jon Lane, business development and partnership director at BT, says “we find that home workers are 21 per cent more productive than office-based colleagues.” They also take less sick leave. He adds, “We have also made significant savings from reduced accommodation costs, and savings from recruitment and induction costs through better staff retention.”

Our people are our greatest asset

You will have heard that slogan many times before ... and, quite often, just before an organisation downsizes or treats its employees poorly in some other way.

Now, the UK government is getting in on the act.

Oliver Letwin, the coalition's policy minister, recently revealed the government's determination to instil "fear" among those working in the public sector, who he claimed had failed for the past 20 years to improve their productivity. (Note: 'they' had failed; not those setting policy and strategy.)

Letwin, architect of the coalition's plans to reform public services, told a meeting at the offices of a leading consultancy firm that the public sector had atrophied over the past two decades.

In controversial comments angering teachers, nurses and doctors, he warned that it was only through "some real discipline and some fear" of job losses that excellence would be achieved in the public sector.

Letwin added that some of those running schools and hospitals would not survive the process and that it was an "inevitable and intended" consequence of government policy.

I am sure we now have high morale and high perfprmance amongst public sector workers.

Government raises the bar

In the US, the White House and car manufacturers have agreed to raise the fuel economy standards for vehicles.

Fuel efficiency standards require mileage to average 54.5 miles per gallon for passenger cars and light trucks by 2025.

This is a significant step up from the 2016 level where cars and light trucks must average 31.4 miles per gallon or 250 grams per mile of carbon dioxide equivalent. This year, the fuel economy of all 2011 cars and trucks sold has to average out to 27.3 miles per gallon.

If the car makers have agreed, they must be pretty confident they can reach these new levels.

Campaigns and Awards

Campaigns and awards are one of the ways in which national and regional productivity centres stimulate interest in productivity development.

As an example, in the Philippines, the Regional Tripartite Wages and Productivity Board has announced the conduct of the Productivity Olympics 2011 in the Zamboanga Peninsula.

Joel Ijirani, RTWPB-Zamboanga Peninsula board secretary, said the Productivity Olympics will be held to showcase the best productivity improvements, programs, and practices of micro, small and medium enterprises (MSMEs) in the region.

Participants must have had a productivity improvement program for at least two years preferably under the National Wages and Productivity Commission's (NWPC) ISTIV productivity program, and not a former recipient of the Productivity Olympics award at the national level.

ISTIV stands for industrious, systematic, time conscious, innovative, and strong value for work.

One enterprise will be chosen for each of the Agribusiness, Service and Industry sectors.

Is the US active?

From January 2000 to January 2010, the number of U.S. manufacturing jobs fell by 6.17 million, or 34%

This is a dramatic drop. Of course, if output has been maintained through higher productivity, this would be less serious. Unfortunately, output also fell.

From 2000 to 2009, 15 of the 19 U.S. manufacturing sectors shrank in terms of real value added (gross output minus the cost of inputs), and overall manufacturing output declined by 10%.

So productivity did rise but not by enough.

What is the US doing about this situation. Well, my eyes and ears have detected very little awareness of the problem, let alone action to address it.

If you know more, please let me - and my readers - know!

What constitutes national productivity infrastructure

The obvious elements of infrastructure required to underpin productivity growth are: a suitable macro-economic environment, good transport and telecoms links and high quality education and training. But there is more.

Take a look at this example.

World Bank experts have attributed Jamaica's perpetually disappointing economic performance to low productivity and suggest there are three major obstacles.

They estimate the country could achieve GDP growth of up to 5.4 per cent, but said that was predicated on the Government addressing and removing the constraints.

Low productivity, the bank argues, is ascribed to a high crime rate, deficient human capital primarily reflected in lack of adequate training for most of the labour force, and distortionary tax incentives combined with enclave development, manifested in the mining sector and all-inclusive resorts, that do not spill over to the rest of the economy.

Some of these fit within my first paragraph ... others don't. Its not always as simple as it first seems.

We Want More ... but we will have to wait

Workers in most countries are 'feeling the pinch'. Prices are rising; wages are not.

Productivity must rise ... yet in many industries there is lower demand.

Governments do what they can to increase demand but their powers are limited.

The answer? There isn't one .. except to lay the foundation for a more productive future. Hold your nerve ... invest ... train.

Workers will have to wait for their pain to be eased .. but if we don't take this opportunity to reflect, regroup and prepare ... they will wait longer than they need ... and (y)our competitors will seize the opportunity because they have prepared.

Social media bad?

Lots of companies have Intranets - to share information.

May of these are firewalled and isolated from the Internet ... so that employees don't get distracted by Twitter, Facebook, Youtube and so on.

Yes, these social media have a part to play ... in improving communication, contact and commitment ... but perhaps we need 'walled gardens' of social media.

When Toronto law firm Hicks Morley started its own internal social network in 2008, it found that by adopting tools that mimic Facebook, Wikipedia and Twitter within the confines of a corporate firewall that collaboration between employees increased dramatically, and productivity soared.

As the song says "It aint what you do, its the way that you do it. That's what gets results"!

Waste energy wasted no more

Engineers at Oregon State University are working on ways to capture and use the low-to-medium grade waste heat that’s now going out the exhaust pipe of millions of automobiles, diesel generators, or being wasted by factories and electrical utilities.

It hopes to be able to use much of the waste heat either in cooling or the production of electricity.

"This could become a very important new energy source and way to improve energy efficiency," said Hailei Wang, a research associate in the School of Mechanical, Industrial and Manufacturing Engineering at OSU.

It is called a "thermally activated cooling system" that gains much of its efficiency by using extraordinarily small microchannels, which help to better meet the performance, size and weight challenges.

It effectively combines a vapour compression cycle with an "organic Rankine cycle," an existing energy conversion technology.

The OSU prototype succeeded in turning 80 per cent of every kilowatt of waste heat into a kilowatt of cooling capability.

It should also be possible for such systems to be used in hybrid automotive technology, taking waste heat from the gasoline engine and using it not only for air conditioning but also to help recharge the battery that powers the vehicle, explained Wang.

Was Malthus right ... and if he was ???

World population rises at a greater rate than agricultural production. This is the belief that gave rise to the thinking of Thomas Malthus.

If this is true ... and I suspect it is ... then we need some major innovation in terms of population control, agricultural productivity or ... politics?

Remember agricultural productivity has been rising inexorably over the last few hundred years ... but remember also that there is a fundamental difference between rising productivity and rising production. If productivity rises but we use less land and fewer people in the industry, we may not get an increase in output.

Remember also, the 2 things that slow down population growth are wealth and (especially female) education. The West - where both have increased substantially - has a much lower birth rate.

We need the politicians to learn these lessons and solve world problems through creating more wealth and spreading education ... surely its worth a try instead of dropping more bombs.

Organic farming holds back productivity growth

Brett Stuart, a partner in analytics firm Global AgriTrends suggests that agricultural productivity is being impeded by the minority demand for organic or "natural" production systems.

This is an interesting debate.

Organic produce commands a higher price - so value added per area rises ... so, in one sense, productivity can be said to rise.

However, that doesn't help feed a growing population. For that we need higher 'physical' productivity.

So, is Brett right. If you want to comment, head over tho the Productivity Futures group on LinkedIn and join the discussion.

USA clean, China dirty. right?

We all know that the Chinese are massive polluters, don't we?

(Some of us even sympathise knowing that China is playing economic 'catch-up' with the West ... when the Chinese have the same standard of living as Americans, then we can complain.)

Well, things are changing. In 2004 the U.S. was the focus of approximately 20% of total global clean energy investment and China accounted for just 3%.

By 2010, China saw 20% of that investment and the U.S. 19%.

So, China might be dirtier ... but it looks like it is trying to clean up its act.

Do not believe all that you read

Chicago economist William Strauss explains how rising worker productivity has led to the situation where manufacturing occupies much less of GDP than it once did.

"In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. The greater efficiency of the manufacturing sector afforded either a slower price increase or an outright decline in the prices of this sector’s goods. As one example, inflation (as measured by the Consumer Price Index) averaged 3.7% between 1980 and 2009, while at the same time the rise in prices for new vehicles averaged 1.7%. So while the number (and quality) of manufactured goods had been rising over time, their relative value compared with the output of other sectors did not keep pace. This allowed manufactured goods to be less costly to consumers and led to the manufacturing sector’s declining share of GDP."

Some go on to suggest that this rise in productivity also cost jobs ... but efficient productivity (as we see above) results in lower prices for goods ... which means that more people can afford them .. which changes the size of the market... which creates jobs.

I am not saying that there is not a link ... just that the link is complex and multi-dimensional

Don't believe all the blogs you read ! (Only this one of course)

Innovation Areas

It is obvious that some technologies lend themselves to, and lead to, innovation. Electronics, for example, has seen massive changes over the last couple of decades ... there are so many products available now that were not even conceived 20 years ago.

Yet, in many other areas the pace of change is astonishingly slow.

About 50 years ago, the internal combustion engine (ICE) and auto design led to fuel efficiencies of about 40 miles per gallon. Since then we have made improvements ... but incremental and evolutionary ... most cars are still in that 40 mpg ballpark.

Is this lack of innovation and change due to the existing technology being so good ... or a lack of enthusiasm by the manufacturers/designers ... or the fact that fuel has been relatively cheap and thus there has been little pressure from consumers for greater efficiencies.

Probably all of these have had an effect.

It will be interesting to see how the changing pressures and priorities (which themselves change the political and economic dynamics) will affect the rate of development of better ICEs ... or better alternatives with the current development of electric and hybrid vehicles.

I don't want to get drawn into the debate about 'better' (well not in this post at least)... here I am only interested in the development of more mpg (or some equivalent measure).

Let the innovation begin.

Of course its important ..

In Australia according to the third annual Telstra survey – the Telstra Productivity Indicator 2011 – 76% of organisations regard productivity as important, but only 24% actually measure it (and we all know that if you don't measure it you don't understand it, and if you don't understand it, you can't improve it.)

When it comes to the public sector, that 24% drops down to about 14% of senior managers measuring productivity.

I am not sure these figures require any comment .. they are simply too damning in their own right!

Population Grows

A higher population is not necessarily a more productive population.

Once, agriculture and industry needed labour ... and many developed countries imported labour to keep things moving forward.

Technology has changed all that. Now production rises as a result of better technology, better systems, creativity and innovation - not as a result of more labour.

In fact a rising population simply means more mouths to feed.

A number of countries with rising populations are about to face a crisis ... the next couple of decades will see them struggle to find enough food, water and shelter. They have to find ways of educating their current population to restrict the size of families ... and curb the growth that will undermine their growing economies.

The best way to do this is to 'emancipate' women, put them into the workforce, educate them, enrich their lives and make them wealthier.

In some countries, this doesn't seem too likely.

Can we have some more, please, Sir?

Food security is going to be a major global challenge over the next few decades. The world population is still rising ... yet the percentage of land given over to agriculture is falling.

For example, a recent policy summit in Melbourne was told that that while Australian farms are capable of feeding the nation until it more than doubles in population, agricultural productivity is in decline and the effects of a looming food crisis overseas are already being felt in rising grocery costs.

Many countries are in a far worse state than Australia ... and shortages are likely to lead to higher prices then perhaps political instability and even mass migration.

We (collectively) have to find ways of significantly increasing agricultural productivity. Our past record is good ... but the problem gets ever more acute.

In the meantime, perhaps you'd better put a few extra tins in the cupboard!

NHS crawls into the black

A report from the UK Office for National Statistics shows National Health Service productivity rose by 0.7% in 2009 compared with a 2.7% fall from 1995 to 2009.

Any commercial enterprise is likely to have 'gone under' given this record.

So, why is the NHS finding it so hard to be more productive.

I don't know ... but I do know from my experience across a whole range of sectors that it CAN be more productive.

Will the recession-induced cuts help? Possibly. A crisis can be a useful motivator ... but it depends on whether the will is there to identify and implement real productivity changes ... especially where these are potentially politically unpopular.

We all love the NHS .. but we could surely love an efficient NHS even more!

Is higher labour productivity always good?

Statistics New Zealand said labour productivity grew 3.7 per cent in the year to March 2010, the strongest increase in 10 years.

However, this was only because labour input dropped more steeply than output during a period of recession. (This is a common phenomenon which is why productivity figures are unreliable going into or out of recession.)

Paid hours, which Statistics NZ used to measure labour input, dropped 4.3 per cent, the steepest fall since 1992, while output shrank 0.8 per cent.

The drop in labour input was driven by the manufacturing and construction sectors as well as a substantial and widespread decline in self-employed hours, Statistics NZ said.

For the period 2006 to 2010, labour productivity growth was 0.9 per cent, less than half the 2 per cent average since 1978 and a third of the rate prevailing between the mid-1980s and the end of the 1990s.

However Statistics New Zealand notes that the 2006 to 2010 period does not cover an entire peak-to-peak business cycle.

The figures cover about 80 per cent of the economy. They exclude parts of the public sector where productivity is hard to measure, notably in health, education, government administration and defence.

Where does the data come from

A number of European countries are under the financial 'microscope' as they have either been 'bailed out' by the IMF/EU or considered likely candidates for future bailing.

Spain is one such candidate ... and the Prime Minister,Jose Luis Rodriguez Zapatero, has suggested that in future wages will be linked to increases in productivity.

I just wait to see who does the measuring .. and the methods - and data - they use.

Give them incentives

Dow Chemicals is investing $100 million in making its manufacturing operations more energy-efficient ... and is using an internal competition to select the divisions and plants that will receive the investment.

When (as here) the result is both good for the company and has an altruistic side or a 'greater good', this is a useful way of involving the workforce in the decision-making process.

The competitive element gives people an incentive to think about where energy can be saved or conserved.

However, if all the benefit accrued to the company (rather than some to society more widely), the incentive would have to be more direct ... with some reward going to the individuals or teams submitting 'winning' entries.

Incentives have become rather unfashionable ... but they still work ... but, of course, you have to be absolutely clear that the incentive you are offering will drive behaviour in the direction you expect!

Its all about energy

Energy productivity is important. Energy costs us money ... and the prices of energy have been rising rapidly in the last few years.

However, we also know that using energy has all sorts of 'side effects' - in terms of creating pollution, in terms of warming the planet ... and, of course, in terms of using up the remaining stocks of fossil fuels.

The Japanese nuclear disaster means it is now much harder to contemplate nuclear power as a contribution to future energy strategy ... so while we look at alternatives, we have to use less of what we have.

Can the planet afford you to use a 2 litre car to take your daughter to school? Can it afford you to fly strawberries halfway around the world just so you can have them out of the local season? Can it afford you (me?) to have your PC on all day just so you can check your emails every few hours?

All of these problems can be addressed by technology .. but shouldn't they be addressed by us thinking a bit more carefully about our priorities .. and about our energy productivity?

China moves to save energy

The Chinese government will publish and implement new building energy efficiency design standards, which are growing closer to the world advanced level, according to a recent meeting on building energy efficiency in Beijing.

During the 12th Five-Year Plan, Beijing will aim at the international advanced level in building energy efficiency and the city plans to promote the standard through legal means as well as economic and administrative methods.

Sui Zhenjiang, director of Beijing Municipal of House and Urban-Rural Development, said that the step will boost the transformation of building energy efficiency, the development of green buildings and the promotion of renewable energy sources and new energy use.

Unintended consequences

Those of us with experience realise that most decisions have both intended and unintended consequences. .. more so, if decisions are made in haste or on incomplete or imperfect information.

Here is an example. The British government has recently introduced measures to curb the influx of immigrants into the UK.

This has been largely welcomed ... but not by many employers.

Curiously, in a situation mirrored in lots of other countries, unemployment is rising but employers cannot fill vacancies.

(There can be many reasons for this, of course ... workers in the wrong places, with the wrong skills, unwilling to work, etc.)

Of course this wasn't meant to happen. It is an unintended consequence of a fairly hasty political decision.

Let's hope those members of society who welcomed the curb on immigration, don't see the effects on the economy hurting their own pockets.

What are the measurement units?

The productivity ratio has 2 components (as do all ratios, of course). Sometimes we forget to think about the units of the denominator.

If you have cattle, you might look at their productivity in terms of quantity of milk produced per animal.

But if your most expensive resource is land (as it is for many farmers) then the yield per hectare is more important. So, you might be more efficient with a lower yield per animal but more animals grazing the same area.

So, next time you see a productivity ratio, give a little thought to the units ... and whether changing them would change priorities.

Purposed Identity

Jamaica's Education Minister Andrew Holness has identified what he described as "a lack of purposed identity" as a key problem for the country.

"In a productive society, everyone is able to define themselves by what they do and what they know," Holness said recently, as he launched the National Career Development Awareness Week at the Jamaica Conference Centre in downtown Kingston.

Addressing students and educators, Holness emphasised the correlation between professional identity and productivity.

"Poverty is driven by a lack of knowledge, and the solution to poverty is dependent on the ability to have productive skill," he suggested.

Budget cuts focus the mind

It is amazing how legislation and budget cuts focus the mind.

Two bills proposed by Senate leaders in Texas recently aim to distinguish prevention-based health care from the current state of "sick care."

The content of these bills has been discussed for years ... but they are only coming into force now because of federal health care reform.

The goal is "to cut waste, fraud, and abuse" and "reward providers who are efficient and who are achieving healthy outcomes for their patients," said Sen. Jane Nelson (R-Flower Mound) in a press conference in February.

Perhaps this is a tactic we should use more often to shake up thinking - change the rules and change the budget. People start to think - and then behave - differently.

Its not a choice

I have seen a couple of recent debates about whether improving fuel efficiencies is more effective (at reducing climate change) than moving to alternative energy sources.

This is not a choice. We need both.

Even those who deny climate change (or deny that it is caused by man's activities) must accept that fossil fuels are in limited supply. We have to make stocks last while we determine what our longer-term strategy should be.

So, let's ask the media to stop fuelling the debate about improved efficiency OR alternative energy. Let's ask them to make the case for improved efficiency AND alternative energy.

The gaps appear

China and India top yet another global league table, this time for growth in labour productivity. The findings by the New York-based think tank, The Conference Board, show that China and India are the most dynamic economies with 8.7% and 5.4% growth in labour productivity in 2010.

However, when one looks at total factor productivity - taking account of all factors of production - the two diverge. China has shown a rising pattern since 1995, whereas India started to slow in 2005. "China has shown strong output growth since 2005, while India's transition to a higher growth path has been more resource-consuming and more constrained by a continuing need for reforms," the report says, adding that a lot of potential for efficiency gains still needs to be realised.

What is the problem?

I come across 'productivity' news all the time. Like a recent report from the Australian Department of Resources, Energy and Tourism which suggests that significant investment is needed to improve the productivity of the Australian tourism industry.

The report entitled Tourism Productivity in Australia goes on to say that while gross domestic product statistics reveal tourism has outperformed the economy as a whole in the past year, the productivity of the industry has lagged behind the economy-wide average over the long-term.

But does the industry need new investment, better marketing, less news about floods and cyclones or ...

I'm a productivity guy. But I don't automatically think that because a sector isn't 'pulling its weight', there must be a productivity problem.

Keep on truckin

Proposed new rules for US truckers (announced by the Transportation Department in December) could cut an hour of driving time per day for the nation’s 1.6 million long-haul truck drivers. Truckers would also have to take breaks after driving seven consecutive hours and wouldn’t be allowed to work as many consecutive days of long shifts as they may now. 

As you can imagine, there is vocal oppostion to the proposals calling them anti-productive.

Here is where debate starts. Do we prioritise economic productivty at the risk of safety or driver well-being? Is there any evidence that these proposals will reduce accidents (involving truckers and others) ... or improve the health & well-being of truckers.

I don't have answers. I'm just pointing out that decisions we take have both intended and unintended consequences ... and that productivity is a complex issue, moderated by a host of other factors.

Of course I would feel diffferently depending on whether I was a trucker (and especially the wife of a trucker) or an employer of truckers. So, let the debate run .... perhaps Amercia is moving to tougher legislation .... bringing it in line with the EU.

Is it also moving to lower productivity. Its too early to tell ... people find all sorts of ways to improve productivity. The direct productivity of drivers may go down (though tired drivers are probably not all that productive) but what matters is the productivity of trucking operations ... and that can be affected by all sorts of other factors ... including technology ... and innovation. So, let's see how the trucking operators solve the conundrum ... and move to a state of higher productivity AND safer trucking.

Be wary about the figures

During an economic downturn, companies naturally trim payrolls. When recovery comes, output tends to rise more quickly than employment and productivity growth looks healthy. Over a period of something like 6 months, employment rsies ... and productivity growth figures go back to their 'normal' levels.

So, when you see good productivity growth figures - globally - wait ... and look again in a few months. You will get a more realistic aseessment of what has been happening. The recovery has been notable ... but will start to look worse (especially in advanced economies) as employment catches up.

Join the discussion

There is a really interesting discussion going on in the LinkedIn group "Productivity Futures" sparked by a position paper on the website of the World Confederation of Productivity Science written by John Parsons. (There is a link on this page to the group.)

John is suggesting that the paradigm of continuous growth might not be viable for the future .. .but we rely on it (growth) to feed a continually growing population and to increase wealth and well-being.

If we can't continue to grow, many of the models and assumptions we build no longer hold true. John suggests we had better start looking afresh at some tried and trusted ideas and frameworks before we hit crisis point.

Governments mean business

The US government says car companies paid $9.1 million in fines last year for failing to comply with federal fuel efficiency requirements.

Six companies had to pay fines to the National Highway Traffic Safety Administration.

Jaguar-Land Rover paid the largest fine of $3.2 million. Mercedes-Benz paid $2.9 million; Porsche, $1.5 million; and Maserati, nearly $1 million. Ferrari was fined almost $500,000 and Fiat paid about $11,000.

The penalties were established to make sure that vehicles meet basic gas mileage standards. Some makers of luxury vehicles consider the fines to be the cost of doing business.

Car companies paid penalties of $13.3 million in 2009 and $37 million in 2008.

Thai workers get more money, need more skill

Kasikorn Research Centre KRC advises in a new report that the Thai government should further develop the skills of the country’s workers and their productivity so that Thai products can compete more effectively in the global market.

The KRC recommendations were made after the recent National Wage Committee decision to increase the daily minimum wage from Jan 1. It said the increase is slightly higher than the inflation rate and is considered “positive news” to workers throughout the country.

The government should introduce innovative knowledge and technology in order to strengthen labourers’ skills from medium to long-term by offering improved incentives so that they would not migrate overseas,

However, Thai industry will encounter a challenging problem next year due to the rise of operational costs due to the increase of the minimum daily wage and a decline in profit margin because of a fiercer competition in the market, both local and overseas.

UK Manufacturing needs support

The UK manufacturing sector should be at the forefront of the countrys economic development, the CBI said recently.

The CBI has published its Vision and Ambitions for UK Manufacturing, ahead of a widely anticipated Government framework for the sector and review of advanced manufacturing.

John Cridland, CBI Director-General Designate, said: UK manufacturing is in many ways the unsung hero of our economy. Big productivity gains in the past ten years have made it leaner than ever before, and its now well placed to lead the countrys economic recovery.

To achieve this, however, the Government must act fast. It should build on the sectors strengths, work with business to harness its innovation, and create a tax and regulatory environment that helps UK manufacturers drive up growth in productivity and exports.

We want the Government to be ambitious: focus its support on the sectors with most export growth potential, and improve the UKs competitiveness as a place to invest.

Since 1997, productivity in UK manufacturing has increased by 50%, about double the growth in productivity for the economy as a whole. The sector accounts for 46% of the UKs exports and 74% of its research and development (R&D).