PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY
Productivity in the Context of PM
Definitions of Effectiveness and Efficiency
Types of Productivity
White Collar Productivity
Critical Barriers/ Problems to Productivity
Causes of Productivity Decline in Organizations
Categories of Productivity Factors
Competitiveness emerged strongly in new era of globalization
describes “economic strength”
of any “organization” or position of certain company” with
respect to its competitors in market
Competitiveness is process by which one entity strives to
outperform another. Competitiveness
in Organization is Ability to get customers to choose your prod
or svc over competing
alternatives on sustainable basis.
Competitiveness continually “sustained incorporated in
productivity” resulting in high wages
and living standards competitiveness - demonstrated by “ability
to meet, rest of free
international markets” while “expanding real income."
39.1.1 Indicators of Competitiveness:
Macro level competitiveness of nations reflects standard of
living of their citizens. National
competitiveness consolidation of micro-level performances of
company’s and individual is true
“Agents of Economic Growth”.
Competitiveness depends on productivity:
"Standard of living is determined by productivity of a nation's
economy which is measured by the value
of goods and services (products) produced per unit of the
nation's human, capital and natural resources".
Indicators of competitiveness:
Efficiency with which goods and services
are produced and provided and determined by:
- Quality and
performance of workforce,
- Quality of
plant and equipment
- Efficiency with
which these factors of production are utilized
Productivity of “local” industries is of fundamental importance
to competitiveness. It depends on:
1. Sophistication with “which company’s compete”
2. Quality of “microeconomic business environment".
When productivity and quality considered together
competitiveness can be enhanced. Definition of
productivity successful project management organization create
surplus through productive output,
productivity is output input agreement on consideration “quality
Productivity = Outputs (Time /Quality) Inputs
Productivity in the Context of Project Management:
39.2.1 Definition of Productivity:
1. Ratio of output to input by large number of professionals.
2. ILO Definition: “Ratio between “output of wealth produced”
and “input resources used up” in
“process of production”.
3. Comparative tool for managers, industrial engineers,
economists, and politicians.
Figure 39.2: Project
39.2.2 Difference between Production and Productivity:
Production: Concerned with activity of “producing goods and
Productivity: “Efficient utilization of resources” (input)
in “producing goods/services” (output).
The basic differences between production and productivity are as
- Production is
quantity of output produced.
“ratio of output produced in input (s) used”.
productivity means accomplishing more with same “amount of resources” or achieving higher output In terms of volume/quality for same input.
39.2.3 Messages of Productivity:
Taylor’s Message of Productivity:
• Various pay
plans based on output for surplus increase labor productivity not possible work
a. Provided ample reward
b. Adequate targets
c. Managerial help
• Careful advance
planning by manager
• Managers to
design work system for worker to do their best.
Low productivity is matter of ignorance on part of labor and
management ignorance. “Fair day’s
work” and “fair day pay” productivity enhancement answer to high
Peter Drucker Says:
Problem faced in developing countries is problem not of
“underdevelopment but rather of under
management”. Actually productivity is most serious challenge
39.2.4 Perspectives on Productivity:
Productivity – Manager’s Perspective:
Use “accounting ratios” for management-usually interested in
productivity measures that enable it
to easily assess the present profitability of company.
Productivity – Engineer’s Perspective:
o Seek measures
of physical assets and other resources. For example: Production/hour.
o Man hours/unit
required/unit, material/consumption, utilization,
May fail to relate to overall productivity.
Productivity – Behaviorist’s Perspective:
View productivity of people in organization in terms of time
they spend at work versus total time
available a misleading measure.
Productivity – Accountant’s Perspective:
“Costing and budgeting” approach to productivity budget figure,
rather than optimum achievable
values, used as standards can be a false impression of high
Productivity – Economist’s Perspective:
Partial measures, such as “labor productivity” employed by
economists, total factor and total
productivity but again definitions do not agree.
Definition of Effectiveness and Efficiency:
Productivity implies effectiveness
both individual and organization
“achievement of objectives”. It
entails promptly achieving stated objective.
is “achievement of ends
with least amount of resources.
Resources to achieve
objective weighted against what is actually accomplished.
39.3 Types of Productivity:
1. Partial Productivity
2. Total Factor Productivity
3. Total Productivity
Total – Factor Productivity:
Ratio of “net output to sum of associated labor and capital”
(factor) inputs net output- total output
minus intermediate goods and services purchased.
Finding of Survey in Different Industries
o Average, only
4.4 hours per day used productively
o 1.2 hours lost
due to personal and other unavoidable delays
o hrs are simply
wasted because of management’s inability to effectively “plan and control”
the worker’s tasks.
• Percent due to
poor: “Planning and scheduling” of work.
• 25 Percent due
to: “Unclear and untimely instructions”.
• Percent due to:
“Inability to adjust staff size” and duties during “peak and valley workload
• 25 Percent due
to: “Poor co-ordination” of material flow, unavailability of needed tools,
39.5 White-Collar Productivity:
Productivity of “white-collar workers” is no less important than
that of direct labor or manufacturing
employees. It is usually least known, least analyzed, and least
managed of all factors of productivity.
White collar employees are productive only 50% of time.
Remainder is non-productive time and can
be traced to personal delays (15%) and improper management
Examples of White Collar Waste:
- Poor staffing
meeting and telephone conversations
- Poor scheduling
- Slack start and
- Lack of
communication between function
39.6 Critical Barriers/Problems to Productivity:
- Earning easy
market, in some segments, some high competitive
- Erratic inflow
- Lack of
productivity and quality culture
- Shortage of
funds low level codification
- Automation -not
- Low priority of
market and commercial activities
- Poor after
government policy, rules and regulations
- Poor infra
structure support/road transport
- Energy shortage
- Poor working
conditions, light, ventilation, safety, housekeeping
availability of basic material components (to be imported)
39.7 Causes of
Productivity Decline in Organizations:
o Inability to
measure, evaluates, and manages productivity of white collar employees. This
causes shocking waste of resources.
o Rewards and
benefits given without requiring equivalent in productivity and
authority and inefficiency in complex organizations, thereby, causing delays and
expansion lowers productivity growth result in soaring costs.
o Low motivation
among rising number of affluent workers with new attitudes.
o Late Deliveries
caused by schedule have been disrupted by limited materials.
human conflicts difficulties in teamwork, resulting in project inefficiencies.
legislative intrusions antiquated laws, resulting in constrained “management
options and prerogatives”.
in work processes resulting in monotony and Boredom.
technology changes and high costs, resulting in decline in new opportunities and
o Include demand
of leisure time causing disruption in operations.
manager’s inability to keep pace with the latest information and knowledge.
39.8 Productivity Improvement (PI):
o How can
projects improve their productivity?
Productivity is composed of:
To improve productivity, management needs to focus on the
following two points:
does not just happen by “trying harder”. It must be planned.
o But how do you
plan for productivity, and what factors are involved?
means “increase ratio of output of goods and services produced divided by input
produce”. Ratio can be included by either increase output,
reducing input or both.
Financial and social benefits of “productivity improvement
strategy” in project manager should be
greater than “implementation cost”, in long run.
Task of project manager is to evaluate those factors that have
bearing on productivity and take
appropriate measures to use effectively. In order to raise
productivity and to reduce cost, we must
eliminate bad features in design and specifications that cause
excessive work contents.
39.8.1 Productivity Improvement Factors:
Productivity improvement (PI) is not just “doing things better”,
but more importantly, it is “doing
right things better”. Inter-relationships between labor, capital
and socio-organizational environment
are important in a way that they are balanced and co-ordinate
into integrated whole.
Three Main Productivity Factor Groups:
There are three major productivity factor groups:
Categories of Productivity Factors:
There are the two following major categories of productivity
o External (not
Beyond control of individual enterprise.
Understanding of them can motivate
certain actions which migrates change enterprise’s or project
behavior and its productivity in LR.
Within its control first step towards
productivity improvement is to identify
problem areas within these factor groups.
Integrated Model of Project Productivity Factors
39.10 Soft Factors:
Principal resource central factor in productivity improvement, drives people in
all have role to play as workers, engineers, managers,
entrepreneurs, trade union members.
Each role has two aspects:
Degree to which people apply themselves to their work. People differ not only in
ability but also in their will to work.
Law of Behavior:
Motivation decreases if it is either
satisfied or blocked from satisfaction. Workers
may do their jobs work order working hard (no motivation), but
even if they work to their full
capacity they would not be satisfied (motivation is blocked from
Motivation is basic to all human behavior and to efforts in
productivity improvement. Material needs
predominant, but does not mean that non-financial incentives not
effective or have no place.
Project manager see what stimulates and maintains motivation to
bring about changes in attitude of
managers, engineers and workers. Develop set of values conducive
to higher productivity.
Workers’ success in increasing productivity by:
- Elimination of
Execute effective incentive schemes, result significant
improvement in productivity. Wage incentives
related to amount of change accomplishes.
Project manager should work to encourage workers to apply their
creative talents by taking special
interest in their problems by promoting favorable social
is extent to which application of human effort brings desired results in
output and quality. It is the ability to do productive job
and placements, systematic job progression (promotion)
Key approaches, methods and techniques to improve labor
- Wages and
- Training and
- Social security
– pensions and health plans
- Incentive plans
- Attitudes to
work, to supervision and to change
- Motivation to
- Career planning
- Job security
Financial Incentives (Individual and Group):
is made to give financial incentives on basis of individual performance.
Types of Individual Plan:
Piece work plan
Group plan is made to give financial incentives on basis of
Types of Group Plan:
- Scanlon plan
- Ruker plan
- Kaiser plan
- Tonnage plane
- Dollar sales
- Profit sharing
Some intangible means of rewarding and encouraging management
employee. These are referred to as
“fringes” and include the following:
- Free Medical
- Free Air
- Company Car
• Both financial
and non-financial form of motivation: Up gradation of employee status is
natural way to recognize skill knowledge, proficiency, and
efforts to job.
Maslow’s Hierarchy of Needs.
Only dissatisfied needs can motivate workers to high
productivity,) physiological, safety, security,
belongingness, self esteem, self actualization (realizations of
- Japanese on
basis of seniority
- USA on basis of
extra ordinary performance
- Debatable issue
Non-financial-motivation technique that provides
autonomy and discretion in performing talks
Feed back on
two-factor theory applied
Two Factors Theory:
“Motivators” factors leading to job satisfaction. Achievement
recognition, nature of work responsibility,
growth etc. Factors leading to dissatisfaction avoidance are
Hygiene, Company’s policy, admin,
supervision, pay status
- Enlargement of
responsibilities associated with job.
- Enhanced scope
and responsibility. Proponents say job get to be boring and monotonous, causing high absenteeism, high turnover, and low morale, with consequent
- Volvo Sweden.
Worker could stamp name on engine.305
Involves rotation of workers in different jobs for short periods
of time provide “all-rounder” in
company’s op –for which - not originally hired for:
boredom by flexibility in job assignments.
• Not retraining
conscious -on going basis effort to provide opportunity to exercise freedom in
staying on a job for a fixed period.
Workers Participation and Empowerment:
Over coming resistance to change through employee involvement in
planning and implementing change,
mental and emotional involvement in groups encourage workers to
contribute in group goals sharing of
Workers Participation Approaches:
Following are the approaches for workers participation in
quality culture change and empowerment:
Formalized techniques to increase skills needed to perform job.
Skill training needed for employee when
employee’s attitude is positive but his abilities are low.
• In information
age there is a great need for skill at all levels.
Management by Objectives (MBO):
Managerial motivation techniques, aids motivation on all
participation by having superior and subordinate
managers jointly identify common goals, carefully define them.
Together monitor progress towards
achieving results to both employer and employee.
- In setting up
goals care must be taken.
- Set simplistic
- Set goals
without adequate resources.
- Not set harsh
goals that cause resentment.
- If properly
administered, MBO can create joint goals and can help in team building.
- MBO goals
provide fairness to both employee and employer.
Working Condition Improvement – Quality of Work Life (QWL):
It is often emphasized but rarely applied technique that
involves detailed audit of working conditions
designing improved conditions of working installing and
maintaining improvements in working
Designing Improved Factors:
light and humidity
handling hazardous material, parts or product
manual handling of heavy items
- Seeks to
achieve improved human productivity by increasing ability levels of workforce
- Seeks to meet
demands of growth and change
- Training may
actually decrease total productivity initially
- Some type of
- On the job
- Outside course
- Refer to manner
in which individual defines his or her job
- Type of effort
employee believes is essential for effective job performance.
- If workers see
high or low productivity as path to attainment of one or more of their personal goals in work situation, they will tend to be high or low
Quality of Supervision:
- Concerned with
work of creating and maintaining environments in which people can accomplish goals efficiently and effectively.
- In order to
improve supervision quality itself, supervisors must be trained in
- Group dynamic
Management shows acknowledgement of employee’s outstanding
performance in terms of improved
productivity, ideas, or any act of good workmanship. They
- Pay raise
- Certificate of
highlights in company newsletter
- Special parking
- Engraving on
plaque in cafeteria
contingency attempt to decrease likelihood of particular behavior occurring by making punishment contingency on behavior.
punishment contingencies used in work organizations include:
- Transfer to
Group of employees who voluntarily
cooperative to solve problems related to
production, quality, work environment, maintenance scheduling,
or anything that affects these
Productivity and Quality Teams:
Small groups of people doing similar tasks meet regularly to
select, investigate, and solve problems
related to workplace, products, and services. Effective means of
improving employee morale, quality,
and productivity in organizations. Team spirit, positive
thinking, and philosophy of achieving
excellence are three important characteristics of productivity
and quality teams.
Zero defects program attempts to improve quality by changing
workers attitudes. Their theme, “do it
right first time” stresses error free performance. It relies on
workers to identify error prone situations
with assumption that people best prepared to eliminate errors
are those who create them.
technique, particularly for white collar, supervisory and management personnel
involves minimization of wasteful elements of person’s administrative work.
by drop-in visitors (without appointment)
lengthy and unnecessary meetings that accomplish very little
say “no” for some tasks
and lack of decisiveness
Taking on much
more than can be handled
responsibility and authority to do certain jobs
inaccurate or inadequate information
from too many people
many “crisis” situations
organization of tasks by priority or target dates
determination to complete tasks assigned
organization on and around desk
unnecessary trips to people, departments, copy machines etc.
rescheduling of meeting, personal engagements etc.
To minimize these “time-wasters”, time management applies
simple, common-sensible but very effective
programming rules to very item of work, one of which is: “never
handle same paper twice”. Time
management always improves human productivity. It is too often
ignored, particular by management
people who preach productivity to their subordinates.
- Flex Time:
- Employees are
given freedom in determining their hours of work
- Core time
(hours when all employees must be at work)
- Flexible time
(hours when employees can vary their time of arrival and departure)
Compressed Work Week:
- Working for
same number of hours but for fewer days week
- 08 hours 05
- 10 hours 04
Integration of interest of stockholders, board of directors,
management at all levels and all employees in
consistent manner both within and outside physical boundaries of