Totally Productive

In a similar vein, Object Consulting organizational performance consultant Alan Abrahams says productivity accounting — a high-level executive reporting system — can provide useful insights into organizational productivity.

"I am an industrial engineer by training but I have worked in a lot of different areas outside of the production area," he says. "My passion and my interest is productivity in general, not necessarily just productivity related to people but this concept of total factor productivity — productivity of all resources in your organization."

Total Factor Productivity is a measure of the physical output produced from the use of a given quantity of inputs by the firm. When there are multiple outputs and multiple inputs, the ratio of the weighted sum of outputs with respect to the weighted sum of inputs is used to calculate the Total Factor Productivity Index. While its exact importance is still under debate, economists have long recognized that total factor productivity is an important factor in the process of economic growth.

Abrahams says productivity accounting lets the organization attach monetary value to changes in productivity (output/input quantities) and price recovery (output/input prices), thereby directly linking productivity with profits. The approach measures all of the resources — people, capital and material — he says. "In short, productivity accounting can show whether company productivity is increasing or not and the impact that this is having on bottom-line results.

"Function points provide a measure of size that covers all types of software projects and can be considered a surrogate for the output of a software development effort. The function point process produces a dimensionless number. If customers accept that they are actually buying function points rather than specified products and services, then in productivity accounting terms there exists an acceptable output quantity series," he says.

SIDEBAR: Chaos Theory

In many organizations chaos — that productivity killer — has become such a normal state of affairs that no one recognizes just how chaotic things have become, according to Eyes Wide Open consultant Noni Sweeney. Sweeney says you can confidently assume your business is chaotic if, as the business owner-operator or senior manager, you can recognize some of these behaviours:

• You are the first to arrive and last to leave each day.

• You are doing everyone else's job as well as your own.

• You feel the need to watch over people's shoulders to make sure the job is being done properly.

• There is a lot of band-aiding of processes and systems.

• You do not have enough time.

• You are involved in fire-fighting issues as they arise.

• The wages bill has gone up but you are working just as hard.

• There is a general sense of people scrambling to keep up.

"The key to productivity is that everyone understands their role in the organization so that they understand the impact of doing their job," Sweeney says. "Therefore when the board sits to decide strategy or spell out the way forward, it's important that the staff hear it from the high level so that they get the big picture.

Sweeney says each manager must make it clear to each person doing a job the impact that doing that job has on customer satisfaction, so that they understand their role in the organization and do not feel that they are "at the bottom of the heap". Otherwise, every member of staff capable of contributing to the success of the organization is equally capable of contributing to its downfall.

"Staff must understand what they need to do if the organization is going to be successful and given the tools [they need]. Management also needs to provide some feedback on a continuous basis. You don't sit down after 12 months for a performance review and say: 'You really failed miserably this year', because that impacts productivity. If you do it on a month-to-month basis then there are no surprises."