Workplace productivity has the power to lift our nation’s wealth and turn management thinking on its head. So why does it languish in the too-hard basket? Maybe because it’s tricky to even define what we’re talking about. Few workplace conversations centre round the word productivity. And any talk that does take place frequently comes cloaked in the language of lean manufacturing, Kaizen or continuous improvement.
Many conversations about productivity sound wonk-ish, dated and deeply unsexy. They appear to employ language inherited from push-button, form-ticking manufacturing past which fails to grasp the new realities of our high-connect, chaos-theory, organic, digital world.
And if we don’t really know what we’re talking about it’s pretty hard to work out what to measure and how to improve it. Productivity, it seems, can easily fall between the cracks of conversations that swirl around innovation, employee engagement and just cranking out stuff on time in order to live another day as an organisation. In tough economic times, plain old survival is powerful instinct.
In an earlier NZ Management magazine article by Reg Birchfield (February 2012, “Solving NZ’s productivity puzzle”), Hay Group general manager Pacific Henriette Roths-child likens the problem of getting to grips with workplace productivity to leadership equivalent of Rubik’s cube.
“Clear direction, organisational design, reward, leadership, performance management, engagement and diversity,” she says, are all interlinked. Swivel one piece around and you find you probably have to change all the others as well.
No wonder, then, that for many business leaders productivity issues remain at the bottom of the most distant to-do list. Yet growing body of evidence suggests this must change: and fast.
Much has been said about productivity at the macro-economic level. The writing is clearly on the wall as our GDP trails forlornly behind that of competitor nations. There’s also an interesting, and very valid, side argument that GDP-based productivity measures do not factor in the “good stuff” such as environmental or social metrics, anyway.
The Government signalled its seriousness to tackle how we can lift output per worker back in April last year by establishing NZ Productivity Commission: whose Maori name Te Komihana Whai Hua o Aotearoa translates into the far more poetic ‘commission that pursues abundance for New Zealand’.
It also gave us national champion for productivity in the energetic form of its chairman Murray Sherwin.
Steeped in 35 years’ worth of public policy roles – including deputy governor of the Reserve Bank of New Zealand and two-year secondment to the executive board of the World Bank in Washington DC – Sherwin’s job is to identify and support measures to remove roadblocks to productivity progress. He’s the natural spearhead for big-picture debate.
At the firm level, he’s charged with handing over the productivity baton to organisational chiefs. It’s their job to implement changes that will make difference.
Productivity, says Sherwin, is the pathway by which societies prosper. He told guests at recent NZIM/NZ Management magazine Editor’s Breakfast in Wellington (see box story “Dining in, speaking out”) that firm level productivity is about making the right choices.
Crucially, he says it’s about the nature of leadership within any organisation, how clear it is about where it’s going, why it’s heading in that direction, and how it’s going to get there.
“It’s about how good leaders are at bringing other stakeholders – most particularly employees – along with them and providing the supporting infrastructure.”
Looking back on his own management roles, Sherwin suggests the key to workplace productivity lies in sharing information, ideas and challenges throughout organisations so everyone can understand and contribute in their own way.
That, in turn, forces managers and directors to rethink their role, and perhaps their worth or value, in the organisation.
So, if productive leadership is about creating more equal, adult relationships between leaders and workers, who in business gets it? And what can we learn from them?
Kerry MacDonald has been working at the coalface of implementing productivity initiatives for over 30 years. He’s held leadership roles at, among other places, Rio Tinto, Carter Holt Harvey, the National Australia Bank, Oceana Gold, Ports of Auckland, Opus and the BNZ.
He knows his comments can sound blunt, but says most chairs and directors in New Zealand just don’t get productivity.
“They’ve never been in circumstance where productivity, or the competitiveness of the firm, is the essence of the business and even if it has been, they haven’t understood it.”
In his experience, workplace productivity is less about big wham-bam moments and more about joining series of tiny dots in minute incremental steps.
In the hard-muscle world of Rio Tinto’s Tiwai Point aluminium smelters, for example, he talks of the cosy concept of trusting workers to be smart, find solutions and to care. His is the language of sharing information and empowering people.
He draws on experiences and data built up at the plant from the early 1980s right through to 2005 during what he says was time of “very determined focus on productivity”.
“An essential element was the empowerment of the workforce, and changing the way they were treated and managed so that they thought as managers did,” he says. “People didn’t just work with their hands. They thought deeply about the job they were doing and how things could be improved. They were trained to do that and rewarded for their successes.”
He tells the story of the smelter cell operators who sussed out way to shift the process from hard-to-divine “black art” to delivering more accurate output by more precisely setting the distance between anodes and cathodes.
The results, he says, were nothing short of spectacular. The more accurately the anodes were set, the higher the purity of the metal produced. Productivity increased. The better quality metal attracted higher prices in the market and this eventually led to the smelter being selected to provide the aluminium for the A380 airbuses.
Throughout the company, as management shared previously withheld data with operational teams, workers shared their own ideas on what could be done differently. They, in turn, were given free access to technical specialists to help them test out their ideas.
Trust rose. Contracts changed. And workers took home much fatter pay cheques based on their individual performance.
Many other changes carried deeper symbolism. Everyone, including the GM, switched to wearing the same-style uniform and coloured hard hat on site. Name plates were ripped from company car parks. Everyone had equal dibs to space on first-in, first-served basis.
The management-only cafeteria was shut down. Workers no longer had their bags checked at the company gates. And everyone – literally everyone – on site had an unquestioned right to stop any act, action or process if they thought safety was at risk.
This is just one of number of examples from MacDonald whose hands-on experience in lifting workplace productivity also spans banking (“BNZ adopted Kaizen”) and manufacturing. “The company was broke. After two years it was sold for many millions of dollars. And all we had done was work with the way people worked.”
Basically, says MacDonald, productivity is what people should be doing every day.
“If you’re on board or if you’re an executive or an adviser, unless you’re adding value you shouldn’t be there. And, generally, adding value is through improving productivity.”
Put like that, maybe lifting our nation’s workplace productivity is neither as wonk-ish nor as difficult as it has sometimes seemed. M
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