Productivity

Andrew Layman:  PCB CEO

At a function hosted recently by Productivity SA, a speaker referred to the dilemma faced by China when conscious decisions were to be taken that would set that country on the part of economic growth.    Should the focus be on productivity, or on quality?    This might imply that the two are not compatible, but this would be an incorrect inference.  They are perfectly compatible, but the choice of one as the focus determines the particular priority objective and the processes to be followed to achieve it.   China chose productivity.    The value of this was that the country was put to work.   Output was high and prices more than competitive, and the reputation of Chinese products as shoddy in quality was comparatively short-lived.   In my lifetime I remember how people shunned Japanese products.   They did so for reasons of prejudice, of course – Japan had been at war with the West – but also because the products could not compete with those of European and American manufacturers.    Toyota, among others, changed the perception in a short time.    

Not long ago I browsed in an upmarket clothing store which was having a sale – 50% off, the banners proclaimed.   Here was a shirt that was branded as ‘Banana Republic’.   The fact that I’d never heard of this particular brand is not surprising as I am not young enough to be a brand fetishist.   The sale price was R500, which suggested to me that its original price was R1 000.   When I looked closely at the label, I found that the shirt had been ‘Made in China’.    And I thought that we are importing cheap clothing!    This shirt had not sold, otherwise it wouldn’t have been on sale, but the expectation of the store buyer was that it would sell, not because of its competitive price, or its quality – I couldn’t recognise any superiority - but because of its brand name.   It is difficult to understand why we have to rely on imported brands to satisfy the wide, and increasing, demand for popular labels.   Africa has more than nine hundred million people and middle class spending-power in excess of that of India.   The continent’s global investment stakes are rising at a rapid rate.   Yet, while some South African companies are doing very well in other African countries, this vibrant, youthful and modernising market is being left for others to exploit.   

It might be different if we understood productivity better.    It is not a simple case of doing, or producing, more.   At least one business operator has written of a “productivity trap”, a cycle of restraint that one can fall into by doing more.   Ironically, over-stretching capacity in a quest for productivity is more likely to result in an unproductive outcome.   The outcome must never be exceeded by the input of energy and resources, and the objective of productivity is to lower the cost of production without compromising the quality.   By achieving this, the capacity is created for production to increase.  

Unfortunately, the cost of labour is not recognised as an input cost by wage-earners.  For this reason, the link between levels of remuneration and productivity are tenuous at best.   During the last few years, and leading up to the recent mayhem, wage demands, and agreements, have exceeded the inflation rate while productivity has declined.   Municipalities are dysfunctional, the public health service is a shambles, education is little better and the queues at Home Affairs continue to reflect the abject failure of government to provide adequate service to the citizenry.    There is no productivity to speak of.   In one private sector after another, workers are striking for more money than the country can afford, but productivity has not improved to warrant such increases.    I believe strongly that productivity is a matter for managers, not for workers, however.    Companies that have high productivity rates (they are generally characterised by low absentee rates as well) are well, innovatively and progressively managed.    These managers have been able to transmit their passion for their business to their workers who feel integrated into the success of the company.   They understand the relationship between labour input cost and profitable output because the trouble has been taken to share this insight with them.

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