Productivity and the Management of Performance

Content

1. Explain the difference between the two concepts of performance & productivity
1.1 Productivity
1.2 Performance
1.3 Conclusion

2. Discuss the need to improve productivity & performance in South African organisations

3. Discuss techniques which managers can take to improve employee performance and productivity
3.1 Introduction
3.2 Technology
3.3 Motivation
3.4 Training, Development & Coaching
3.5 Management by Objectives
3.6 Performance Appraisal
3.7 ISO9000
3.8 Total Quality Management (TQM)
3.9 Conclusion

Bibliography

1. Explain the difference between the two concepts of performance & productivity

The terms of performance and productivity are often confounded in practice because they are used in a similar context. In the following the distinction is pointed out.

1.1 Productivity

The term productivity has been used to refer to individual groups, organisational units, entire organisations, industries and national economies. Today, the majority of definitions say that productivity is a measure of outputs divided by inputs. For instance, inputs can be raw materials, energy, etc, whereas outputs can be furniture, cars, services etc. With regard to Human Resource Management the main interest lies in the invested labour and capital in relation to the units produced. By measuring the productivity of an organisation the achieved efficiency can be found out and will show how effectively the invested resources have been used. Generally it can be stated that the higher the ratio, the more efficient are the used inputs. From a business point of view the main organisational goal is to reduce costs until only unavoidable costs remain. Thereby it is essential to realise that an appropriate measurement system in every organisation is crucial.

1.2 Performance

In contrast to productivity, performance refers to the output of an individual employee. The achieved output is compared to determined standards the worker is expected to meet. The units of the standards depend upon the nature of the job and the more complex the job the more difficult it gets to measure the performance. For these more complex jobs performance appraisal systems have been designed which will be discussed later. For instance, possible criteria to measure the level of performance of more simple jobs can be the number of produced products, the number of rejects or the wastage of raw materials. However, quantity, quality and time are indicators in any case to measure performance.

1.3 Conclusion

Finally, it can be summarized that performance refers to the output of an individual person, department or whole organisation in relation to the work standards whereas productivity deals with the ratio of inputs to outputs. So it can be stated that there is a close relationship between productivity and performance because a high level of performance achieved by each employee is critical for a high level of productivity of an organisation. This implies that it is more important to concentrate on the employee performance rather than productivity. Methods and techniques to improve employee performance and productivity are discussed in the last part of this work.

2. Discuss the need to improve productivity & performance in South African organisations

South Africa faces a lot of problems, for example the high unemployment rate of approximately 30%, the disastrous rate of HIV infected people, one of the highest crime-rates in the world, the high number of unskilled people and illiteracy. Some of these problems are related to the low South African economic strength (compared with European or the US economy). Besides that, the problems are also often a result of Apartheid, especially the shortage of skilled people and the still prevailing differences in the treatment of black and white people. During apartheid, economic growth was never dependent on better utilisation of inputs (such as labour, raw materials, energy) because these inputs where sufficiently available. Hence there is still a low awareness of productivity.

However, many problems could be overcome or at least reduced by increasing productivity and labour performance assuming that higher productivity leads to more jobs and therefore, for instance, to a lower crime-rate (which certainly would attract more international investors).

Especially in the age of globalisation, productivity keeps economies growing. According to an article by William Pesek (see THISDAY, 09/09/2004, page 14), one of the unique aspects of today’s global environment is that productivity grows relatively to gross domestic product (GDP, in other words, the total value of all final goods and services produced within the boundaries of a country in a particular period). This is shown in a recent report by Bridgewater Associates. In 2003, for example, US productivity grew 5,4 percent, or 0,4 percentage points faster than inflation-adjusted GDP (www.bwassociates.com). Assuming that a South African GDP growth rate of 6 percent per annum would lead to new jobs it can be concluded that increasing productivity plays a key role in the solving of some prevailing problems in South Africa.

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