Can doubling productivity double profits?
EOPLE WHO show up late for meetings live in poor countries.” It’s a statement credited to an entrepreneur specialising in enterprise solutions to poverty in developing countries and repeated by business stalwart Douglas Orane at the Acorn Group/IDB seminar on productivity and growth at the University of the West Indies last Tuesday.
In detailing his prescription for drastically improving productivity in the workplace, Orane insisted that a zero-tolerance approach to lateness is one of the simplest remedies every leader can employ for immediate results.
He’s right on the money. In fact, a single employee who Douglas Orane, former chairman and chief executive officer of GraceKennedy Limited, making a presentation to the Acorn/IDB forum on Growth & productivity, at the UWI Regional Headquarters in Kingston on October 10, 2017. shows up 10 minutes late for how much we can gain by one of the messengers. work or returns 10 minutes late improving productivity at work. worked! from lunch each day in 2017 A remarkable case study “What gets measured gets would have squandered the shared by Orane and outlined done, and instead of getting equivalent of one full week paid below should be especially caught up in complex measurements, vacation leave by the end of this exciting for small-business which could not be easily year. leaders and managers intent on understood by everyone
Chronic lateness is also associated enhancing competitiveness, across a complex group, we with a culture of indiscipline, customer value, employee satisfaction, chose one measure as the surrogate inefficient meetings and and profitability. for productivity increases. outputs, missed deadlines, low The measure was the growth in staff morale, and poor work performance profits in equivalent US dollars — the cumulative cost per person annually. of which can wipe out profits of “The approach may have the most viable businesses. been imperfect, but it worked. Employees who are chronically An important component of this late are unwittingly making their transformation was in manufacturing. organisations and companies With the opening up of poorer as are leaders who accept the economy through liberalisation, their behaviour. our factories were being
It is a sobering, but timely savaged by foreign competition. reminder that embracing tardiness We made the decision not to as ‘Jamaica time’ is a mindset fold, but instead to double that is impoverishing our down on modernising our factories. country’s coffers, individual We did this by closing pockets, and general quality of each of them for about three life. months to retool. At the same
As impactful as punctuality time, we moved to a new system may be to our competitiveness of teamwork on the factory and growth prospects, it is just floor. the tip of the iceberg when “Instead of each worker assessing productivity, which, in being a specialist, the new the simplest terms, is defined as methodology was flexibility — a ratio between the output volume individuals working in teams, and value and the volume with each one doing whatever of inputs such as labour, capital, was required at a particular time and equipment. — moving goods, adjusting
The critical question is exactly machinery, cleaning up, and
THE GK CASE STUDY
“In 1995, Jamaica was in crisis, and so was GraceKennedy. Within our group, we were granting wage and salary increases of 20 per cent, and by the end of the year, inflation had ended up at 40 per cent. We recognised that the aspirations of our GraceKennedy people could not be met on such a path. We, therefore, set an objective to double the productivity of every employee within five years, that is, by the year 2000. Many said it was impossible, but we didn’t listen.
“We launched an extensive campaign to involve every single employee as to the meaning of productivity and how important it was to their personal and professional lives. We coined a slogan ‘Double the productivity of everyone from Raf to Rupert’ — Raf was the chairman and CEO and Rupert was It doing their own quality-assurance tests. In many cases, this required employing new people out of high school, with four CXC passes, who had good problem-solving skills. A new payment method was introduced based on linking remuneration to output, which we named variable pay.
“Each team was paid on their weekly and monthly production once it met our rigorous quality standards. Our expectations were far exceeded — within six months, increases in productivity of 100 per cent or more. A critical part of this experience was the engagement of workers and trade unions, months in advance, to explain in detail the future plans.
“One of the fears of some managers was that workers would sabotage production. Instead, the opposite occurred, with greater dedication to work leading up to the impending closures. I remember one rank and, file member saying this to me :‘Mr Orane, what took you all so long to do this? We could see what needed to be done’. Having a viewpoint from the ground level illuminates what is important to change.
“Around this time in the late ’90s, we did an extensive survey of employees to get feedback. One of their suggestions was to move from the old paternalistic system of Christmas bonuses to a merit-based incentive process. We acted on their ideas, linking both performance appraisals and company profitability to the calculation of incentive payments.”
A key takeaway from this case is that there is tremendous opportunity in owning up to Jamaica’s decades-old productivity trap and implementing bold actions to break it.
Indeed, for many enterprises the key to unlocking increased profits in as little as six months could lie in simply doing more tomorrow with the exact same resources they have today.
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