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1 1 2 0 0 2 So u t h W e st e rn / T h o mso n L e a rn i n g TMS l i d e s p r e p a r e db y J o h n L o u c k s2 Chapter 18 Employee Productivity 3 Overview ? Productivity and Human Behavior ? Designing Workers’ Jobs ? Empowering Workers ? Work Methods Analysis ? Work Measurement ? Learning Curves ? Employees’ Health and Safety ? WrapUp: What WorldClass Companies Do 4 Productivity ? Productivity means the amount of products or services produced with the resources used ? Productivity = Quantity of products or services produced Amount of resources used ? Productivity varies with the amount of production relative to the amount of resources used. 5 Ways to Increase Productivity ? Increase output using the same or a lesser amount of resource. ? Reduce amount of resource used while keeping output constant or increasing it. ? Use more resource as long as output increases at a greater rate. ? Decrease output as long as resource use decreases at a greater rate. 6 Impact of Price/Cost Change on Productivity ? When the cost of a resource increases and profit is to remain the same, some bination of the following must occur: ? output is increased ? resource usage is decreased ? price of output is increased 7 Why do We Care About Productivity? ? Without productivity improvement, businesses do not survive in a global economy. ? Higher productivity means higher standard of living. ? The US has traditionally been the leader in productivity gains but other countries are closing the gap. 8 Single Factor Approach to Measuring Productivity ? Capital Number of products produced divided by asset value ? Materials Number of products produced divided by dollars spent on materials ? Direct Labor Number of products produced divided by direct laborhours ? Overhead Number of products produced divided by dollars spent on overhead 9 Single Factor Approach to Measuring Productivity ? Note that the productivity of a particular resource can be increased simply by replacing some of this resource with a different type of resource. ? For example: If automation is substituted for direct labor and output volume is unaffected, directlabor productivity increases (and capital productivity decreases). ? Our view of productivity must be toward improving the productivity of all the factors of production. 10 Labor Productivity ? For some firms, production labor (touch labor) represents a very small part of the firm’s total costs ? For other firms, particularly service firms, direct labor cost remains a significant cost and the need to improve labor productivity is still a serious concern 11 Variables Affecting Labor Productivity ? Physical work environment ? Technology, equipment, materials, lighting, layout ? Product quality ? Defects, scrap, rework ? Employee job performance ? Employee ability, motivation 12 Employee Job Performance ? Motivation is perhaps the most plex variable in the productivity equation. ? Only unsatisfied needs are motivators. ? Maslow identified five basic needs: physiological, safety, social, esteem, and selffulfillment. ? The higher level needs (social, esteem, and selffulfillment) might hold the most promise for motivating. ? If productivity is seen as a way to fulfill needs, higher productivity is likely to result. 13 Motivation ? Formal anization ? Informal groups ? Job design ? Leadership ? Union ? Psychological needs ? Economic conditions ? Personal situations 14 Specialization of Labor ? Advantages ? High production rates ? Low wage rates ?