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COVER
STORY - June
2000 by Adam Bruns
Looking into how people count their work time is one portal into the changed terrain of worker productivity. Like Frederick Winslow Taylor’s obsessive experiments with efficiency, we’re still trying to quantify and measure how we get things done. Only now, the knowledge economy has turned the convenient model of the factory into a portable burden, located in our minds and in the other parts of our lives instead of out there in a building on the edge of town. Talk to any Internet company and the new worldview is immediately apparent. Take Louisville-based TechRepublic CFO and co-founder Kim Spalding, whose community for IT professionals, just purchased for $80 million by the Gartner Group, is taking the tech world by storm. "Measuring productivity -- that’s a tough question," she ponders. "We have no formal mechanisms. We have very aggressive plans and set timelines for them, so if we’re getting close, we assume we’re being productive. I will say that we decided to launch our site in November, 1998 and it was up in May 1999, so we feel like we’re pretty productive."
What used to be termed "throughput" on the factory floor might now be called "optimum process refinement" in the studio atmosphere of the new workspace. But the manufacturing sector is still keeping up the pace and has an impressive recent track record. According to Modern Materials Handling, manufacturing productivity in 1999’ås fourth quarter posted its strongest gain in 17 years: "During the final quarter of last year, manufacturing sector productivity increased at a 10.3% annual rate, reflecting a 6.6 percent rise in output and a 3.3 percent drop in the number of hours worked." Executives love to see those kinds of numbers. But recent reports from the U.S. Labor Department indicated a slowdown in Americans' productivity, from an overall 6.9 percent rise in the final quarter of 1999 to a mere 2.4 percent growth rate in the first quarter of this year. And while the amount of output per hour of labor was diminishing, unit labor costs rose by 1.8 percent, a typical sign of inflation. Dollar for dollar and hour for hour, Kentucky’s workforce ranks as more productive than average -- in fact 13 percent better than the national average as measured by value per dollar of production wages. In a 1996 survey of manufacturers, Kentucky ranked 12th among the 50 states in value added per dollar of production wages in manufacturing, at $6.09. That rate beats out states like Ohio ($4.66, though its share of U.S. manufacturing is almost four times Kentucky’s), Indiana ($3.54), North Carolina ($5.51) and Tennessee ($4.48). What’s more, as illustrated by the more than 60 company headquarters located in Kentucky, companies and people have begun to relocate here because of quality of life as well. One statewide organization helping to make Kentucky companies more productive is Kentucky Technology Service (KTS). Headquartered in Lexington, KTS has satellite offices in Louisville, Owensboro, Bowling Green, Florence, Morehead, and Somerset. The company uses field engineer consultations, training seminars and referrals to help Kentucky manufacturers become more globally competitive. "We try to become the project manager for the manufacturer," says KTS executive director Lynn Witten, who admits that this kind of nuts and bolts work is "not the sexiest part of economic development." Her lean staff of 12 experts possess well-rounded backgrounds in manufacturing (including a few who ran their own businesses) and are capable of conversing with plant managers and owners in a common language. On the KTS résumé
is a project with Canton Cooperage in Lebanon, which makes high quality
wine barrels. "In their case
it was helping them look at production efficiencies, and finding a simple
solution to a problem on the line that was causing a lot of scrap and
rework -- it was a $25 fix, some welding and a change to a lever, so
they got payback in two pieces of rework." Currently, KTS has
20 active projects and 12 in the proposal stage statewide. Witten notes that
not all new technologies being put to use are high-tech and flashy,
especially in the B2B
area. "Supply chain
management, sending specs and drawings back and forth, doing invoicing
and purchase orders," she explains. "For people who implement
that, it doesn’t feel like a productivity boost at first. But you
begin to realize there’s an incredible efficiency and savings." Just as KTS conducted
ISO 9000 seminars when it was a new concept, there are plans in the
works to work with the newly partnered community and technical college
system to deliver e-business seminars to manufacturing firms. But what about the
growing non-manufacturing sector? "The line is
beginning to blur," says Witten. "It’s hard to categorize
some operations as exclusively manufacturing or service. It may well
be that down the road we can move in and work with some of those service
companies."
New
paradigms: from the factory... According to IDC,
worldwide spending on customer relationship management (CRM) services,
such as call centers and online computer help desks, is expected to
rise at least 20 percent, to more than $40 billion, this year. And it
should more than double that in the next four years. By 2003, firms
are expected to spend $90 billion a year on CRM. Kentucky’s
activity in this arena is abundant:
Individuals are
also becoming little CRMs unto themselves. The Yankee Group
estimates there will be more than one billion Web-enabled mobile devices
by 2003, and that 63 percent of Web business will be transacted through
them. At the recent Comdex technology show, Palm executive Alan Kessler
called the industry’s new direction "me-business" --
where the focus is on customer convenience, not technological one-upmanship. Yet another new
term, boasted by the growth of wireless Internet services as well as
cell phones, is "m-commerce," where the "m" stands
for "mobile." Since e-commerce will almost be an assumed way
of doing business very soon, it’s the mobility of the user between
tasks and projects that is thought to be the next enhancement. Public relations
director Barbara Eilert of TechRepublic knows all about m-commerce. "We have four
offices: Headquarters in Louisville, sales and marketing in San Jose,
market research in San Francisco and sales and new products in New York,"
she says. "We live on e-mail. We have a mix -- some people swear
by the Palm, some swear by the computer." At least they’re
not swearing at it. A recent analysis by Princeton economist Alan S.
Blinder suggests that it has taken a while for the computerization of
American business to fully take place. But we have now reached a point
of critical mass and have begun to deploy the Internet as an interconnective
tool.
Counting
what’s on the inside But IT advances
alone will not keep productivity humming. Even the latest in hard-wired
equipment will do little for companies whose workers are pushed to the
limit. To the mining industry, "productive" describes the
richness of a particular vein of coal or deposit of precious metal.
Far too often in labor’s past however, that analogy was transferred
to the workforce -- with the result that some burnt-out workers, like
a productive mountainside, grew scarred and eventually depleted from
overuse. In an article on
workplace design in Journal of Property Management, MIT's Fritz Steele
calls productivity "doing the right thing required for your current
purposes, and not just doing a lot of it." The interface of
personal motivation and organizational strategy is where the productivity
question gets answered. Many companies find that the same principles
that help individuals achieve balance in their lives also contribute
to their organization’s health. While working in overdrive may
have brought them to a new level of productivity, burnout eventually
occurs. Lynde McCormick
of the Christian Science Monitor called it "conspicuous production."
"Productivity gains should at least flatten out, at some point,"
he wrote last year, "as the pace of technology improvements slows
and people tire of 12-hour days." But as he and others have noted,
even though work is following us around -- to our homes, on vacations,
to dinner -- we appear to like it like that. For many, it’s a consequence
of working for themselves. No matter how many productive hours they
spend "at work," they overwhelmingly prefer it to those same
hours spent at someone else’s behest. But even the autonomous
have customers for bosses and the hours spent to please them can taketheir
toll. As published in Management Review in February, "a survey
of HR managers at 305 U.S. companies by CCH found that stress as a reason
for unscheduled absences has tripled over the past five years, from
six percent of employees in 1995 to 19 percent in 1999." While just finding
people is a major challenge these days, once we have them suitably installed
in our reengineered processes, lean organizational models and cross-functional
teams, how do we keep them? Whether it’s
a call center or an assembly plant, maintaining health and comfort is
a key. At the Center for Industrial Ergonomics at the University of
Louisville, Dr. Waldemar Karwowski directs research and training in
several areas of work systems design, ergonomics, and occupational health
and safety management. "I’m focused
on improving working conditions, which have a great direct impact, and
indirect impact, on the workforce performing reliably," he reports.
"Ergonomic work is designed so it fits physical, mental, and organizational
capabilities." Karwowski says that
the corporate culture of America is just catching on to the need for
greater awareness of health and hazards in the workplace. Since OSHA
was created in 1970, many companies have fought off "government
intervention" in the workplace instinctively, but today realize
the importance of employee health in the overall health of their organizations. "Improving
the workplace seems like it’s forced upon them [upper managers],
but by providing and designing better places to work, you achieve a
lot of things -- reduced absenteeism, less workers compensation and
injury. Truly, the bigger impact that nobody is measuring is the effects
it will have on quality of life, period." The ergonomist points
to companies like GM, Ford, Chrysler and Toyota for their leading work
on ergonomic issues, as well as UPS, Federal Express and IBM. And he
notes how awareness of workplace health -- first formulated for the
manufacturing environment -- can still be helpful in the new paradigm
of the networked service workforce. "More and more
people will work from different places, especially as the number of
knowledge workers increases," he observes. "But I think the
good thing about all of this is as the culture changes, and we realize
how important safety issues are, the more we’ll be prepared to
deal with working from home, and society will be healthier in the long
run. They can transpose this experience into other types of work." Indeed, telecommuting
has helped many companies and individuals achieve mutually supportive
goals. Gartner Group Inc. estimates a telecommuting employee’s
productivity on average increases 20 percent, thanks to more time spent
working and fewer interruptions. At the same time, for workers both
in and away from headquarters, welcoming the occasional interruption
can paradoxically improve productivity in the long run. A recent study
by Cornell's Human Factors and Ergonomics Laboratory found that computer
users whose software alerted them to take breaks were 13 percent more
accurate than their co-workers who weren’t alerted. Various studies
report that U.S. business spend almost half of its after-tax profits
on employee medical care. Health and wellness programs not only help
productivity by trimming medical services use and absenteeism, but by
boosting performance through the sheer presence of more energy. As of
1998, Kentucky ranked 45th among the 50 states in overall population
health, so even though the state’s economic productivity numbers
shine, a general upsurge in personal health could do nothing but improve
those statistics. For those with a view toward boosting productivity, definition is what brings a thing into focus, be it a body’s shape (plant layout), a storyline (strategy) or the number of pixels in your photo file (clear corporate vision and resolution). As Kentucky companies and individuals further pursue productivity’s various meanings, the big picture will resolve itself into equal portions of measurement, shared information and innovation -- and perhaps even a bit of rejuvenation.
Adam Bruns (adambruns@lanereport.com) is associate editor of The Lane Report.
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