Increase Growth Rate, Increase Productivity

Recently, I went through a wonderful article titled The Power of Productivity in the latest issue of ‘McKinsey Quarterly’ (2004 number 2). I strongly recommend this article to everyone connected with running an enterprise as well as the nation’s economists. It propounds that it’s neither capital investment nor the education of the workforce that makes a country grow fast and bring prosperity for all it’s citizens. The article goes on to say that the best growth indicator is GDP per capita, measured simply by multiplying labour productivity (how many goods and services a given number of workers can produce) to the proportion of the population that works. The productivity increase is the key for higher GDP per capita. And the productivity improvement does not always need a lot of investment nor is it necessary to have only educated workforce. More important is on-the-job training and regular upgradation of skills through training in related acquired technologies.

When we talk of productivity, it relates to and covers all tasks and activities of all able-bodied persons of the country. One must improve the productivity of his/her output against the input- engagement time and compensation. Productivity requires fixing up a measurable norm for every activity- the whole of the work as well as its elements. How much time and manpower is required to construct

  • a kilometer of road
  • or a housing complex
  • or to obtain an internet connection from the time it is requested to the time the consumer starts using it
  • or to build a power plant
  • or to lay down per kilometer of oil pipe lines
  • or to get a new product designed and developed

The local as well global standard or benchmarks achieved must be used for comparison and improvement. I cannot emphasise this point enough – Most of the productivity (cycle time, quality, cost, delivery time) improvements does not require huge capital investment. Sometimes it is even available freely or requires only proper utilization of budget already allocated and available. I could cite gazillion of examples from the industry on this subject.

However, what it does require is a different mindset to improve and innovate. It requires the knowledge of some simple management tools for all the team members that do not require high technical education to understand and use those effectively in workplace. Most importantly, it requires leadership to create an environment and work culture for improving productivity. Needless to say, India can attain the status of a developed nation only after it has resolved poor productivity numbers that seem to plague us

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