Organizational Performance Part 48: Understanding Productivity | Operational Excellence Quick Hits

In today’s session, we’re going to continue on the path of mindset change necessary to get breakthrough improvement in an organization, and today’s session’s going to be on understanding productivity.

A lot of companies we work with, we see a lot of people that are busy and they’re busy all day long, most times overwhelmed with what they need to get done, but are they really productive? So, that’s what we want to challenge today. Being busy is not synonymous with being productive. We think that it is, that people being busy is being productive, but let’s challenge that assumption.

So, first let’s define what is busywork. So busywork is an activity that is undertaken to pass time and stay busy, but in and of itself is adding no value for the customer. The customer, again, might be the next step in the process who you hand your work off to. I’m amazed in companies how many people don’t understand who their customers are. So first, we need to understand is who our customers, what are their needs.

It’s got to provide value. So, what is non-value added? Non-value added is activities that we do that don’t convert the product or service one step closer to what the customer is demanding, or it doesn’t add to the market form or function and is not necessary. These are activities that external customer are not willing to pay for. These are the activities that should be eliminated, simplified, reduced, or integrated.

How do we understand what is value added, what is non-value added? There’s a technique that we use, it’s called a standard work combination sheet where we start to look at what are the work elements being done in a specific process, and then we classify those elements, as I put it into three categories, is it value added? Is it necessary non-value added? These are things that are necessary, but can’t be eliminated easily and then waste. Definitely we want to eliminate the waste. We want to reduce the necessary non-value added steps as much as possible, and of course we don’t want to focus on the value added.

By doing this analysis, you’ll be able to look at the work and understand the activities that are being done and what percent of them are actually converting that product or service one step closer, and what you’ll find, it’s a very small percentage. So even though the people are busy, the value added is what’s really important, and we typically see that that’s a really small percentage.

So, there’s great opportunity to improve productivity just by eliminating the waste in those necessary non-value added steps. If we can do that, the value added becomes a much higher percentage, and of course we eliminate all this time in the process making the people more productive. So, this is a great tool to start documenting those steps.

So, what is productivity? It’s a measure of effectiveness of a resource converting inputs into useful output. So again, useful is what the customer needs. It starts with defining the necessary and sufficient inputs as defined by the next step in the process. We start with the customer and say what are the needs of the customer? What do they see as value? Those outputs from the process need to create those inputs for the customer. So again, the output of one process is the input for the next step.

We work backwards through the supply chain saying what are the needs? What’s necessary? Are they sufficient? What are the needs? Are they necessary? Are they sufficient? We work backwards through the process, eliminating those things that aren’t necessary and are not required by the customer or the next step in the process.

What are the contributors to lost productivity? So, we see a lot of things such as lack of sufficient problem solving skills, reactive decision-making. So we’re getting interrupted throughout the day because of problems, and we’re just making decisions based on our gut feel or some reaction. Incapable or unstable process, which is contributed by poor work instructions or lack of work instructions or people not following work instructions. Lack of ineffective training, bad multitasking, so moving onto one task before completing another task. Ineffective or too many meetings and creating data or reports that are not utilized. These are a lot of contributors that we see in organizations.

That’s our session for today. When someone’s productive, that means that they’re converting tasks of what they’re doing into value added elements for the next step in the process. If they’re not value added activities, then we need to eliminate them.

Next session we’re going to talk about managing workload, and the belief that many organizations have is that earlier that work has started, the sooner it’ll be completed. We’re going to challenge that one in our next session.