In service business, the biggest constraint is optimization of resources. A hospital needs to ensure the availability of doctors, nurses, medicines, beds, operation theatres etc. based on the patient’s demand. A restaurant needs to effectively manage their food supply, attendants and even availability of tables to meet their customer demand throughout the day. A maintenance team in an organization to ensure availability of engineers, spares and tools to cater the needs of their internal customer. The list goes on like this. If we look at closely the above examples, the effectiveness of a service business, which differentiates from its competitors is how they are handling resources effectively to meet the customer demand. We call it as Productivity.
What is Productivity?
Productivity is a war on waste and inefficiency ; it is a way of life and an attitude of mind; it is a constant and continuous effort at improving things; it means motivating people to do things better. Productivity is calculated by dividing output by input.
For example, imagine a restaurant handles 100 customers every day with 10 attendants and 10 tables available for serving; if the same restaurant managed to serve 125 customers a day with the same resources (tables and attendants) the productivity of the restaurant increased up to 25% from its current margin. Do not confuse production with productivity. Sometimes you need to stress your employees, machines or other resources to work extensively for meeting the demand of the business. In this case you might achieve more, but the output is increased the production and not productivity. Productivity is achieved by techniques; sometimes higher output is achieved with the same inputs or same output is achieved with reduced inputs.
How to Measure Productivity?
Productivity measurement forms a basis for planning, evaluating and taking appropriate measures for improving productivity at various levels, contributing to more business growth. We tend to measure the productivity in terms of labours, it means how many products a labour produces per day and how many entries a labour makes per day decides the productivity. The concept of labour productivity has created the impression that in order to obtain higher productivity it is necessary to stress the labours or employees. This view of productivity should not be allowed as it would hamper the growth of productivity and productivity movement. It should be made as a business policy statement that productivity increases must be achieved with methods and means best suited to individual business needs taking into consideration the maximum utilisation of available labours and employees.
How to Increase Productivity?
Almost, all the organisations, who have achieved productivity is achieved through implementing ‘quality in management’ which gets better results. The methods adopted by them are simple, clear and quick.
The implications of good management for increasing productivity in service business can be listed as below;
Training of its personal in a special skill both within and outside the firm.
identify the appropriate talent within the organization and train it and give it the right kind of experience and promote.
Utilisation of resources effectively
Utilisation of machinery including maintenance materials, manpower and other utilities in productive process effectively.
Planning of all operations to secure the smoothest and fastest flow through all the productive process.
Close and continuous pressure for greater standardization, simplification and specialisation of components or processes and of end products.
The leader of service business has the primary responsibility for increasing productivity also have the responsibility for motivating his employees and seeking their cooperation for increasing productivity.
Reference: Productivity and economic growth – a management guide by M.V.V Raman.