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Productivity Chain…The Rules of Human Productivity

Written by : Tom Davis
2008-04-15
While hundreds of thousands of financial experts, economists and investors, around the world, anxiously watch declining unstable stock markets it appears that few appreciate how the rules of human productivity enter into the equation. The fact is, human productivity is key to creating the wealth necessary for sustainable growth. Ignoring its significance, in favor of radical unsustainable wealth building concepts, has cost North America over three million manufacturing jobs in recent years. Just as important, it has created instability in global markets that has placed the future prosperity of North American workers at high risk.

Explanation: The emergence of a global marketplace, new suppliers, new labor forces and shifting markets, for both products and services, has inspired employers to restructure their operations in order to compete. This means obtaining the most suitable workforce to produce its products or services. Manufacturing and the availability of natural resources is directly linked to the level of wealth/prosperity in a region. Regions without natural resources must rely on manufacturing or services that support manufacturing growth, to deliver regional wealth.

Restructuring has caused many employers to shift work to different cultures throughout the world. In order to maintain a certain lifestyle, countries such as the USA have encouraged other means of creating wealth outside manufacturing. In doing so, they have attempted to circumvent the rules of human productivity. An example of four major attempts to create new wealth have resulted in fiasco:

1. Savings and Loans (Early 90s)
2. Dot com (Late 90s)
3. Fabricating results e.g. Enron, Nortel, Worldcom etc. (2000)
4. Sub-prime lending (2007)

Each of these attempts provided short-term prosperity followed by a reduction in regional wealth and trust. The most recent, sub-prime lending, has impacted investors globally and therefore negatively impacted global trust in American investment opportunities.

Most experts now believe that the USA is in a recession. When this occurs people look to history to get a feel for what to expect. One of the points I really want to get across is that you won't find an answer to this recession in history. In today's global market place, business owners don't have to locate in America. Americans are in uncharted waters.

Last week I was talking to the UAW about a plant closure in Rockford Illinois and discovered there were three more plants under the same employer in bankruptcy…one in Sterling Heights Michigan, one in Toledo Ohio…one in Newark Delaware. The same fellow told me that six more closures were happening this week. In Canada, it's no different! Last week an automotive plant closed in Kitchener Ontario, yesterday an automotive plant in Guelph, producing automobile frames, announced its closure putting 1200 out of work and a Dell Computer call center with 1000 employees closed in Edmonton. Some of the employees in Edmonton were being sent to the Philippines to train their replacements. General Motors announced today that they are taking a 35 billion dollar loss to pay off their current employees and hire a new workforce at half the wages. This will impact everyone in America as the domino effect takes place. One of the reasons we're here today is because modern technology gives us an opportunity to fight back…cutting wages in half is not the answer. It's not the answer for GM and it's not the answer for you or me. There is an answer. The answer is in the Productivity Chain™, the roadmap for the Rules of Human Productivity.

Productivity is the factor that is at the core of economic success and stability. Ignoring the human element can lead to societal collapse. To help appreciate this human factor it is a good idea to review the Productivity Chain™ and how it relates to culture, wealth and society.

In order to appreciate the Productivity Chain™, read it from right to left. Productivity is a result of LEARNING skills/competencies, behaviors and attitudes. Skills and competencies are normally developed by instruction and practice while behaviors and attitudes are more often the result of conditioning. It's the kind and percentage of EFFORT that is applied to the skills, behaviors and attitudes that determine the final productivity. A workforce can deliver collective and/or cooperative effort. Behaviors and attitudes can assist or restrict the level of EFFORT. The level of cooperative effort is directly related to the level of quality. The level of cooperative effort is calculated at 100% less the amount of restrictive behaviors and attitudes. Some cultures rely on obedience while others rely on CHOICE/BUY-IN. Obedience will drive collective effort, which is a requirement of volume, CHOICE and BUY-IN relate to cooperative effort…the key ingredient of quality. TRUST is a key element of both collective and cooperative effort. Transactional trust applies to trusting the message. Mutual trust applies to trusting the messenger. Homogeneous workforces are generally easier to manage because of the similarity in behaviors and attitudes. The inspiration or driver of the quality component of the chain is good communication. Good communication is the basic requirement of mutual trust and cooperative effort.

Quality is a significant part of employer competitiveness, growth and employee wealth. The larger links, in the chain, are the pivotal points of quality. For maximum quality, all four large links must be a part of the culture whereby behaviors and attitudes play a key role in the level of quality. Each of the large links has a unique characteristic that makes them effective. The communication link, in front, must be nurtured…not taught. (Teaching and training are a part of learning.) For quality, trust must be mutual…not transactional and effort must be cooperative rather than collective.

>Employer Competitive Culture Needs

In a global marketplace, employers must consider a number of factors in order to determine the most suitable workforce for its business. The primary factors in the decision are the potential for growth, commitment/stability level of the government, quality level required in the product or service and the available skills of the local workforce. Profits and stability generally go to employers that appreciate and act best on these characteristics. Once a business is established, employers must focus on the quality component in order to protect their competitiveness. Otherwise, a less expensive or more stable workforce, elsewhere, can replace the collective effort.

Workforce Competitiveness Requirements

Employee Competitiveness is more significant in some sectors than others. Resource sectors are generally restricted to availability of skills in the resource region while other sectors such as manufacturing and services can be more flexible depending on the product or service being provided and the overall target market. There is a direct relationship between cooperative effort, learning, quality, compensation and lifestyle. Greatest wealth generally goes to workforces that produce the highest levels of quality.

Cultures

Diversified: Diversified workforces often have difficulty achieving a high level of cooperative effort. Cooperative effort is the key ingredient of quality. This generally occurs through historical factors whereby certain ideologies have limited or discouraged the acceptance of other ideologies. Nurtured communication encourages the necessary understanding to build the mutual trust necessary for cooperative effort.

Diverse/Self-centered: Usually found in urban centers throughout North America. Self-centeredness adds an additional challenge to diversity. The workforce itself can vary from highly skilled to unskilled depending on the product or service. It is generally a difficult workforce to manage because there is strong focus on individual worth and personal development. Self-centeredness is often exaggerated by a high percentage of family units that are in disarray. The disarray causes offspring to develop undesirable behaviors and attitudes prior to entering the workforce. These undesirable behaviors and attitudes interfere with cooperative effort and often react negatively towards diversity. Studies show that the trust levels are usually very low in these workplaces (20 to 30% depending on sector and size). The lack of trust produces a weakness in the buy-in factor that is reflected in employee engagement studies (14% are actively engaged, 21% actively disengaged and 65% considered not engaged). Many workplaces have a bicultural situation that includes labor unions. Unions often create an additional cultural barrier made up of negative behaviors and attitudes and this occurs because unions usually insist on communicating on behalf of employees. This type of communication interferes with a leader's ability to develop mutual trust. (An inability to maximize productivity/quality with these workforces, in a competitive global marketplace, has caused many employers to move operations or outsource work.)

Homogeneous: Homogeneous workforces are the easiest to manage. The trust factor already exists before employees enter the workforce. The key is to develop mutual trust as Dr. Kaoru Ishikawa did in Japan in the 1960s. A nation known for poor quality changed to one of high quality by adding nurtured communication. When Dr. Ishikawa added quality circles, a communication methodology, to Japanese management in the 1960s the benefit was realized overnight. Japanese employers became competitive in major (high ticket) manufactured products by an improvement in quality. By 1992, Japan became the number one asset holder in the world, surpassing the USA for the first time in modern history. The success of homogeneous workforces in Japan has evolved to a similar management philosophy in North America where Japanese auto makers generally choose locations in rural areas where they can attract a more homogeneous workforce and are less likely to run into diverse/self-centered problems.

Homogeneous Restricted: Restricted cultures are found in societies where ideological principles have encouraged obedience rather than openness. The most influential of these cultures, in recent years, is China. The workforce is well known for high volume at low cost. The quality is often lacking because the employees are not accustomed to communicating openly with each other. This lack of mutual trust supports "collective effort" rather than "cooperative effort." Such a workforce is limited to the manufacturing sector of high volume consumer products. On the other hand, homogeneous, educated workers with acceptable language skills, such as those found in countries like India, can provide a less expensive source of support services where value added sales and innovation are not necessary.

Summary:

There are four basic cultures in societies throughout the industrialized world. For productivity purposes, all workforces benefit from better communication, regardless of the culture. The most important factor is that the communication must be nurtured in order to improve the quality of the output. A good communicating workforce can compete and survive in any region, culture and/or sector while a poor communicating workforce has difficulty establishing the cooperative effort necessary to support the quality levels required for growth and sustainability. In the western world, the core of an organization's productivity is the relationship between employees and their direct supervisors...not the relationship between the employee and the employer. In societies such as Japanese, the core of productivity is the relationship between workers with less focus on leaders. Worth noting: Regardless of the culture, communication is the key to healthy relationships.

There are two known methods of successfully nurturing communication in the workplace. Quality Circles, developed by Dr. Kaoru Ishikawa in Japan and the Workplace Communicator® developed in Canada by myself. Both have been tested, measured and proven. The consideration for what works best in a particular culture relates to the ideologies of the community that cause the behaviors and attitudes of the workers. If workers are conditioned to choice, over obedience, the Workplace Communicator approach works best. If it is a homogeneous workforce conditioned to obedience, Dr. Kaoru Ishikawa proved it is possible to convert an obedient workforce to a communicating workforce. Japan may be a unique situation. The Japanese culture prior to Dr. Ishikawa introducing Quality Circles was one of respect combined with Buddhist/Shinto principles (95% of population). In simple terms, they understood each other because they were raised the same and were not discouraged to communicate openly. The common understanding and lack of restriction provided an excellent foundation for the mutual trust required for cooperative effort. Other homogeneous communities don't generally have these characteristics and therefore, should use the Workplace Communicator type of nurturing to develop the understanding necessary for mutual trust.

Remember: When Dr. Ishikawa added quality circles, a communication methodology, to Japanese management in the 1960s the benefit was realized overnight. By the early 90's the Japanese became the number one asset holders in the world.

Tom Davis is the President of TDG International Inc.

The Workplace Communicator has been measured and proven.

It provides a simple, efficient, tool for nurturing communication between a leader and his or her direct reports. It requires less than one-half hour of employee time, twice per year. Among a number of unique features is the online coaching support, for the leaders, that is tailored to each individual employee's behaviors and attitudes.

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