Replying to LO29354 --
Greetings Alan and group,
On Fri, 18 Oct 2002 22:06:28 +1000 Alan Cotterell said:
> Terje, I think it's important to clarify why you would want to measure the
> productivity of individual workers. If it is for the purpose of
> controlling their activities, it is a pointless and cynical exercise.
> Any organisation worth its salt understands the TQM concept and that
> productivity from a team can be much greater than the sum of the
> productivities of individual members. Team members must be free to
> interact, and I suggest managers should rely on peer group pressure to
> ensure that each member 'pulls his or her weight'. If the team is
> genuinely empowered the manager should be effectively redundant.
>
> If productivity is to be measured for the purpose of rewarding the team,
> the measurement can be based on the ratio of total value added (profit?)
> to wages bill, for a given period. This is provided there has not been a
> major investment in plant or equipment (which causes an aberration to the
> calculation) during the period..
>
> Best Regards,
> Alan Cotterell
Greetings Alan,
I appreciate and pretty much agree with what you are saying. I never said
anything about rewards or control in my mail at all. The issue I was
concerned about is how to increase KW productivity. I felt that the best
way to do this is to look at how it can be measured theoretically - this
helps one to direct ones thinking. I think I also implied that this
formula cannot always be used practically, but only as a point of
reference for thinking about productivity. It cannot be used practically
always because in KW quality has a great deal of variability. Also, higher
quality (number of qualities or value) is not always better, but depends
on the situation at hand (e.g. what the client needs and wants.)
If measurement is done (i.e. numbers calculated) it should be done for the
purpose of productivity improvements as a coaching or self-help tool, not
rewards. There are a few exceptions that need to be made though
occasionally, such as salespeople.
The problems with measurement based rewards are:
1. People are motivated primarily by promises of short term rewards. The
time discount function is very high. That is, if you give someone the
choice between 10 dollars for doing task A, or 100 dollars one year from
now if he does B, chances are he'll do A. This makes for myopic decision
making.
2. Long term rewards have greater uncertainty, this makes the discount
function even steeper.
3. Measurement based rewards are often easy to manipulate.
4. The motivational drives and priorities you like the measurement based
rewards system to drive today is unlikely to be the same tomorrow. You are
forcing a dead motivational structure onto an evolving organization - not
wise.
5. Measures usually give a highly fragmented view of performance. If you
choose quality you ignore cost, if you choose cost you ignore quality, if
you choose cost and quality you ignore revenue etc. The most holistic
measure is profit of the whole. That is why it is the best measure for
rewards if any is to be chosen.
What I have said about measurement based rewards also applies to
measurement based judgement/ ranking. As you implied, the team knows best.
Measurement is, however, a powerful learning tool, it allows you to be
crystal clear about what you want to achieve. Helping people see their
relationship to relatively holistic measures, such as profit (even if they
are not calculated) should be a basic management task, related to the
question "how do I add value?" and "how do I produce more of it?"
OK, OK, before Andrew or Chris jump all over me ;-) , let it be said, that
profit as a measure, without being weighed in the scale of good versus
evil and Short Term vs. Long Term is not holistic at all, but I am trying
to be brief...
Terje
--"Terje A. Tonsberg" <tatonsberg@hotmail.com>
Learning-org -- Hosted by Rick Karash <Richard@Karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>
"Learning-org" and the format of our message identifiers (LO1234, etc.) are trademarks of Richard Karash.