The Productivity Conundrum

While sipping coffee in the cafeteria of an mid-sized organization I visited some time back, it was interesting to see the number of people out there. I observed the occupancy at different times of the day, excluding the lunch hours of 1200-1500 hrs, when of course most of the employees would be in the cafeteria. Nevertheless, it appeared that in the time period of 0900-1200 hrs and 1500-1800 hrs, at any given point in time, there were roughly around 400 people in the cafeteria and its surrounds. I could not resist the urge to do some back of the envelope calculations and ponder about some productivity issues that would be faced by organizations.

The annual time spent by the employees at the cafeteria would be:
400 persons x 6 hours/day x 250 days = 600000 person hours = 600000 / 8 = 75000 person days

Assuming that around 50% of this time is required for having food and general socializing, it translates into 75000 / 2 = 37500 person days not accounted for.

In other words, 37500 person days / 250 days per year = 150 persons per year were hired in a non-productive fashion. For a company size of about 3000 persons, it means about 5 percent of employees were hired for nothing.

Of course, numbers do not tell the whole story. But then, do they, at least point towards something more meaningful for appropriate management action?

The typical layman’s response could be that employee strength is re-evaluated and adjusted for this non-productive number. However, that would be catering to the symptom and not the cause. The important questions that need to be asked and answered are:

- How best can this free employee time be utilized in areas like training and development, internal projects that address current issues ?
- Why were these persons hired in the first place?
- What assumptions were made earlier that are not relevant now?
- Is it the result of the current organization structure and the processes followed?
- Does it require an assessment of the new business realities and responding to them in a holistic fashion, rather than a simple employee count reduction?

Abstract Business Problems and BPM

The principles of Business Process Management (BPM) can lend themselves beautifully to solve abstract business problems. The methodical rigor it propounds can help in providing good objectivity and quantification to an abstract and subjective problem, provided. As an example, let us consider a case of a company having very low employee motivation resulting in high employee turnover and poor performance issues without having much clarity on the reasons for the low motivation. The essential method of applying BPM principles is briefly outlined here.

Step 1: Define the problem statement: Objectively address the problem of low employee motivation using the principles of BPM

Step 2: Identify the business processes impacting employee motivation. e.g.

• Training and development (adequate, timely, regular)
• Remuneration (as per industry standards, performance based)
• Career roadmap (clarity)
• Performance appraisal (transparent, interactive, fair)

Step 3: Gather objective responses from the target employees on how good or bad are the processes and actitivies being performed by the designated roles. Analyze each individual impacting process, its activities, evaluation factors and and their current state.

As an example, if we consider the training and development process, its evaluation factors and their current state findings could be on the lines of something like:

• Regularity (irregular, no clarity in training program schedule)
• Appropriateness (lack of appropriate training that is relevant to job)
• Adequacy (Inadequate in both volume and expertise levels)
• Timeliness (Not conducted when required for the job)
• Formal / Informal (Informal trainings that lack professional expertise)
• Mentoring (lack of mentoring and guidance)

Step 4: Carry out appropriate checks against each finding. Some BPM driven analytical questions that could be asked for the training and development area could be:

• Is there a formal updated process laid down for appropriate training and development of employees for each component?
• If no, it implies a high amount of arbitrary decisions being taken in that area. There is a starightforward need to define the organization wide processes
• If yes, then further investigate to what extent the process has been followed at an individual activity level.
• Identify each occurence of deviation versus adherence to the process, its individual activities and the roles and then aggregate the results. This would help in isolating that activity - role combination which is not performing as per the process standards.
• Collate the resulting data for further cause - effect analysis. Graphs, charts may be used for visual analysis as well.
• Applying proper weightages to each area can also help rate a process using a numerical score.

Step 5: Repeat the actions for all processes, activities and evaluation factors and then identify the process - activity - role shortfalls.

Step 6: Study and synthesize the findings from each process area and take corrective action. Corrective action may also include designing improved / new processes.

The data collection can be easily done by asking the target employees to respond anonymously to a comprehensive questionaire and obtaining objective feedback on how well were the process and its activities followed for each of the evaluation factor. Modern IT tools are readily available to do the analytical number crunching part.

Thus, the focus on and use of business processes and activities helps to build objectivity in an otherwise subective area. The method may seem to be tedious, but can work very effectively in generating objective data. What remains upto the business manager is the initiative to conduct such an analysis and take appropriate corrective actions. :)

Recession, Cost Cutting and Employee Motivation

, mThe recession prevalent for the last almost two years has reportedly been the prime reason where companies across all sectors have resorted to a slew of cost-cutting measures which include sales of assets, travel freeze, employee layoffs, freeze on salary increments, and many others.

No doubt most of these measures are crucial to the well being and indeed the survival of some companies. Companies have gone ahead and updated their corporate policies and implemented the same to safeguard the interests of the shareholders. Unfortunately, the employee as a principal stakeholder is sometimes ignored. There are some peculiar instances where employee related austerity measures fail to withstand the the test of common sense and logic.

As a suitable backdrop for this discussion, let's look at an imaginary representative software services company that has say a annual revenue base of around Rs. 1000 cr with an employee strength of 6500 persons. Lets assume, the salary expense come to about Rs. 550 cr and the PBDIT is about Rs. 250 cr. Lets further assume that this company does not reduce some of its manpower (500 persons) due to performance issues and a reduction in business opportunities. It also announces a freeze on any increments for the two years and a sizable cut in the variable pay of the employees as well.

Now that the economy is looking up, and the stock markets have risen consistently for about 7-8 months, the company is upbeat about the future. The company also maintains and thanks the employees for standing by it in trying times. It also announces employee oriented qualitative measures. But, at the same time, the company maintains the need for continual of the austerity measures in view of a possible economic downturn. The employees are, however, not so upbeat due to rising inflation, the continued freeze in salary increments and cuts in the variable pay. And obviously the employee motivation levels turn dangerously negative due to a seeming lack of congruence in the words spoken and the deeds performed.

Assuming the company's reading about the uncertain future is valid, is there anything that can be done at all to boost employee motivation and confidence? Let's evaluate one possible measure and its impacts, both financial and motivational.

Let's assume the company announces a one time cash reward of say an average Rs 15000 per employee. What is the impact?

1. Financial Impact:
Increase in salary cost = Rs. 15000 x 6000 employees = Rs. 9 cr
Therefore, percentage increase in salary cost = (Rs. 9 cr / Rs. 550 cr) x 100 = 1.6%
Percentage decrease in PBDIT = (Rs. 9 cr / Rs 250 cr) x 100 = 3.6 %
Considering the hardships faced by the employees in terms of rising inflation and other factors, this one time extra cost is quite manageable and even negligible to some extent.

2. Motivational Impact:
The motivational impact obviously is difficult to gauge in numbers, but such a step would build up a substantial positivity in the employee. First and foremost, it bridges the credibility gap between what is said and done. It also sends a correct message regarding the future uncertainty, business austerity and the concern it has for its employees. A cash reward of Rs. 15000 though not comparable to the expected salary increment, is substantial enough to gain the lost employee confidence and morale. With the potential increase in employee positivity and motivation, the corresponding impact on overall business operations and objectives would definitely be far reaching.

To put it concisely, it is well upto the company management to think of such bold innovative steps that augur well both for the organization and for the employees as well.