Productivity of white-collar worker is no less important than that of direct labor or manufacturing employees. Indeed, in terms of numbers and expense, non-production employees outnumber production employees by a wide margin. Yet the problem of measurement of output is more elusive. Measuring the units assembled per man-hour is not too difficult, but how many reports should an accountant prepare, not to mention the most difficult of all measure–managerial productivity.
Peter Drucker tells us that it is usually the least known, least analyzed, least managed of all factors of productivity. Research has shown that white-collar employees are productive only about 50 percent of the time. The remainder is non-productive time and can be traced to personal delays (15 percent) and improper management (35 percent). Cause of wasted time include:
- Poor scheduling
- Slack start and quit times
- Lack of communication between functions
- Information overload
- Poor staffing
- Inadequate communication of assignments
- Unproductive meetings and telephone conversations
Measuring the Service Activity
Although the manufacturing worker (one who physically alters the product) has been measured for decades by time standards, time studies, and work sampling, it is not easy to set standards for the non-manufacturing employee or the service activity. It is unlikely that measurement can be achieved in the same way as is done for the manufacturing worker. Nevertheless, a system can be devised to describe the productivity of an activity at a point in time and then provide a baseline for judging continuous improvement over time. The system is particularly appropriate for multi-plant or multi-divisional companies with similar products or services and for individual companies within an industry.
The basis for a system of measurement starts with the existing functions and activities of the organization. Each activity is a subset of a particular function. For example, the activity of recruiting is a part of the human resource function, accounts receiveable is a part of the accounting function, and so on. The typical organization may identify a hundred or more activities that can be grouped into ten or more functions.
The next step is to identify the output indicators that “drive” the activities or cause work in the activities. In other words, if it were not for the work caused by or resulting from indicators, there would be little need for the activities. If for example, there were no personnel employed, there would be no need for employee relations. If there were no purchasing, there would be no need for vendor invoicing. The resources utilized in the activity of vendor involving are therefore a dependent variable of the purchasing function. In other words, if activities are “input” in the productivity ration of out put to input, then the indicators are the “output.”
Source: Total Quality Management, Second Edition by Joel E.Ross