Productivity – output per unit of input – is one of the critical concepts in economics. It measures how much people, companies, and countries can produce with a given set of land, labor, capital, and technology.
One economist described the concept's importance this way:
Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.
In his famous book Out of the Crisis, Dr. W. Edwards Deming outlined fourteen points that organizations of all sizes could use to increase output per unit of input.
Productivity is often thought about as a math problem – Xs and Ys – but I appreciate Deming's focus on leadership. It turns out that, with the right leader, people can spend less time on unnecessary audits, performance evaluations, and other soul-sucking tasks.
Deming's principles, listed here, are from a different era but withstand the test of time:
- Create constancy of purpose for improving products and services.
- Adopt the new philosophy.
- Cease dependence on inspection to achieve quality.
- End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier.
- Improve constantly and forever every process for planning, production and service.
- Institute training on the job.
- Adopt and institute leadership.
- Drive out fear.
- Break down barriers between staff areas.
- Eliminate slogans, exhortations and targets for the workforce.
- Eliminate numerical quotas for the workforce and numerical goals for management.
- Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
- Institute a vigorous program of education and self-improvement for everyone.
- Put everybody in the company to work accomplishing the transformation.