Productivity : A Competitive Tool
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Authors
Authors: Pradip Sinha, Sadhu Ramakrishna
Associate Consultant, Research Associate
ICMR (IBS Center for Management Research).
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The Competitive Edge Contd...
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There are several companies which put themselves into trouble by mixing their strategies and tactics together. In productive companies, the goals to be achieved by a particular group of people are kept very simple and easy to understand. It is the employees who have to perform; if they are confused and not clear of what exactly they have to do, they will not be able to give their 100% to the job. It is this power of simple and clear objective which made Ikea, a Swedish furniture superstore chain, achieve 50% more profit per employee, that too, in the low-margin discount furniture business. It is the power of this simplicity which enabled the New Zealand-based warehouse chain of discount stores to score over the world's No. 1 retail, Wal-Mart, on many different counts. Focus is vital for profit maximization. However, many corporate leaders today lack this attention to focus. Kmart, the US retailer, went bankrupt due to its management's inability to focus on its core competencies. Other major firms which collapsed due to lack of focus are: Arthur Anderson, WorldCom, Enron, Xerox, to name a few. Any organization which complicates its business by concentrating on needless issues tends to lose its focus and purpose in the market, which negatively affects its production, and thus the business as a whole. |
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Managing your employees is an important aspect in increasing productivity. It is only when a company manages to get its employees focused towards a particular goal that it can think of obtaining more with less. Openness to the company's goal or mission helps in achieving the purpose more easily. The organization should be transparent with its ideas, goals and expectations from its employees. It is this openness which made Yellow Freight, the world leader in transportation services. This is what made SRC holdings, a diversified manufacturing holding company, post 15% growth each year, irrespective of the slow growth rate in the industry.
Gillette also achieved the tag of the most innovative company in the world
because of its approach to offer the customers innovative products. Moreover, it
is this openness towards its employees which made Nucor, a major steel producing
company of the US, one of the most efficient steel producers in the world for
decades.
One should encourage suggestions from the bottom line of the workforce. One need not be amused by this idea, for the quality of their suggestions can improve the firm's productivity. Openness can go a long way in improving productivity and the most productive companies have this distinct competitive advantage from their rivals. It has been observed that in many companies when revenues go up, bureaucracy too follows. Bureaucracy in any sense and form is always a bad sign for the firms, as it complicates and paralyzes the organization. Complexity usually crushes the flexibility of the firm and this further becomes a hindrance to change. So, there is no place for bureaucracy in productive companies.
Change is inevitable and that is applicable here also. Productive companies are
always willing to change their strategies and tactics according to the changing
needs and demands of the customers. For them, continuous improvement and a
dedication to becoming more efficient day by day, is a way of life.