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VOLUME ONE • ISSUE 8

Official publication of Productivity SA

The key to good leadership Employee recognition promotes productivity Agriculture productivity


contents

contents

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CEO’s desk Ed’s note Letters to the editor Pan African Productivity Association selects new board Agriculture Sector Productivity Construction Sector Productivity A bid to boost the manufacturing sector Employee recognition and increase in productivity

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The impact of Leadership on Productivity

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Productivity Enhancing Measures for South Africa

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Barriers to Productivity in the Workplace

Public Holidays and Productivity The Importance of goal alignment Continuous improvement Mining in South Africa Organisational Structure and Productivity Growth

Case Studies • Messina Verpakking (Pty) Ltd

Productivity SA CEO: Bongani Coka

Senior designer: Joanne Brook, Isikhova Publishing

Productivity SA Executive Manager: Rebecca Phalatse

Tel: 011 883 4627 • Email: joanne.studio@isikhova.co.za

Editor: Maupi Monyemangene Email: maupim@productivitysa.co.za Contributing writers: Faranaz Janodien, Keneuoe Mosoang, Maupi Monyemangene, Manuel Netili, Mokgadi Mahlakgane, Motlatsi Gabaocwe, Mudzunga Mashamba, Peet Dorfling

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Photography: Productivity SA and Photos.com, a division of Getty Images Productivity SA

Project co-ordination: Charlene Pillay, Isikhova Publishing Tel: 011 883 4627 • Email: communications@isikhova.co.za Printing and reproduction: Burlington Dataprint All correspondence should be addressed to the Editor, Productivity SA, Reg no 1975/00044/08 All rights reserved. No part of this publication may be produced, adapted, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of Productivity SA.

Physical address: International Business Gateway, Midrand, cnr New Road and Sixth Road

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The views expressed in this newsletter are not necessarily those of the publishers or its agents. While every effort has been made

Tel: 011 848 5300 • Fax: 011 848 5555

to ensure the accuracy of its contents, neither the owners nor the

Email: info@productivitysa.co.za

publishers can be held responsible for any omissions, errors, or for

Website: www.productivitysa.co.za

any misfortune, injury or damages which may arise therefrom. The same conditions apply to any advertising in the publication.

Publishers: Isikhova Publishing & Communications (Pty) Ltd Postal address: PO Box 651793, Benmore 2010 Tel: 011 883 4627 • Website: www.isikhova.co.za

ISDN 1018-7227


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CEO’s DESK

CEO’s desk For those of us who tend to make resolutions at the beginning of each year, it may now seem like an eternity since we made a pledge to improve various aspects of our lives in 2014. Entering into the second month of the year, we may have already forgotten some our resolutions as we ease into workplace. Perhaps given the fact that we live in a world whereby we are constantly engaged in various forms of media, time seems to just pass us by. From the minute we wake up, we are besieged by a flood of messages. From the morning news, the massive billboard that glares at you every day and the consistent beep of your mobile phone, today‘s communication savvy world means we are constantly preoccupied. It is hard to believe we are already trudging halfway through the month of February. As we ponder the pace of modern living and enter into 2014, Productivity SA would like to take this opportunity and welcome you into the New-Year. Productivity SA is of the firm belief that in order to address social ills including the high rate of unemployment; South Africa has to constantly improve its productivity and competitiveness. In results released by the World Competitiveness Yearbook (WCY) 2013, South Africa scored a lower ranking in its overall competitiveness. In the 2013 report, South Africa dropped three places from its previous ranking of 50 in 2012 to 53 in 2013. The yearbook is published by Switzerland‘s Institute of Management Development (IMD). The WCY ranking is an annual report on the competitiveness of selected countries and is recognised internationally as the leading survey of competitiveness between nations. The yearbook rates the ability of over 60 industrialised and emerging economies ‘to create and maintain an environment that sustains the competitiveness of enterprises’. Country data is evaluated through distinct criteria, grouped into four competitiveness factors: government efficiency, business efficiency, economic performance and infrastructure. It is envisioned that the South African economy should expand by at least 3.5% for 2014. Without an inkling of a doubt this is a tall task for the country. In order to up its competitiveness the country has to experience exponential growth in its productivity levels. This is where government organisations like Productivity SA come to the fore. Productivity SA is an organisation dedicated to the development and enhancement of South

Africa’s productivity and contributes to socio-economic development, competitiveness and ultimately the general improvement of the quality of life of all South Africans. The organisations key objectives are to create productivity knowledge and awareness, skills development and accelerated productivity, second economy productivity interventions, industry sector collaborations and strategies, turnaround solutions for companies, and labour-management collaboration. I would like to make a call for companies that may require Productivity SA to contact us. As Schedule 3A government entity, Productivity SA is strategically positioned to assist industry through its productivity improvement programmes. Productivity SA discharges its responsibilities through long standing programmes that focus on research, providing information, training, and facilitation, advisory services, auditing and monitoring productivity issues. These programmes engage South African productivity issues at all levels, from the teaching of productivity awareness to school learners through to sophisticated best practices models designed to boost the efficiency of private and public enterprises. The three key programmes are namely Turnaround Solutions (TS), Workplace Challenge (WPC) and Productivity Organisational Solutions (POS). The TS programme aims to provide technical assistance to different organisations and companies to increase productivity, profitability and service, as well as to save and retain the current jobs. WPC is a 24 month programme that aims to add value to the South African economy. Since 1995 the programme has helped more than 250 companies, employing more than 50 000 people. The WPC actively encourages and supports change in the workplace to improve company performance, productivity and job creation. The POS programme focuses primarily on the development and training of Small, Medium and Micro Enterprises (SMMEs).

Bongani Coka CEO: Productivity SA

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Ed’s note

Ed’s note With the festive season behind us, we have once again woken up to the reality that it is time to hit the production line and move towards the improvement of the country‘s competitiveness. While the festive season may have given us a false sense of eternal holidaying and festivities, the reality is that the holidays ultimately seem to be quite short. For most employees, the festive season represents an opportunity to enjoy a well-earned rest and also reap the rewards of good performance through incentives such as bonuses. On the other hand, for some employers, the period may represent a time of low production and may not be so welcome. We usher the first edition of Productivity SA Leader for 2014 with an article that looks on the impact that public holidays may have on productivity levels. On Page 13 Executive Manager, Value Chains and Competitiveness, at Productivity SA, Mr Sello Mosai, gives an overview of the cost of public holidays and the value of public holidays. The article provides an objective analysis on the Pros and Cons of public holidays and also gives a global view. The common goal shared by most if not all companies is the overwhelming desire to be successful. What is it that makes companies stand out amongst their peers? On Page 12 Change Facilitator at Productivity SA, Faranaaz Janodien, says successful organisations have one thing in common - good leadership steering the organisation in the right direction. Often these leaders are coaches and mentors that invest a lot of time in their employees. Excellent leaders focus a lot on developing their staff and creating an environment where people want to perform. Pioneering leaders take a personal interest in what makes each staff member unique and ensure they harness employee strengths and develop their weaker areas. We live in a competitive world. A leader today may be a follower tomorrow. If you stand still, you will be left behind. You are either getting better or worse. Thus the Japanese business philosophy of Kaizen, which essentially means (kai) “change” (zen) “good.” The inherent challenge for change becomes making that ‘good change’ continuous/ continual in nature such that you ensure that those “goodchanges” are sustainable. On Page 05 Chief Economist at Productivity SA, Keneuoe Mosoang gives us a peek into productivity within the agriculture, forestry and fishing sector. Mosoang says real output in the agriculture, forestry and fishing sector recorded an increase in the annual growth from -0.1 percent in 2011 to 2.9 percent in 2012. The labour input growth improved from -3.7 percent in

2011 to 7.2 percent in 2012 accompanied by a decline in labour productivity from 3.7 percent to -4.1 percent in 2011 and 2012 respectively. We round off this medley of productivity articles with a look at the recent signing of a memorandum of agreement between The Manufacturing Accelerator Programme (MAP) and Productivity SA to revitalise the South African Manufacturing Industry by implementing the MAP programme in manufacturing companies. The memorandum provides a framework for cooperation between Productivity SA and MAP, with the view of sharing information and best practices in manufacturing, as well as enhancing the effectiveness of the two entities. In addition they will jointly pursue opportunities for manufacturing businesses’ productivity and competiveness improvement and assist them to become world class players. Enjoy the read.

Maupi Monyemangene Editor maupim@productivitysa.co.za

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LETTERS

Letters to the editor Dear Editor I take this opportunity to thank you for an informative Productivity SA Leader magazine. I found Volume One Issue 7 very interesting. The articles that were covered shed a lot of light on issues related to productivity. I specifically found the article on Productivity Accounting on Page 08 particularly informative. Regards, Name withheld

ness around Productivity SA business and educate business, labour and government decision-makers on the trends and developments in productivity. Productivity SA Leader aims to create awareness on Productivity SA programmes, inform and educate stakeholders on productivity issues. Your letter is an indication that we may be on the right track. In this issue we have a potpourri of articles that you may find quite interesting. Do be sure to read on and your feedback is always welcome.

Dear Reader Thank you for the positive comments. Productivity SA Leader‘s aim Productivity SA Leader‘s objective is to create aware-

Regards, Editor

Pan African Productivity Association selects new board The Pan African Productivity Association (PAPA) has selected a new board. The aim of the Pan African Productivity Association (PAPA) is to improve the quality of life of the African people through productivity improvement. The key objective that drives PAPA is the need to: • increase value added, productivity and competitive ness of the African Economies, • facilitate the improvement of productivity culture of people in Africa • mobilise all relevant stakeholders at national, regional and continental levels for addressing productivity more actively for socio-economic development of the African Continent. Speaking at the inception of the new board, The 1st President of PAPA, Dr Paul Bdliya, said Africa has undergone a lot of change. Citing an article titled “Africa the last frontier”, Bdliya outlined how Economist Chris Gilmour succinctly explained the economic change in Africa. In the article, Gilmour mentioned that the decade between 1990 and 2000, Sub-Saharan Africa’s real GDP growth in total was around 25%. In other words, between the beginning and end of that decade, Africa only grew by 25% in total. By comparison, the Asian newly industrialised countries (NICs) grew by 75% and the world grew by almost 35%. By the following decade, however, that had all changed. Between 2000 and 2010, Africa had grown by 85%, the Asian NICs and Latin America by 45%, the USA

by just over 20% and the Euro area a dismal 14%. Africa was the star performer and this view was endorsed in the Economist magazine’s supplement ‘The World in 2009’ which highlighted the fact that of the 10 fastestgrowing economies on earth in 2008, five were in Africa. Bidlya concluded by saying that as outlined in the African Union productivity agenda, Africa is endowed with abundant resources. However the relative inefficiency and ineffectiveness of the use of its resources is hampering its competitiveness and adversely affecting the capacity of the African Nations to deliver its social and human development in the framework of the Ouagadougou 2004 Declaration and Plan of Action on employment Promotion and Poverty Alleviation.

Above: PAPA coordinator Mokgadi Mahlakgane.

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NEWS

Agriculture Sector Productivity By Keneuoe Mosoang Recently, most areas of South Africa have been blessed with consistent rainfall. Often the irony that besets the country when the heavens open up is that high rainfall is recorded mostly in the metropolitan areas such as the Highveld that is Gauteng. Although the Highveld constitutes parts of the Mpumalanga, Northern Cape, North West, and Limpopo provinces, the northern Free State, and all of Gauteng, it is Gauteng that tends to get higher rainfall. Considering that 23% of Gauteng ‘s economic activity centers around finance, real estate and business estate, one would think the rain would pelt more in areas such as Limpopo where Proportions of provincial GDP (net of tax) in agriculture is 2.7%. In Gauteng proportion of provincial GDP (net of tax) in agriculture is merely 0.4%. However those are the ironies of life and as we usher in 2014 and South Africa looks to up its competitiveness, one of the areas to place closer scrutiny on is the productivity within the Agriculture, Forestry and Fishing Sector. Productivity within the agriculture, forestry and fishing sector real output in the agriculture, forestry and fishing sector recorded an increase in the annual growth from -0.1 percent in 2011 to 2.9 percent in 2012. The labour input growth improved from -3.7 percent in 2011 to 7.2 percent in 2012 accompanied by a decline in labour productivity from 3.7 percent to -4.1 percent in 2011 and 2012 respectively. The capital input growth annually of -0.5 percent in the year 2011 depleted further to -0.8 percent in 2012. The growth in the real earnings per employee dropped from a growth rate of 3.2 percent in 2011 to -6.3 percent in 2012. It was accompanied by unit labour costs that declined from 3.2 to 6, 3 percent in 2011 to 2012. This is reflected in a significant drop in capital labour ratio implying more labour utilisation in production. The annual growth rate of the capital labour ratio in 2011 was 3.4 percent and -7.5 percent in 2012. This implies good appetite towards labour intensive production supported by increasing labour input.

The ratio of real output to the stock of fixed capital used in the production, indicates how efficiently capital assets are being used in this sector. The best two performing years of capital productivity in this sector were in the year 2002 where an annual growth rate of 6.6 percent was registered. During 2012 capital productivity witnessed an annual growth of 3.7 percent, supporting the annual growth rate of 2.5 percent observed in real output. The Multi Factor Productivity (MFP) surprisingly declined despite the growth in output. MFP registered a decline in growth from 1.5 percent in 2011 to 0.9 percent in 2012. This anomaly can be attributed to the fact that output growth was initiated primarily by the expansion of labour input, rather than improvements in production methods. Although it is rather difficult to draw-up conclusions on the drivers of the sector productivity due to the fact that the sector’s productivity is also linked to land productivity, some comments can still be drawn based on productivity indicators. 1. A drop in productivity performance of the sector will impact other sectors negatively leading to a negative economic growth. 2. Casualisation of labour is on the increase in the sector, thus not providing a succinct employment picture. 3. The wage bill of farmers tends to indicate a significant drop that may be directly attributed to the casualisation of labour. 4. Farmers opt for inputs that are not too costly in order to increase their output. 5. Adoption of new technologies and innovation in the sectors is limited most probably due to limited investment in research and development. 6. The increase in output growth can mainly be attributed to the significant positive growth in labour input and a drop in unit labour costs Based on the figures as outlined, it is indeed pertinent for the country‘s productivity within this sector to continue on an upwards trajectory to enhance South Africa‘s competitiveness.

Keneuoe Mosoang is the Chief Economist at Productivity SA.

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NEWS

Construction Sector Productivity By Keneuoe Mosoang In the not so distant past, there have been luminous clouds hanging above the construction sector. Cloaked in the collusion scandal, the sector has somewhat seen its image tarnished. The construction sector came under fire from various quarters with the most visible being the investigation launched by The Competition Commission. In fact the government's statutory body tasked with the control and evaluation of restrictive business practices amongst others, The Competition Commission, reached settlement with 15 construction firms for collusive tendering, in contravention of section 4(1) (b) of the Competition Act and companies agreed to pay penalties of about R1.5bn. However it has not been all doom and gloom for the sector and a glimpse at the Productivity Statistics for 2012 indicate that real output growth in the construction sector has experienced a positive growth of 2.5 percent in line with the economic growth of 2.5 percent in 2012. The growth in the sector was accompanied by strong growth of 4.1 percent in capital input, 1.9 percent in labour input and 2.7 percent growth in real earnings. Whilst labour productivity as a result of increased investment into the sector improved by 0.6 percent, the growth in both capital productivity and Multi Factor Productivity (MFP) declined by -1.6 percent and -0.7 percentage points. The analysis of construction sector productivity needs to be set against a backdrop of a rapidly growing sector since 1993. During the first period (1993-1996) the best performing indicator in this sector was MFP recording an average annual growth rate of 23.2 percent, followed by labour productivity with an average annual growth rate of 7.5 percent. During the sector period (1997-2001) labour productivity improved recording an average annual growth rate of 9.9 percent whilst capital productivity declined recording an average annual growth rate of -4.8 percent. During 2005-2009 periods, labour productivity continued to show improvements recording an annual growth rate of 10.4 percent followed by MFP with annual growth rate of 5.7 percent. The trend showed that labour productivity and labour input growth were negatively correlated over the ten year

period, 2002-2012. Where labour input declined at an annual growth rate of -4.4 percent in 2002-2003, real output increased at the growth rate of 7.7 percent annually. This implied that the net improvements in labour productivity of 12.7 percent during this period could be explained by a drop in labour input and increase in output. Since 2007, Real output has been declining reaching the zero percent growth in 2010. However, 2012 suggested that the industry has turned the corner with indicators showing a weak but positive trend after years of negative growth. The analysis may paint a bleak picture of the construction sector productivity. The main reason that comes to the fore for this kind of performance is a range of macro pressures coupled with specific stresses in the building industry brought about by reduced building sector profitability. These were brought about by the effects of the global recession coupled with regulation that protects consumers from over indebtedness. The timing of the regulation and the recession lags the poor performance of the sector, thus suggesting a causal effect of these factors on productivity in the recent past. However, Labour productivity and multifactor productivity both performed better than capital productivity throughout the ten year period. The analysis of the productivity trend from 2002-2012 in the construction sector reveals that there was co-movement of labour and multifactor productivity with labour productivity trending higher followed by multifactor productivity. Although all productivity indicators have been moving together for the 10 year period, in the period 2012-2012, labour productivity growth (17.2 percent) was in excess of 10 percentage points in 2008 – 2009 than MFP (7 percent) which reached the highest point over this period. There are a variety of possible reasons for this. The results suggest that there may be issues in the areas of improved labour quality (highly skilled labour force), improved investment quality (investment in high profile projects), innovativeness and competent management. Further research on the construction sector productivity is necessary to focus on identifying key blockages that hampers productivity of the sector as this sector offers various opportunities for other sectors’ improved productivity performance.

Keneuoe Mosoang is the Chief Economist at Productivity SA.

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NEWS

A bid to boost the manufacturing sector The Manufacturing Accelerator Programme (MAP) has signed a memorandum of agreement with Productivity SA to revitalise the South African Manufacturing Industry by implementing the MAP programme in manufacturing companies. The initiative was launched to 20 make-to-order manufacturing businesses. The memorandum provides a framework for cooperation between Productivity SA and MAP, with the view of sharing information and best practices in manufacturing, as well as enhancing the effectiveness of the two entities. In addition they will jointly pursue opportunities for manufacturing businesses’ productivity and competiveness improvement and assist them to become world class players. MAP was launched in South Africa at the beginning of last year with the purpose of revitalising the South African manufacturing industry and creating a substantial number of new job opportunities in the country. In the MAP programme, suitable tools for the company are proposed and recommended from an extensive knowledge base of trusted partners with specific industry focus, track records of innovation and delivery over at least two decades, and who are recognised leaders in their specific manufacturing industries. “In fact,” said Ian Huntly, CEO of RifleShot Performance Partners, “the Tooling Association of SA, in conjunction with the South African Capital Equipment Council (SACEEC), also signed an agreement with MAP late last year resulting in a number of large toolmakers in Gauteng benefitting from MAP implementations.” Through the programme it is envisaged the industry will increase its competitiveness and export readiness, add more value to the value chain and improve skills and skills development as well as create a substantial number of new jobs. MAP consists of three founding members, namely ISAH,

Rifle-Shot Performance Partners and SANEC. ISAH is an international software company, whilst Rifle-Shot Performance Partners is a specialist solutions provider and distributor. SANEC is the Southern African Netherlands Chamber of Commerce and is the key intermediary agency for companies, organisations and entrepreneurs doing business or seeking to do business in and between the Netherlands, South Africa, the Benelux and the southern African region (SADC). Productivity SA is a Schedule 3A Public Entity whose mandate is primarily to enhance the productive capacity of South Africa. Its governance board comprises representatives from labour, government and business. MAP works through sector or cluster organisations to implement the programme at groups of companies across their member base. “Using our specialist systems technology, MAP enables small and medium make-to-order customers to access and benefit from the world’s best class specialist manufacturing software,” said Huntly. MAP is similar to programmes that are running in the United States. Known as “Reshoring”, these programmes are heavily endorsed by President Obama. Speakers at the event included Rifle-Shot Performance Partners CEO, Ian Huntly, Bongani Coka, CEO of Productivity SA and Peter van Harten, EVP, Isah International. About Rifle-Shot Performance Holdings Rifle-Shot is a 100% South African consulting services and software provider specialising in manufacturing, mining & metals and the utilities industries over the last 12 years. Rifle-Shot is a Level 4 BBBEE compliant organisation headquartered in Sandton, South Africa. About Isah Isah is an international software provider to the make-toorder industries. The company has been a market leader in the Benelux area for over 25 years, has a distribution in 20 countries, more than 600 customers and a track record of more than 25 years. About SANEC SANEC is the Southern African Netherlands Chamber of Commerce and over the last 20 years has seen active growth in commercial co-operation between SA and the Netherlands grow to the point that the Netherlands is on of SA’s leading trading partners. The article was utilised courtesy of Rifle-Shot Performance Holdings (Pty) Ltd

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Employee recognition and

increase in productivity BY Nhlanhla Masondo Employee recognition is the timely, informal or formal acknowledgement of a person’s or team’s behaviour, effort or business result that supports the organisation’s goals and values, and which has clearly been beyond normal expectations. To be really effective in the job, employers need to understand the psychological effect of acknowledging and lauding employees who have performed excellently. Appreciation is a fundamental human need. Employees respond to appreciation expressed through recognition of their good work because it confirms that their work is valued. When employees and their work are valued, their satisfaction and productivity rises, and they are motivated to maintain or improve their good work. There are two aspects to employee recognition. The first aspect is to actually see, identify or realize an opportunity to praise someone. If you are not in a receptive frame of mind you can easily pass over many such opportunities. This happens all too frequently. The other aspect of employee recognition is, of course, the physical act of doing something to acknowledge and praise people for their good work. Secondly employee recognition has a huge communication component. Recognizing people for their good work sends

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an extremely powerful message to the recipient, their work team and other employees through the grapevine and formal communication channels. Employee recognition is therefore a potent communication technique. Employee recognition is not difficult – it is an obvious thing to do. Despite the unquestioned benefits arising from employee recognition, one of the mysteries of the workplace is that recognition invariably is done badly, if done at all. Managers need reinforcing and coaching. Employee recognition remains an undervalued management technique. Why Is Employee Recognition Scarce? Time is an often-stated reason and admittedly, employee recognition does take time. Employers also start out with all of the best intentions when they seek to recognize employee performance. However they often find their recognition efforts turn into employee complaining, jealousy, and dissatisfaction. With these experiences, many employers are hesitant to provide employee recognition. Employee recognition is scarce because of a combination of several factors. People do not know how to provide employee recognition effectively, so they have bad experiences when they do. They assume that one size fits all when they provide employee recognition. Finally, employers think too narrowly about what people will find rewarding and recognizing. Cost-benefit analysis of employee recognition The cost of a recognition system is quite small and the benefits are large when implemented effectively. Metaanalysis conducted by the Gallup Organisation in 2003 of the results from 10,000 business units in 30 industries found [a meta-analysis is the statistical analysis of results across more than one study]: Benefits • Increased individual productivity – the act of recognizing desired behaviour increases the repetition of the desired behaviour, and therefore productivity. The reinforced behaviour supports the organisation’s mission and key performance indicator • Greater employee satisfaction and enjoyment of work - more time spent focusing on the job and less time complaining. • Direct performance feedback for individuals and teams is provided. • Higher loyalty and satisfaction scores from customers. • Teamwork between employees is enhanced. • Retention of quality employees increases – lower em ployee turnover. • Better safety records and fewer accidents on the job. • Lower negative effects such as absenteeism and stress. Costs • Time spent in designing and implementing the program. • Time taken to give recognition.

• Monetary cost of the recognition items given. • Time and cost of teaching people how to give recognition. • Costs of introducing a new process.

Individual performance

Recognition

Increased value to your organisation

Increased productivity and satisfaction

Measurable improvement in profitability. Measuring the direct impact on profitability is difficult because it is only one of many factors influencing employees in every workplace. However, case studies make a persuasive case that bottom line benefits have been achieved through recognition schemes. The Walt Disney World Resort established an employee recognition program that resulted in a 15% increase in staff satisfaction with their day-to-day recognition by their immediate supervisors. These results correlated highly with high guest-satisfaction scores, which showed a strong intent to return, and therefore directly flowed to increased profitability. How you can give employee recognition? It can be done by spontaneously praising people – this is highly effective. To many employees, receiving sincere thanks is more important than receiving something tangible. Employees enjoy recognition through personal, written, electronic and public praise from those they respect at work, given in a timely, specific and sincere way. This day-to-day recognition is the most important type of recognition. It brings the benefit of immediate and powerful reinforcement of desired behaviour and sets an example to other employees of desired behaviour that aligns with organisational objectives.

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It gives individuals and teams at all levels the opportunity to recognise good work by other employees and teams, and it also gives the opportunity for them to be recognized on the spot for their own good work. Employee recognition is not limited to managers and supervisors; other employees can be alert for opportunities to recognise others. The best formula for recognise an individual for their efforts is: • Thank the person by name. • Specifically state what they did that is being recognised. It is vital to be specific because it identifies and reinforces the desired behaviour. • Explain how the behaviour made you feel (assuming you felt some pride or respect for their accomplishment!). • Point out the value added to the team or organization by the behaviour. • Thank the person again by name for their contribution. Recognition is a key success factor even at higher levels of management. Professor of Management in the Wharton School at the University of Pennsylvania, Dr Lawrence Hrebiniak, states, “What’s absolutely critical is that the organisation celebrates success. Those who perform must be recognised. Their behaviour and its results must be reinforced. Managers have emphasized this point to me time and time again, suggesting that, as basic as it is, it is violated often enough to become an execution problem. Give positive feedback to those responsible for execution success and making strategy work.” How to Provide Effective Employee Recognition? If you make employee recognition a priority, you can ensure a positive, productive, innovative organisational climate. Encourage more of the actions and thinking that you believe will make your organisation successful. People who feel appreciated are more positive about themselves and their ability to contribute. People with positive self-esteem are potentially best employees. These beliefs about employee recognition are common among employers even if not commonly carried out. Why then is employee recognition so closely guarded in many organisations?

• Create goals and action plans for employee recog nition. Establish employee recognition opportunities that reinforce sought-after qualities and behaviors. • Fairness, clarity, and consistency are important in employee recognition. People need to see that each person who makes the same or a similar contribution has an equal likelihood of receiving recognition for her efforts. For regularly provided employee recognition, organisations need to establish criteria for what makes a person eligible for the employee recognition. Anyone who meets the criteria will then receive recognition. • For day-to-day employee recog nition, guidelines must be es tablished so that leaders ac knowledge equivalent and simi lar contributions. An employee of the month-type program is most often unsuccessful for effective employee recognition. These employee recognition programs cause discontent and dissention when the organisation’s intentions were positive. It's one of the common management mistakes in managing people. It is important to recognize all people who contributed to a success equally. • Employee recognition approaches and content must also be inconsistent. One can observe a contradiction here. No, not really. The organisation want to offer

If you make employee recognition a priority, you can ensure a positive, productive, innovative organisational climate.

Guidelines for Effective Employee Recognition • Decide what you want to achieve through your em ployee recognition efforts. Many organisations use a scattergun approach to employee recognition. They put a lot of employee recognition out there and hope that some efforts will stick and create the results they want. Or, they recognize so infrequently that employee recogni tion becomes a downer for the many when the infrequent few are recognized.

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• •

employee recognition that is consistently fair, at the same time want to make sure that employee recognition efforts do not become expectations or entitlements. Be as specific as you can in telling the individual exactly why he is receiving the recognition. The work purpose of feedback is to reinforce what you’d like to see the employee do more of; the purpose of employee recognition is the same. In fact, employee recognition is one of the most powerful forms of feedback that you can provide. Offer employee recognition as close to the event you are recognizing as possible. When a person performs positively, provide recognition and a thank you immediately. Since it is likely the employee is already feeling good about her performance; your timely recognition of the employee will enhance the positive feelings. This, in turn, positively affects the employee’s confidence in his or her ability to do well in the organisation.

Specific Ideas for Employee Recognition. • Remember that employee recognition is situational. Each individual has a preference for what he finds rewarding and how that recognition is most effective for him. One person may enjoy public recognition at a staff meeting and another person may prefer a private note in her personnel file. The best way to determine what an employee finds rewarding is to ask. • Use the myriad opportunities for employee recog nition that are available to you. In organisations, people place too much emphasis on money as the only form of employee recognition. While salary, bonuses, and benefits are critical within your employee recognition and reward system - after all, people work for money - think more broadly about the opportunities to provide employee recognition. Employee recognition programs: However, in order to maximize the positive effect on employee morale and productivity, it is important to ensure that the programs use appropriate rewards for relevant achievements. Here are some factors to keep in mind to help you make the most out of your employee rewards:

1) Use programs to improve employees' work environment A survey showed that employees felt that recognition programs positively impacted both their happiness and their productivity. There is a strong correlation between the two. When employees have high morale, they also work harder; as recognition programs improve morale by making workers feel more appreciated, the result is increased efficiency. 2) Reward quantifiable achievements Employees appear to value recognition programs that focus on tangible accomplishments, when compared to those that relate to abstract concepts such as "leadership," "innovation," or "flexibility." Tie your rewards to achievements that have a clear relationship to the focus of your business. 3) Give employees rewards that they care about Although employees do value recognition from their company, in the form of plaques or written letters of appreciation, they still prefer more tangible benefits such as gift cards, cash or bonuses, or even personalised gifts. Surprisingly, employee perks such as days off or parking spaces scored comparatively low in popularity among employees as potential rewards. Of course, the size of the business and the number of employees may affect what types of recognition are practical. 4) Utilise different forms of recognition Another finding of the survey was that three or four formal employee recognition programs are the optimal number. While one program might focus on cash bonuses to specific individuals, another program might implement group rewards such as a picnic or party for a department that excels in exceeding monthly/annual targets, or even for the company as a whole. As a result, they focus more on doing their job correctly and following company procedures, they care more about customer service, and they feel involved and excited about the business. By contrast, employees at businesses without these programs mentioned feeling "disheartened" and that they have "no incentive to do better."

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opinion

The impact of Leadership on Productivity By Faranaaz Janodien The author of over sixty books with a focus on leadership, John Calvin Maxwell says: “Leadership is a process, not a position. The subject of leadership can be overwhelming and confusing. Where does leadership start? What should we do first? What processes should we use? How can we gain influence with others? How can we develop a productive team? The challenge of leadership is to create change and facilitate growth.” Most organisations today underestimate the important role that Leadership can play in improving their productivity levels. Lean processes and waste elimination paired with cost reduction are popular methods when managers want to improve productivity. Lean manufacturing has been the buzz in most industries however credible Leadership is the main source of navigation in bringing about positive change in the work place. American scholar, organisational consultant and author, widely regarded as a pioneer of the contemporary field of Leadership studies, Warren Bennis says “A business short on capital can borrow money and one in poor location can move. But, a business short on leadership has little chance of survival” The fact is that most managers fail, not because of their technical ability, but because of their inability to handle change, their inability to work in a team, and their poor interpersonal relations. So how does Leadership affect productivity? Successful organisations have one thing in common - good leadership steering the organisation in the right direction. Often these leaders are coaches and mentors and invest a lot

of time in their employees. Excellent leaders focus a lot on developing their staff and creating an environment where people want to perform. Pioneering leaders take a personal interest in what makes each staff member unique and capitalize on employees strengths and develop their weaker areas. These environments are normally high performance environments where teams want to perform. There are high levels of motivation and the willingness to take on more is evident in all teams. Effective communication is a characteristic for any good leader. Most businesses fail due to poor communication and a lack of proper communication structures. Good leaders are able to align goals throughout the organisation making them visible from senior management right down to the shop floor. Staff members who are aware of the company goals and objectives and understand their role in achieving the overall goals will inevitably add more value to the business. As business leaders we often underestimate the difference good communication can make in contributing towards improving productivity. Leaders should be involved and accessible to their teams. Involved leaders will know what is happening throughout the levels of their organisation. These protagonists will surround themselves with a competent team that is empowered to make decisions. They will create an enabling environment where change is well received and commitment and buy-in will prevail on all levels. Improving productivity should be the main focus on achieving ultimate goals. However the path we take to improving productivity levels lies in the how and not the what. A good leader will be self-aware and realize the impact that he/she has on the performance of individuals. Measuring your own effectiveness should be the starting point before even expecting others to perform. The two will ultimately go hand-in-glove. A good leader will display a high level of emotional intelligence. Good leaders will be aware of how their actions influence the behavior of others. Daniel Goleman (father of Emotional Intelligence) talks about the fact that we are being judged by a new yardstick: not just how smart Intelligence Quotient (IQ) we are, or by our training and expertise, but also how well we handle ourselves and each other Emotional Qoutient (EQ). Self-assessment in leaders therefore becomes important in gauging their effectiveness. Leaders that are truly effective will be able to engage and inspire others to reach their full potential. They will give people a possibility to live into and not an expectation to live up to. Self-awareness, developing others, clear communication, coaching and mentoring is important characteristics of a good leader. This will ultimately lead to improved productivity within teams.

Faranaaz Janodien is a Change Facilitator at Productivity SA.

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opinion

Public Holidays and Productivity By Sello Mosai Public holidays will always be quite a thorny issue in South Africa, and to some extent, around the world mainly due to two factors being the cost attributed to it and the diversity of our population. South African workers enjoy 12 public holidays every year. The December and January month tend to be tricky due to festive season holidays. The matters became more complex in 2012 as an additional holiday was added at short notice. It Is understandable that there are many who bemoan the perceived negative impact these ‘forced’ holidays have on our nation’s productivity. Many mention productivity cost figures of between R1,5 billion and R3 billion per holiday to support their arguments that South Africa is a developing economy with significantly high levels of unemployment. On the other hand the most recent quarterly Labour Force Surveys point to a slight decrease in these unemployment levels from 25.5% in Q3 2012 to 24.9% in Q4, the figures are still high enough to have many convinced that the country simply will never be able to compete globally unless the number of public holidays is reduced. However, there are equally and even more compelling arguments made in favour of public holidays, the most common of which is that giving people time off work to celebrate their heritage and spend time with friends and family, actually serves to enhance productivity in the long term. What most people tend to overlook is that there are other workplace issues that are potentially far more damaging to business production than a few planned days off. The top 5 countries in the World Economic Forum (WEF) competitiveness report for 2013 have an average of 12 holidays. It is therefore not the number of public holidays in total that is to blame for the loss in productivity, but the underlying fibre of the society. Employee absenteeism is a case in point. SA is ranked 132nd out of 144 economies in relation to the health of the workforce according to WEF competitiveness report for 2013. On the other hand according to HR Future magazine, desktop research on almost 80 SA companies

delivered an estimate that unplanned sick absenteeism is costing the country over R19 billion a year. Unlike possible production losses due to public holidays, employee absenteeism and low morale are not issues that many organisations are willing, or able, to predict and proactively manage. Ironically, addressing the causes of such unplanned productivity killers is actually a lot easier, and often far cheaper, than overcoming the staffing challenges of planned national holidays. For the vast majority of working people, achieving quality of life, health, and a sense of purpose are often the most important motivating factors for increased productivity. Since most working-age adults spend around two thirds of their working week hours at the workplace, companies have very real opportunities to help their employees achieve all these things in their lives. It’s common knowledge that in South Africa, people working in most competitive sectors can subsequently suffer from issues such as stress and limited family time; therefore, companies have to explore extensive interventions to maintain productivity while providing a reasonable work/life balance. An Accenture survey released during the first quarter of 2013 revealed that at least 52% of global participants (including South Africans) stated that they have turned down a job offer that would have affected their existing work-life balance. In South Africa the figure was approximately 67% of the surveyed correspondents. A recent study in the UK by Croner indicated that even though Britons may complain of being one of the hardest working nations with the fewest bank holidays in Europe, an additional bank holiday will add to boosting productivity. Therefore, employers addressing productivity issues should be looking at ways to help their staff achieve a better work/life balance through offering more flexible working practices. Richard Smith, employment services director at Croner said, “As a nation we moan about being overworked and not having as many bank holidays as our European neighbours. Unsurprisingly, therefore, the respondents to our survey said that a long period of time with no public holiday has a negative impact on their productivity. “But when probed further, it became apparent that the frequency of bank holidays is not the real issue. Feeling unproductive is more likely to be due to becoming weary of long-term nine to five shifts rather than a lack of odd days off. While a single day’s public holiday is nice to have, it is not long enough to counteract the cumulative effect of hard work. This is why many employers offer statutory bank holidays in addition to normal annual leave, which allows for longer periods of rest and relaxation. Enough rest stimulates creativity and productivity.

Sello Mosai is Executive Manager, Value Chains and Competitiveness at Productivity SA.

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opinion

The Importance of goal alignment By Manuel Netili The month of February saw the delivery of the State Of The Nation Address (SONA) by his Excellency, the honourable President Jacob Zuma. Traditionally the State of the Nation Address serves as a platform if you may, to remind South Africa and its citizenry that ship SA is still headed in the right direction. During the SONA, the captain reminds all that the rough seas have been well navigated or lets us know if the choppy waters have got the better of us. The State of the Nation address primarily provides an opportunity for the provision of information on South Africa‘s achievements of the past year. Commonly known as the“Opening of Parliament”, the State of the Nation Address is even more importantly a medium to provide a sense of direction with regards to future objectives and goals for the country. It is during the address that issues such as increasing spending on social security and on infrastructure development to stimulate the economy come to the fore. During the address, plans are outlined although not in detail. As it were and as a developing country, South Africa is faced with a myriad of challenges and often this provides a challenge in terms of goal alignment and prioritising. For the country to attain its objectives such as economic growth and job creation, our goals have to be very succinct.

From a productivity point of view, the same principles that are utilised to steer a business towards a land of "Manna" should be applied to government. Often organisations face challenges of not attaining their goals as the majority of organisations may find themselves in the quagmire that can be strategic planning. Elongated strategic sessions and formulation can see a company lose productive hours as it grapples with setting clear goals. One of the most common reasons strategy implementation gets derailed is the failure to recognize the cross-functional nature of most strategic goals. For instance if a sales department in a manufacturing company sets a target to sell 1000 widgets (a small gadget or mechanical device) whilst the production team can realistically only produce 500 widgets, a bottleneck develops even before any work is undertaken. This basically means that despite the brilliant strategy and implementation plan, the sales team will technically not achieve its goals not through the lack of trying but rather through the lack of goal alignment. Consequently the drafting of that particular strategy turns out to be counter-productive and a contradiction in terms of the company‘s goals. Goal alignment or the act of aligning goals in an organisation should ensure that within a company all members from to top to bottom in an organisation adopt a seamless approach to attain goals. Goal alignment should be an attempt to achieve the following: • All employees should understand how their role within the organisation contributes to the attainment of organi sational goals. • Departments and sub departments must set goals that enables and contributes to the overall attainment of the organisational goals. Getting both employees and work units to align goals with the overall organisation objectives results in much less effort and enhanced productivity and a workplace where there is ownership and active participation by all to work towards achieving common goals. Other benefits of goal alignment include: • Accelerated operational execution • Improved employee engagement and enablement and • Staff retention Implementing effective goal alignment throughout an organisation in support of a well-defined strategy is one of the most important things any leader can do. Strategy has the best chance of succeeding when the organisation aligns itself with set goals. Without an inkling of a doubt “company South Africa” stands to attain its goals if all role players align themselves with the country‘s strategic direction.

Manuel Netili is a Change Facilitator at Productivity SA.

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opinion

Continuous improvement By Mudzunga MashambA At the start of the year, many an individual may have penned down a host of resolutions for the New Year. Whether those resolutions are met or not is another issue however the crucial question is what drives the need for resolutions? Resolutions by their very nature are underpinned by the need for change. This change in turn is driven by the need for improvement and adaptability to changing environments. After all, change is the only constant. As much as individuals see the need for change so does the world and its various economies. We live in a competitive world. A leader today may be a follower tomorrow. If you stand still, you will be left behind. You are either getting better or worse! Various business philosophies are in existence to ensure improvement and competitiveness of world economies. One of the foremost business philosophies is the Japanese business philosophy of Kaizen, which essentially means (kai) “change” (zen) “good.” The inherent challenge for change becomes making that ‘good change’ continuous/continual in nature such that you ensure that those “good-changes” are sustainable, part of the culture and make an impact to core business drivers within any organisation across all sectors. This Japanese approach for "improvement" or "changing for the best", refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering and business management. It has been applied in healthcare, psychotherapy, life-coaching, government, banking and other industries. It became famous from Imai’s 1986 book Kaizen: The Key to Japan’s Competitive Success. This philosophy is widely applied as an approach to continuous improvement as it is based on many, small changes rather than the radical changes that might arise from research and development. The core principle of continuous improvement is the (self) reflection of processes which comprise: • The identification of opportunities to improve • The elimination of suboptimal processes and finally • The re-evaluation of the improvements such that the cycle of reflection can begin again. When used in the business sense and applied to the work-

place, kaizen refers to activities that continually improve all functions, and involves all employees from the Chief Executive Officer (CEO) to the assembly line to workers involved in the support services of the business. It also applies to processes, such as supply chain management, finances and human resources that cut across organisational boundaries. Other widely used methods of continuous improvement include Six Sigma, lean and Total Quality Management. Implementing continuous improvement An inherent characteristic of continuous improvement is that it is all-inclusive and all-embracing which simply means that continuous improvement does not happen by default but rather by strategic intent that involves engaging everyone and everything within an organization. • While everyone within an organisation is responsible for continuous improvement, some businesses imple ment steering committees to help oversee and monitor the process. The committee comprises a number of personnel from different departments to provide a round ed view of improvement within the company. The com mittee should have senior management's support; with out this, the committee lacks authority. • It is pertinent to actively communicate the continuous improvement strategy to everyone in the organisation so that everyone understands what is expected of them and why it is important and how it affects them and the overall organisation. • An organisation embarking on continuous improvement should also assess the knowledge and skills of the existing workforce and actively address the knowledge and skills gap that exist through conventional, unorthodox and affordable means. • It is important to encourage continuous improvement efforts by recognising efforts and incentivizing efforts in monetary and non-monetary ways. • There is no way of establishing whether continuous improvement works unless the business sets goals for each department to achieve. In conclusion, for continuous improvement to be successfully implemented an organisation must; • Identify continuous improvement goals and objectives • Specify the approach and the measures • Share and celebrate the results and finally • Make ‘continual’ changes The Kaizen philosophy adopted as a daily practice goes beyond simple productivity improvement. It is also a process that, when done correctly, humanizes the workplace and creates a culture of continually evaluating if what ‘I’ did today was the best ‘I’ could do and how ‘I’ can improve what ‘I’ did today tomorrow for increased productivity and profitability.

Mudzunga Mashamba is the Executive Manager, Turnaround Solutions at Productivity SA.

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FEATURE

Mining in South Africa By Keneuoe Mosoang Mining in South Africa has been the main driving force behind the history and development of Africa's most advanced and richest economy. South Africa’s total reserves remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion). Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value. It has the world’s largest reserves of manganese and platinum group metals (PGMs), according to the US Geological Survey, and among the largest reserves of gold, diamonds, chromite ore and vanadium. The sector accounts for roughly one-third of the market capitalisation of the JSE, and continues to act as a magnet for foreign investment in the country. Mining and its related industries are critical to South Africa's socio-economic development. This core sector of South Africa’s economy is lately threatened by endless labour unrest with employees demanding high wages that mining houses claim they cannot afford and better working conditions which is a non- negotiable. The reality is that if things carry on like this, South Africa would probably continue to do poorly in attracting new mining investments relative to emerging and increasingly challenging mining jurisdictions in sub-Saharan Africa.

In the midst of everything where does this leave the Productivity levels and the competitiveness of our mining sector and what can be done to ensure that we recover from where we are and get back on track of being world class in the sector? Statistics South Africa figures indicate that this sector is an important earner of foreign exchange, main contributor to the GDP and one of the biggest employer with an estimated 2 090 930 employees. Over a period of ten years (2002- 2012) productivity performance in the mining’s real output, labour productivity and multifactor productivity has been depleting. In 2011 – 2012, the sector registered an undesirable growth rates. In 2011, the sector’s real output dropped from 0.3 percent growth rate to -0.4 percent growth rate in 2012. The poor performance was as a result of further decline in the growth rate of labour productivity registering a negative -2.3 percent in 2012 from -2.9 percent growth rate in 2011, capital productivity recording a negative growth rate of -8.5 compared to -7.4 percent growth rate in 2011, and multifactor productivity registering a negative growth rate of -6.0 percent in 2012 compared to -5.7 percent in 2011. On a more positive note, a recent article in the Financial Mail notes that platinum offers an interesting opportunity, as SA is the main source of the metal and the number of vehicles being manufactured in the East should buy future demand.

The country is estimated to have the world’s fifthlargest mining sector in terms of GDP value.

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Standard Bank commodities research expects platinum prices to be muted in the near term owing to surpluses and weaknesses in the European Union, and according to their prognosis, prices were expected to be firm in the fourth quarter of 2013. Forecasts for 2014 are expected to average $1 850/oz. from current levels of around $1 570/oz. Unlike Gold, with more than 50% of demand for platinum coming from industrial applications, the metal is hardly considered precious and its price usually correlates well with the ups and downs of the economic cycle. During periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold, whereas during periods of economic uncertainty the price of platinum tends to decrease due to reduced industrial demand, often falling below the price of gold. Gold prices are more stable in slow economic times, as gold is considered a safe haven and gold demand is not driven by industrial uses. It takes tools such the Mining Indaba, a platform that brings together mining companies, government, unions and investors to achieve the above estimated potential. African Mining Indaba is an annual professional conference dedicated to the capitalisation and development of mining interests in Africa. At the realm of everything South Africa is also entering this year with substantial uncertainty on mining legislation. The two most important pieces of mining legislation in South Africa, the Mining Charter and the Minerals and Petroleum Resources Development Act are currently under the spotlight. The Mining Charter expires this year, and companies are expected to reach a 26% black ownership level by April. This raises questions about what will happen to companies that do not achieve compliance in time, and whether the target for black ownership will be raised.

Parliament is considering changes to the Act that will enable mineral resources Minister Susan Shabangu to control the exports of certain minerals. As a result, Productivity SA believes that a well-managed productivity improvement initiative will make a huge contribution towards meaningful productivity improvement on all hierarchal levels within the three operations under discussion. Such a productivity improvement initiative should include active measures such as interventions to improve labour productivity and capital productivity, as well as multifactor productivity. The short term challenges will however continue for some time to limiting productivity improvement potential. The Company’s leadership and employees, on all levels of the hierarchy, remain responsible for increasing the productive capacity utilisation of the relevant three operations.

Keneuoe Mosoang is a Chief Economist at Productivity SA.

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FEATURE

Organisational Structure and Pro By Nhlanhla Masondo The analysis of economic growth and that of the differences in economic performance between firms and countries has been mainly been conducted within growth accounting approach. In that approach, productivity depends on technology, on the quantity and the quality of labour and capital and also on other inputs. The growth rate of productivity depends on the growth rate of these variables. This explains growth in the sense of breaking it into its parts; it does not explain why some firms are able to achieve those changes in capital and knowledge, while others are not. However, there is no satisfactory explanation as to why some firms are better organised and more productive than others. Part of the explanation lies within the organisation itself. The management structure may provide a clue to these differences. The structure of an organisation sets the hierarchy for responsibility and creates the various levels of communication within an organisation. The manner in which an organisational structure is set up and administered can have a direct effect on company productivity. When monitoring employee output, consider how the various issues with organisational structure can affect efficiency. Managerial Influence The efficiency of the managerial staff has a broad-reaching effect in the organisation because of the organisational structure. Weak or incompetent management at any level of an organisation will spread throughout the company as bad managerial decisions in those departments also affect the departments that come into contact with each them and reduce productivity. Good management can have the opposite effect, as efficient and intelligent decision-making can help improve productivity and raise overall efficiency.

Structural Flaws If the organisational structure is not set up properly, information is not able to travel where it is needed. If the middle management team does not have effective channels of communication with the executive team, important company information could take days before it reaches the entire staff. Flaws in your organisational structure that cause breakdowns in communication or lapses in responsibility need to be repaired to facilitate efficiency. Creativity Ideas from employees are critical to the success of the organisation. The influx of employee input adds to current company ideas and offers a variety of opinions that company management may not have considered. The bureaucracy that can sometimes develop in an organisational structure can stifle that creativity and hurt productivity. For example, if a manufacturing employee submits an idea to make better use of manufacturing equipment that would lower costs, but that idea gets lost in the shuffle of corporate bureaucracy, the company could be losing money when it could be seeing an improvement in productivity. As a company grows with a weak internal structure, communication and administrative channels are strained to the point of inefficiency. A strong corporate structure that is designed to grow with the organisation can maintain corporate productivity during times of growth and allow for structural improvements that will be necessary as the organisation expands. The structural arrangement The management of a business has a tremendous effect on future growth, how to interact with customers and the overall culture of the business. Most companies start off with a horizontal structure, but they consider implement-

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than vertical companies, especially as the business grows, because the business must foster a culture of teamwork. Employees may be less sure about their roles and responsibilities within the company, and project managers can be frustrated by their lack of authority. Frank Ostroff, author of "The Horizontal Organisation," believes that companies will become more horizontal than vertical as the world globalizes, because customers will demand fast response times and better service--two things at which horizontal companies excel. No business, however, should have a strictly horizontal or vertical structure, but rather should implement the best of both worlds.

oductivity Growth ing vertical structure when they start to compete on the global market. Vertically structured companies have a chain of management, usually with a CEO at the top making decisions and then delegating authority to lower-level managers. Horizontal, also called flat, companies have almost no middle managers--meaning that high-level managers handle day-to-day tasks and usually interact with customers and front-line employees personally. Most new companies and small businesses opt for a horizontally arranged company because they have a limited amount of employees. Small businesses tend to be more intimate, and the lack of a large workforce means management styles are more informal than formal. In addition, small businesses may not even have the resources to hire any middle management. Companies with a tall organisational structure are better at designating tasks to employees or departments within the company, have well-defined responsibilities for employees, and are generally easier to manage, according to Practical Management. Horizontally structured businesses tend to have the best employee morale because there is less red tape when dealing with problems. Also, it costs less to run a horizontal company because managers cost more than rank-and-file employees. Vertical companies are dependent on a strong leader at the top. Weak upper management means that each successive hierarchical structure will get frustrated by poor decision making by the superior. In addition, tall companies lack the transparency of a horizontal company because each layer muddles information more and more. Horizontal companies are much harder to implement

Adoption of sound management practices. There are large and persistent differences in organisational performance within detailed sectors that are not yet explained. Traditionally, these differences have been ascribed to management quality; there are other origins of these differences. As useful as this qualitative evidence is, there is a dearth of quantitative information on firm-level management practices across countries and sectors. Leading management consultancies have developed an in-depth survey methodology to benchmark management practices covering many thousands of organisations in 20 countries in many sectors (for example manufacturing, retail, healthcare and education). • Quantify the association of management practices with firm performance (productivity, market value, growth) controlling for a wide range of other factors • Look at the drivers of the adoption of managerial best prac tice. How important are managerial and workforce skills, ownership and governance, product market competition, labour market regulation or other government policies? • Analyse what accounts for the differences in these relations across countries. • Understand the relationship between work-life balance and firm performance. Do better management practices come at the expense of awful working conditions or are more effectively run firms able to treat their workers better ("work smarter not harder" in the jargon). • Develop theoretical developing models to understand how firms adjust their organisations in response to changes in their environment through devices like decentralisation and delayering. • Empirically, how is decentralisation affected by social capital, uncertainty and technology? From the above analysis, it is clear that no size fits all when it comes to structure of the organisation. It depends of the factors like the quality of management, the goals of the firm, the size of the firm, the trading environment and productivity targets set to be achieved by a typical firm.

Nhlanhla Masondo is a Researcher at Productivity SA.

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OPINION

Productivity Enhancing Measures for South Africa

The role of governments Government has a critical role to play in raising awareness about productivity among its people and industry, nurturing their positive attitude toward productivity improvement. The effectiveness and sustainability of a productivity movement depends on the extent to which the government commits itself to the movement, in particular by availing sufficient funding on a regular and sustained basis. The role of Employers Employers and managers could set up enterprise productivity improvement programmes supported by different gain sharing systems, participate in strategy development, promote labour-management collaboration and create participative work environment.

By Motlatsi Gabaocwe

The role of workers Workers and their representative organisation could promote positive attitudes towards productivity improvements and innovations, and actively participate in developing and implementing productivity incentive schemes.

South Africa has to consider the role of productivity enhancing initiatives in order to stimulate the low economic growth, create sustainable jobs and tackle the challenges of high income inequality and poverty The 2014 budget statement is the second budget in which government continues to implement the National Development Plan (NDP) priorities. The central priorities of the macroeconomic policy underlying the NDP include amongst others: (I) stimulating real economic growth (ii) eliminating poverty and reducing income (iii) tackling unemployment and job creation. The manner in which these challenges are tackled will ultimately determine the competitive performance of South African companies, effectiveness of government in reaching and serving citizens’ needs and improving the quality of the people. The issue is how can the South African economy achieve higher rates of growth with the ultimate aim to raise living standards of the nation and achieve a better life for all? Theory says savings, investment, diversification, technology and hard-work. All these are important; however in a highly competitive globalised environment, with limited resource endowments, these factors would be secondary to productivity. For sustained prosperity, productivity is the key. Economists agree that in the long run, productivity growth is the principle means of improving living standards. The rate of productivity growth affects key variables such as economic output, employment growth and rates of income inequality. The success of productivity is dependent on all key stakeholders playing their role:

The role of Civil Society Academic institutions can play a critical role in promoting productivity culture, identifying constraints and analyses as well as facilitating a legal environment conducive to productivity. Education department can promote productivity culture in curricula, awareness building among students and disseminate literature on productivity. Organisations in all sectors and individuals workers at all levels of professional achievements may be assisted by Productivity SA to join hands in identifying and working on productivity drivers. Productivity drivers are the factors which bring about direct productivity changes in an organisation. For example, productivity can be enhanced at the workplace by using the following four driving factors (i) measuring performance and rewarding superior results (ii) applying productivity techniques, (III) employee education, training retraining and involvement; and (iv) employee communication and information sharing. Economists agree that in the long run, productivity growth is a key determinant of living standards. The rate of productivity growth influences the economy in important ways, by affecting variables such as economic growth, employment and income inequality. Furthermore, productivity increases are necessary to sustain increases in income distribution through narrowing of inequalities and increasing wages of the lowest paid employee. Productivity is the only sustainable way to increase valueadd and grow incomes and it must be the key driver of SA economic growth.

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Barriers to Productivity in the Workplace By Mokgadi Mahlakgane The most competitive nations are those that have the highest level of entrepreneurial activities. Small and medium size businesses tend to be the greatest creators of jobs and collectively, the greatest creators of wealth in emerging economies. However, there are barriers to creating this productive and efficient environment which can hamper the competitiveness of enterprises, subsequently of the country. According to Global Competitiveness Report 2012-2013, South Africa is ranked 52nd, remaining the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. However, in order to further enhance its productivity and competitiveness, the country will need to address some of barriers to productivity in the workplace which includes the following:

skill development contribute to increase level of education. A study has shown the following relationship between productivity and skills development: • Use of equipment • Job satisfaction • Labour turnover These low levels of education are a barrier to a productive environment and economic growth. 3. Communication There is no doubt that consistent and regular communication on the common company goals and vision in the workplace leads to continuous improvement, be it top-down or bottom-up. Employees that are unhappy and dissatisfied due to un-communicated issues are less likely to be productive employees 4. Lack of Productivity measures The notion of: ‘we are what we measure’ applies to improving productivity. Many organisations however, do not think through ‘sufficiently’ what productivity they need to improve and therefore measure. The results in such cases may be a wasted effort and no or a negative return. Often organisations limit themselves to the return on their labour input.

Low levels of education are a barrier to a productive environment and economic growth.

1. Adversarial relationship between management and labour According to Global Competitiveness Report, South Africa is ranked 144 out of 144 countries with regard to Cooperation in labour-employer relations because of significant tensions between the two parties. Commission for Conciliation, Mediation and Arbitration (CCMA) have also confirmed that referrals have increased by 25% in the last five years. The adversarial nature of the country’s industrial relations has led to the latest flair-ups in the labour market which obviously impacted negatively on the productivity of the country.

2. Low levels of education South Africa is also not doing well in terms of relevance of its quality of the educational system to meet the needs of a competitive economy. The World Competitiveness Report rated us 140 out of 144 countries. The quality of education and the attitude of learners to the value of learning and

5. Remuneration Employees who are poorly paid or not remunerated appropriately are generally less productive than those employees who are relatively satisfied with their remuneration. The reality of the matter is that nations need to put more emphasis on productivity by adopting enabling factors and avoiding inhibiting ones. In conclusion productivity is achieved in ourselves – through constant upgrading of knowledge, skills, discipline, individual effort and team work. The individual is at the heart of productivity.

Mokgadi Mahlakgane is a Manager in the office of the CEO at Productivity SA.

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CASE STUDIES

Messina Verpakking (Pty) Ltd By PEET DORFLING Messina Verpakking (Pty) Ltd, operating as M-Pak is a fruit and vegetable packaging company in the Limpopo Province, operating in Musina with 290 employees. Walking around in the M-Pak production area is a colourful and enjoyable experience, which would have given any Impressionist painter like the famous Claude Monet much inspiration! There is a buzz from employees packing thousands of tomatoes, brinjals, baby marrows, green peppers or sweet corn according to customer requirements.

Why M-Pak joined the Workplace Challenge (WPC) Programme Although M-Pak as an enterprise has been a stable and solid performer, they joined the WPC programme in January 2011, because Management felt that the company’s productivity levels generally were unsatisfactory - Management wanted to improve productivity on all fronts. It meant they had to educate employees to understand the meaning of productivity and team work. They needed employees to be motivated for on-time delivery of products to the market, and Management desperately wanted employees to contribute innovative ideas to enhance the overall functioning of the company.

Step 1: M-Pak started with Goal Alignment and Created Mini businesses They did it by getting employees together as a whole group and explained why the business needed to improve its productivity, why they needed many innovations. The WPC Change Facilitator then helped the Supervisors to create Mini Business units in order to create a smooth flow of operation throughout the business. Mini Businesses formulated team goals derived from the overall company goals. Every Mini Business Team formulated their own Mission based on their interpretation of the company mission:

One of the Mini Business charts helps team members to consider their customers’ requirements as well as to formulate their requirements of internal suppliers, serving to streamline relationships throughout the M-Pak organisation.

M-Pak as a business is a seasonal operation which means that Mini Businesses have to formulate new goals at the beginning of every new season; for example in the mango season

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quality is measured in the form of kilograms waste in relation to throughput. Safety is measured in the form of Hazard Analysis and Critical Control Points (HACCP) / food safety violations or complaints, for example not wearing protective gear such as hair nets, or not washing hands at the wash-bay. In the daily Mini Business Meetings the teams discuss the delivery targets in the form of orders coming in every day, as well as required delivery times. Employees realise that cost and waste go hand in hand. They measure daily waste levels and work diligently to keep waste levels below target.

To ensure good quality produced by the teams, the QC Teams regularly inspect quality of orders. Any problems picked up by the QC team are then taken up and resolved with the team supervisors. The Goal Alignment Toolkit was not implemented without challenge though – it took a while to convince employees of Management’s bona fides.

However, Management learned the value of constructive involvement of employees in the Mini Business Units and of encouraging employees to make suggestions for improvements. The employees’ positive experience regarding the functioning of their Mini Businesses gradually served to involve them more, resulting in more positive attitudes, which in turn led to better attendance levels! Employees like Daniel Munyai’s opinion of the WPC pro-

gramme and the company itself is that these days he enjoys working for M-Pak, because he can see the good results of his Mini Business. Mashudu Tshitangano says that the WPC programme has opened her eyes to what is really required of employees, which is a good feeling! Step 2: Cleaning and Organising Toolkit (5S) Implementing the principles of the Cleaning and Organising Toolkit (5S) has helped M-Pak to consolidate the company’s HACCP certification (Hazard Analysis and Critical Control Points).

The last S of the 5S process is aimed at establishing various Cleaning and Organising disciplines, for example conforming to health requirements such as wearing hair nets and gumboots in certain areas. “Cleaning-as-you-go”, and disinfecting everybody’s hands before entering the production area. Before 5S, the work areas were somewhat un-organised and people sometimes had to make do without essential equipment such as pallets.

The application of the 5S principles also helped employees to plan their days’ work better. One of the 5S activities that smoothed operations was the yellow tagging exercise: people participated in taking away all un-used stuff lying around in the work areas, so as to streamline the efficient running of the Mini Business Units. A significant improvement resulting from the Cleaning and Organising drive was how M-Pak has reorganised their

volume one • issue 8 productivity leader

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CASE STUDIES

lenge Project, most of the improvements have happened more or less to the ‘exclusion’ of Management.

production lines, by adjusting the team composition and utensils required for operations, according to the products and tonnage of packing required per order. By doing this, M-Pak managed to generally increase the output per individual and team, without people having to work harder!

Another improvement resulted from creating a grading team: the grading team generally does pre-sorting of products according to size and removing any damaged / rotten produce, which ensures quicker packing by the packers.

M-Pak also reorganised certain wrapping machines from manual wrapping to flow wrapping, which generally improved the speed and appealing appearance of wrapping. Step 3: The Plant Level Committee M-Pak is a unionised company and they’ve involved the union in the WPC Programme, in particular in the monthly Plant Level Committee (PLC) meetings, where the PLC discusses problems such as cooperation between Mini Business teams. Although the Plant Level Committee served to involve the employees in the implementation of the Workplace Chal-

The Future: Management System Toolkit Because of a general lack of regular communication and feedback between the shop floor and Management, the company has also learned the valuable insight of the importance of a system which would facilitate such communication. The company therefore intends to implement the Management System Toolkit of the WPC Programme next, in order to facilitate more regular contact between Supervisors / Teamleaders and Management. The core of this communication process is for Teamleaders to consolidate the issues from their different Level 1 Mini Business Meetings, and to elevate such issues to a weekly Level 2 meeting between Management and Teamleaders. This would serve three purposes: • keeping Management informed of problems and develop ments at the shop floor, • involving Management more in operational improvements • Management showing support for employees, which would also create even more positive attitudes towards the business among employees. The Future: Streamlining the PLC Management has expressed their intention of becoming more involved in the Plant Level Committee and to increase the frequency of meetings of the PLC so as to consolidate the benefits of the Workplace Challenge Programme and better coordinate quality, cost, and delivery improvements. The Future: Teamwork and Leadership Furthermore, although M-Pak has successfully implemented a few useful components of the Workplace Challenge Programme and have gained a few good improvements, they still want more. They have not yet achieved everything they wanted. Two areas where they feel there is still much to be gained, are to implement the Teamwork and Leadership Toolkits. From the Leadership Toolkit they want to learn how to develop their Teamleaders / Supervisors. They feel they need every employee to be an innovator, so that the company may get more innovations from employees. They feel that the Teamwork Toolkit (including Innovations) would help them to set up a proper Innovation system and help to evaluate, approve and properly implement innovative suggestions.

volume one • issue 8 productivity leader


www.workplacechallenge.co.za Sango Madikizela Tel: 011 848 5305 Email: sangom@productivitysa.co.za


Psa leader volume one • issue 8  
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