Workers' Welfare and Productivity Improvement: a Comparative Analysis Essay

WORKERS WELFARE AND PRODUCTIVITY IMPROVEMENT: A COMPARATIVE ANALYSIS BY UZOIGWE NNAMDI C. INTRODUCTION: The aim of this is paper is to provide the relationship between productivity and employee welfare in any business organization. It is a known fact that human resource is one of the most important resource that have to be managed appropriately if productivity have to be achieved and improved upon. Infact, organizations do not need to search for opportunities for productivity improvement anywhere, they exist in every workplace situation all of the time.

It’s for managers, supervisors, trainers at any level who wish to develop their understanding of productivity and their ability to improve the efficiency and utilization of resources, human resources in particular, in their organizations and who see achieving targets and budgets as merely minimum starting standards. The paper will take precedence with the definition of the concept of productivity. This concept will be expanded beyond the working environment of the worker to the social and ecological environment of the organization.

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The two most important patterns (paradigm) of productivity (doing things right and doing the right thing) will further be highlighted. The paper will then proceed to discus the human involvement in the productivity improvement and efficiency. Workers welfare and management ideologies will thereafter take the peak of the discursion, and conclusion would be drawn based on the issues raised in the paper. THE CONCEPT OF PRODUCTIVITY Current economic realities (liberalized and dynamic markets, constantly changing customer preferences, new structure of production and work, etc. ) are leading to a rethinking of the notion/concept of productivity.

Whereas traditionally, productivity is viewed mainly as an efficiency concept (amount of outputs in relation to efforts or resources used), productivity is now viewed increasingly as an efficiency and effectiveness concept, effectiveness being how the enterprise meets the dynamic needs and expectations of customers (buyers/users of products and services) i. e. how the enterprise creates and offers customer value. Productivity is now seen to depend on the value of the products and services (utility, uniqueness, quality, convenience, availability, etc) and the efficiency with which they are produced and delivered to the customers.

According to Davis; Aquilano; Chase (2003), the economy, and other associated trends require a much broader conception of productivity and a fuller appreciation of the changing dynamics of the determinants involved in the process of its improvement. The increased competitiveness, sophistication of markets, manufacturing and the increased concern about social and ecological issues make productivity improvement more important. At the same time, a broader meaning of productivity is emerging. Correspondingly, such broader conception of productivity calls for a wider set of indicators to catch and reflect the new elements and parameters involved.

The broader conception of productivity, however, is incorporating wider definitions of what the outputs and inputs are of the production-distribution process. The social and ecological impacts are now increasingly considered as outputs of the production process in addition to the traditional physical and value measures of outputs (Lazear:2000). Similarly, the social and ecological costs are now also being recognized as inputs in the productivity equation. With increasing concerns on the social impacts of the operations of enterprises, the definitions of what are inputs and outputs are changing.

The structures of the production-distribution systems are also changing. Products and services and hence customer values are increasingly created through enterprise networks, supply-chains and value-chains that even extend beyond national boundaries. In these situations where an enterprise relies on network of suppliers, service providers, extended and disaggregated supply and delivery networks, its effectiveness and efficiency are very much dependent on the way it manages its value-chain. Davis; Aquilano; Chase (2003), Agreed with this and further buttressed the notion of value-chain roductivity (using a broader notion of productivity referred to above) is becoming of increasing significance. PRODUCTIVITY IMPROVEMENT PARADIGM To be relevant in the dynamic and changing environment, productivity improvement effort must focus on two paradigm: firstly, doing the right things (know “what” to produce and distribute) by continuously reviewing and identifying changing customer and societal needs and expectations (economic, social and ecological) and developing and designing products and services to best satisfy the needs and meet the expectations.

Create more customer values. Secondly doing things right (know “how”) by constantly improving production and distribution processes to produce and deliver the goods and services in the most efficient way while at the same time minimizing their negative impacts (Margiotta; Miller: 2000). Because of the very dynamic markets, rapid advance of production and information technology, changes in resource availability and constantly changing customer needs and expectation, constant innovations in products, processes and organizations are essential for productivity.

Productivity improvement must now focus on value creation rather than on minimization of inputs. Higher customer value is created when the products and services meet customer needs for utility, timeliness, esteem, service, etc. This is what customers buy and pay for. With the rapid advance of technology and greater access to information, customer expectations are constantly changing and becoming more demanding.

For long term productivity and competitiveness therefore, enterprises must constantly innovate (come-up with new and better products and develop better ways of doing things), be flexible and agile, respond rapidly to the increasingly sophisticated customer needs which are constantly changing, and be able to anticipate and adjust to the very dynamic market conditions. THE HUMAN FACTOR INVOLVEMENT Successful organizations meet the needs and expectations of their customers more effectively than their competitors; at the same time, they generate acceptable financial returns. Achieving these outcomes requires competent and committed people.

People, then are critically important strategic resources. Successful companies will be able to attract, motivate, develop, reward and keep skilled and competent managers and other employees. They will be able to create and implement strategic changes in a supportive culture. People need to be used and stretched to get the best out of them but, correspondingly, they need to be looked after and rewarded. Everything that an organization does in the end, depends on people. Although technology and information technology (IT) can make a major strategic impact, it is people who exploit their potential.

Managers and employees are needed to implement strategies and to this end they must understand and share the values of the organization. They must be committed to the organization and they must work together well. At the same time, where an organization is decentralized and operating in a turbulent environment, the strategic leader will rely on people to spot opportunities and threats, to adapt and create new strategies. Consequently, it is people who ultimately determine whether or not competitive advantage is created and sustained. Adding new values with innovation.

They can be an opportunity and a source of competitive advantage; equally unenthusiastic, uncommitted, untrained and can act as constraints to productivity. People’s capabilities are infinite and resourceful in the appropriate organizational climate. The basic test of their value concerns how much they and their contribution would be missed if they left or, possibly worse, left to join a competitor. They could take customers with them and not be easily replaced (Thompson 2004). Achieving the highest level outcomes that people are capable of producing will therefore depend upon the human resource practices adopted by the organization.

While the issues are clear and straightforward, they involve selection, training, rewards and work organization. There is no single best approach to the challenge. A relatively formal, ‘hard’ approach can prove very successful in certain circumstances; other organizations will derive significant benefits from a ‘softer’, more empowered style. One issue here is whether the business is being driven by a small number of identifiable key decision makers or by the employees collectively. Before productivity can be improved upon, people have to be managed well.

This requires leadership. A useful metaphor (employer/employee) is a specialist. With some making a unique contribution which, on occasions, can take the form of a solo performance. Nevertheless, all the contributions must be synthesized to create harmony (synergy), which is the role of the conductor (employer). Moreso, organizations can influence productivity by the sound application of human resource management programs. Specific activities and practices can improve individual performance and consequently organizational productivity.

Motivational and compensational techniques can be used to retain employees and improve job performance. Training and development can improve job performance or rectify deficiencies in skill and competency, in turn increasing performance. Ivancevich (2004) however opined that, to be able to continuously innovate, be flexible and agile, an enterprise must have the competent, skilled, motivated and dedicated people who are working together in an atmosphere of mutual respect, trust and confidence, partnership and collaboration which facilitate cooperation and coordination.

Sustained productivity improvement depends on the enterprise’s human capital (the skills, knowledge, competencies and attitudes that reside in the individual employee of the enterprise) and its social capital (trust and confidence, communication, cooperative working dynamics and interaction, partnership, shared values, teamwork, etc. among these individuals as well as among the different parties the enterprise interacts with in its supply-chain and value-chain including the host community of their operations).

Thus, it is also increasingly being recognized that human and social capital of the enterprise are the sources of long term competitive advantage of enterprises. New product designs get easily imitated or copied and new technology are easily accessed or bought. It is the unique human capital and work systems and relationships that are much more difficult to copy.

The product or service that an enterprise sells to a customer is the result of these series of activities that involve bringing together the inputs required, manufacturing these inputs into the enterprise’s products, transporting these products to wholesalers and distributors, bringing them to the customer through retailing and other outlets, and providing after sales services as required are the essence of human involvement in productivity improvement. The supply chain made-up of segments: the up-stream segments made-up of suppliers of raw-materials, components, services, consumables, etc. the internal supply-chain made-up of the various departments and units involved in the production of the products or services, and the down-stream segment made-up of distributors, wholesalers, retailers and providers of after-sale service all involve the work force in their various activities (Margiotta; Miller: 2000). The building of these unique human and social capitals transcends the traditional boundaries of the enterprises. In an era characterized by production distribution systems based on extensive outsourcing, disaggregated value chain, and alliances and partnerships.

The productivity and competitiveness of an enterprise depend on the human and social capital of its extended enterprise system. Human and social capital of extended enterprise network. One way for enterprises to improve their flexibility, acquire new technical and managerial competencies, increase leverage of their internal resources, and achieve speed in bringing product to market from market research, product development to distribution and retailing is through entering into alliances with its esteemed workforce.

Through cooperation and collaboration with its employees, a company could access new market opportunities and sources of needed inputs; concentrate and perform only those activities and functions that it can do most productively and quickly; have better access to new technology and innovation; learn and access new managerial practices and organizational systems; increase speed of the product cycle; and improve overall productivity. And to achieve this, an enterprise must put into consideration the welfare of its workers. WORKERS’ WELFARE AND MANAGEMENT IDEOLOGIES

The workers welfare however have been misunderstood over the years by management and other authorities within the business and enterprise circle as ineffective and costly and have dubbed incentives as the only tool to encourage their employees to work hard and increase productivity. The bonus plans used vary widely, from complicated stock option offerings to simple employee of-the-month awards becomes often preferred. But do incentives matter? How well do they (incentive plans) really work? How significant are they? What are the welfare gains to the worker and the firm from using incentives?

Do these completely create job satisfaction from the workers perspective? These last two questions are particularly important as it captures both the benefits and costs to achieving workers satisfaction and productivity. It is only by measuring workers’ disutility from effort and comparing it to the gains in productivity, will we have an accurate account of how well workers are provided for. Welfare at work therefore transcends the ordinary pay per work performed to bonus pay. It is an increasing function of the distance between the worker’s productivity and the threshold level (conditional on being eligible).

For any level of productivity below the threshold. With respect to incentives, workers simply earn an equivalent. Because of its structure, incentives and the bonus system creates a dynamic effect within the worker’s problem. The firm’s bonus scheme is designed so that employees are only eligible for incentive pay if their daily productivity is above a threshold level. This kink in the bonus profile creates the perverse incentive for a worker to either quit working hard or die working hard, thereby creating a low measure of productivity in the workforce.

Researchers has also proved that the majority of involvement of the union in industrial relations has been mostly on increment in salaries and or bonuses, and industrial actions when taken on this issue cripples production and the resultant effect is lack of productivity. However, employee welfare is a case where the worker has a high and an increasing productivity because all other incentives that have a bearing on his person, work environment, and his social being are properly considered. This becomes one of the responsibilities of the management to fully take charge of the concerns of the employee.

At this level of manpower productivity, the worker sees him/herself as fully responsible to either the downfall or the growth of the organization. CONCLUSION Surveys and case studies indicate that increased worker welfare and satisfaction can increase worker output and productivity. Progressive, innovative managers now achieve productivity gains with human resource management techniques that go direct to the concerns of the employees, recognizing their productivity challenges and tailoring benefits to meet these challenges with tools beyond pay and statutory benefits that provide the most value to productivity.

The essence of employee motivation and effectiveness is the manner in which they are managed. A direct relationship exists between effective management (i. e. , providing a work environment that simultaneously achieves company goals and employees’ goals) and employee empowerment and welfare vis-a-vis pay incentives. Managements’ success is judged by skill and knowledge applied in recognizing and assessing issues that concern employees, and by their ability to resolve these concerns with employee help and satisfaction.

Getting high quality job performance and productivity improvement from employees is dependent on giving the employees opportunities for their personal growth, achievement, responsibility, recognition, and reward. Therefore there is a need to access whether employees: ?Know how their performance are judged and measured? ?Are encouraged individually through developmental and educational programs and training? ?Are trusted and relied upon in their knowledge and judgment? ?Are allowed to make decisions and are the decisions they made accepted and put into practice? Do employees have timely, accurate, open two-way communication with their employers? Occupational Synergy has a fundamental belief that the health, fitness and wellbeing of employees can be proactively and positively influenced by the employer which in turn brings extensive company benefits including; enhanced staff benefit package, Increased workforce productivity, Improved staff morale and loyalty, Valuable recruitment tool, Decreased absenteeism, Reduced cost through reduction in lost time due to sickness and injury, Reduction in long-term sickness cases, A healthier, happier workforce, Valuable staff retention tool

Pay – money – is just the primary need and reward for the inputs of employees. Once compensation (pay and benefits) is established properly, it is necessary to use other means to further motivate and improve work force’s output. The basis of all job enhancement efforts and productivity improvement is the recognition of workers’ desire to do good work, to assume responsibility, to achieve and to succeed. REFERENCE M. M. Davis; N. J. Aquilano; R. B. Chase (2003), Fundamentals of Operations Management: McGraw-Hill/Irwin inc.

NY 10020, pp 50-77. J. M. Ivancevich (2004), Human Resource Management: McGraw-Hill Inc. NY 10020, pp 33-63. J. L. Thompson (2004) Strategic Management : Thompson Learning, London, WC1R 4LR, pp 471-479. Lazear, E. P. (2000): “Performance Pay and Productivity,” American Economic Review, 90, 1346–1361. Jim Saxton (1996)Twice the workers—and twice the productivity: World Bank Policy Research Bulletin August–October 1995 Volume 6, Number 4 Lazear, E. P. (2000): “Performance Pay and Productivity,” American Economic Review, 90, 1346–1361.

Margiotta, M. , and R. Miller (2000): “Managerial Compensation and the Cost of Moral Hazard,” International Economic Review, 41, 669–719. Oyer, P. (1998): “Fiscal Year Ends and Nonlinear Incentive Contracts: The Effect on Business Seasonality,” Quarterly Journal of Economics, 113, 149–185. Paarsch, H. , and B. Shearer (2000): “Fixed Wages, Piece Rates, and Incentive Effects: Statistical Evidence from Payroll Records,” International Economic Review, 41:1, 59–92.


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