Measures for Productivity: Part-II
Prabha Shankar
Executive Vice-President - Manufacturing Engineering at Creative Synergies Group
Enlightened Measures
Enlightened measures are ways of looking at organizations performance from a world class view. Each organization must select measures that are best represented by its goals and objectives. These measures enable monitoring all significant performance aspects of the organization, including the inputs, internal processes, final outputs, and customer satisfaction in different levels of the organization.
The Enlightened measures help us in making business decisions, and identifying the bottleneck areas, so that right actions can be planned to overcome issues and increase productivity and profitability.
The Productivity must be measured in different levels of an Organization to monitor the health from the root to the tip.
a) Employee Level: Where only the Input time and the output work is measured to evaluate the employee’s efficiency
b) Team Level: A measure for the work handled by the team, which is measured for the output achieved by the total work efforts put in by all the team members together. This measure includes the efforts of the Team manager and all the engineers, including the quality checkers. This measure shows the performance of the team, and helps in rectifying the issues and increase efficiency levels.
c) Department / Company Level: This comprises of measuring the productivity for more than one team, including all billing and non-billing staff or departmentally, which would include the output of each and every individual either working on a project, or managing or supporting.
d) Accounting & Finance: There are few measures which are seen in the perspective of Accounting and Finance, these measures are not the financial index or ratios, but which represents the productivity in the organization in terms of finance.
The below are some of the non-traditional measures in different levels which can give complete insight of the business operations.
- 1. Overall Employee Effectiveness (OEE) for Individuals and Team
Employee Availability = (Total Working Hours – All Down time) / Total Working Hours
Performance Efficiency = Number of Hours Billed / Actual Time taken
Rate of Quality = (Total Opportunities - Total Errors) / Total Opportunities
Overall Employee Effectiveness =
Employee Availability x Performance Efficiency x Rate of Quality
- 2. Total Head count Productivity (HCP) for Teams and Departments
HCP = Total Hours Produced (billed) / Total Hours of all Employees (Including indirect staff)
- 3. Billable Hours per Payroll Rupee (HPR)
HPR = Total Hours Produced (billed) / Total Payroll Rupees
- 4. Value Added per Employee (VAE)
VAE = = (Total Sales – Total Cost of Operations) / Total Number of Employees
- 5. Value Added per Payroll Rupee (VAP)
VAP = (Total Sales – Total Cost of Operations) / Total Payroll Rupees
Other Measures that can be used for measuring the schedule and cost variances depending on the business and quality perspective are
- Percentage of Design started that do not finish
- Percentage of Parts that have at least one defect
- Percent of parts that are scrapped / reworked
- Number of Customer complaints / Returns
- Percent of Deliveries On time
- Customer Opinion about our service or quality level.
It is very important that we measure the productivity at different levels and take appropriate corrective and preventive actions so that the productivity can be kept high at all times. The Productivity values can be plotted on different suitable graphs to monitor the productivity and possibly forecast. This needs a meticulous planning and continuous efforts to collect and analyze the data. Keeping up the productivity is like keeping up our good health, for a dynamic and efficient use of life.
Your feedback on this post is welcome - write to prabha_shankar@yahoo.com or Tweet to @prabha_shankar
Risk Manager at McKissack
9yI might suggest that you read contemporary quality theory (6 sigma, lean, etc.) It is hardly a matter of making graphs and charts, but of doing the right thing in the right way at the right time. In any endeavor, you are constrained. A chemical reaction requires a certain run time, and customer service representatives have a limit to the number of customers they can serve with satisfaction. In other words, there are always limits to productivity. You can approach this ideal level (if you can figure out what it is in the first place), and you can make the mistake of trying to manage to a higher level. You can change technology to change a productivity limit. When a computer was a person who did arithmetic, the rate at which calculations could be done limited the complexity of calculations (and the size of businesses as well) relative to what can be computed today. Of course this comes at a cost. Digital film projectors will improve the productivity of movie houses, and perhaps the durability of images, but there is no way to guarantee that a digital image has not been altered. With film, an expert can detect alterations.