Productivity variables

Productivity variables consisted of factors that are critical to ensure productivity. 3 types of productivity variable is here as discuss below:

v Labor consist of workforce whether skills, semi skill or non-skills. Labor skills are varied but the productivity still can be improved by improving on some key areas that affect the labor. According to Henzer, the labor productivity can be improve by improving on 3 areas which are basic education appropriate of an effective labor force, diet of labor force and social overhead that makes labor available. Social overhead is such as transportation and accommodation provided to foreign labors in Malaysian factories. Labor productivity improvement is the most talk about topic by management because it is something hard to manage as labor quality, skills are different, and parts of results in productivity can be qualitative rather than quantitative.

v Capital is an important asset to improve productivity. Capital goods are ready durable goods purchase used the business capitals that can be used as production function such as machinery and factory building. Businesses are investing a lot of money to equip themselves with latest capital technology or tools to improve their productivity. Example is investment in utilizing new machinery and information technology for production rather than using labor-intensive methods. Interest and taxes affect the capital investment and making it expensive. Drop in capital investment can results in drop of productivity.

v Management is one of factor of production and economics resources. According to survey, management is the most important key to improve significantly the productivity of the organization. This is because management can collect, disseminate and utilize their knowledge and skills to applicable level in organization to see the results in productivity. Management can used labors resources effectively and know how to use cost-effective capital goods to further enhance the business productivity. To create a strong and knowledgeable management, investment in training and education is necessary in organization.

Why organization need to be creative and innovative?

· Things or products will be invented, sold and one day decline in term of its sales and popularity. This is called product life cycle and a lot of technology products nowadays changes very fast to the market trends, technology development, power of advertising, and the taste of consumers. If the organizations are not having creative talents and try to innovate its current products, it may see itself shrinking in the market, revenue and potential lose to its competitors and force to shutdown. See Nokia innovation in market in its mobile phone design. Its 3310 it’s popular in Malaysia market at one time captured large slice of market due to its user-friendly feature. However Nokia keep-on innovates according to latest technology trend and may have to cannibalize its successful 3310 product to ensure its future in the long term because consumer trend is changing fast and product life cycle is short.

· Sometimes it is more on economic opportunities for organization to improve creativity and innovative. Organization need to strive for creativity and innovative because it is already reached a point where all excessive cost has been controlled, downsizing and reengineering may not have work well. So organization must try something different such as innovation in its products or services as a key to continue its sustainability in the market.

· Sometimes organization operates in highly competitive market where most products is quite identical and be replace by any of the consumers who are influence by marketing ploy, pricing, design, historical experience, after market services and other consumer behavior. For example is competitive American car market where Big 3 is competing with a lot of Japanese and Asian car maker to fight for the market. In order to compete in market, constant innovation in products, design, services and price must be place on hand to compete with other organization.

· Continuous improvement will reach a point of diminishing returns. At some point an entirely new platform or category is needed. Motorola seemed to have made this mistake by improving analog cellular phones after the market had shifted to digital technology. For example if company A is producing and improving walkman that play on cassette, it is a no future product because cassette is going to be short in life cycle as constant innovation in disk and flash based system. So in order to survive, it must be creative and innovate in new product line.

· Value and wealth creation is important to ensure a healthy return to organization and the shareholder. Raw material at the very first point is low in value but through upstream production by adding new product process will add up its value to the market. For example if Company B only do plantation of tea, it will only earn its money from selling that raw material. However if the organization creatively add up its own process such as processing the leaves and do packaging and set up own distribution channel it will earn a lot of potential income selling package teas such as Lipton rather than keep on in static manner doing only plantation.

· Sometimes organization needs creativity and innovation to revitalize itself after dampening market situation poor company performance. For example Apple Computer loosing a lot of its PC market to conventional IBM compatible PC market in 1990s. Creative approach and innovation by ex founder Steve Jobs bring the company to life and competitive by introducing newly design translucent Mac, IPod flash based music player and online songs downloading network.

· Strong creativity and innovation will be a reputable name for the organization where organization associated to these values such as Motorola, Apple, 3M and GE is said to be one of the best place to work and employees will have sense of pride in them.

· Creative drive is important to fulfill the high taste and demand from the customers which is ever changing in fast trend line.

· Creative and innovation is important to prepare the organization to face the challenge in the future, Technology is changing very fast and organization must be prepare to be a technological leader to control the market and earn healthy profits in short term. This is because technology catching up game is very fast and in long run all firms will only earn low profits if there are a lot of competitors entering the market.

· Creativity and innovative drive will push up competition and cooperation among all employees in the organization. This will prevent the employees from falling in the comfort zones.

10 barriers for creativity and innovative in organization

* Management support is important because they give direction to the whole organization. If the management does not support innovation and creativity, then it is very hard for the employees to excel. This is because some organization prefers a formal structure where employees are following rules and respect the line authority from higher lever or superior without much questioning.
* Fear of loosing the time, resources and money by buying into the ideas of new creativity or innovation is holding some organization backwards. These risk avoider organization does not want to lose to its competitors by investing into wrong direction which is the end will cause it down. For example some companies are daring to battle for differences in creativity and innovations such as Sony BluRay DVD and Toshiba HD format because they are risk taker. Winner will takes all while losers will end up losing the market and initial investment in R&D.
* Employees fear for critism and lose face. When one to introduce an ideas, the first thing we will think is other people will accept our ideas, will our ideas be seen as ridiculous and laugh by other people and how are the people going to judge us.
* No financial benefits too drive employees. Some organization does not put creativity building is one the priority in the company. They will not allocate a hefty sum of compensation to a person who drives innovation and worst of all there is no such recognition. Remember money is one of the most important factors that drive people’s desire to excel.
* No clear direction form management. Sometimes management put too many efforts in a lot of projects, creativity and innovative drive but focuses none in one of them and the success rate is questionable to the employees. Some management does not do what they actually say. At one time they may say they are encouraging creativity and at one time none at all. These put employees in the gray area do not know actual intention and direction from the management.
* Drive not to align to market. Some innovation is not necessary because it does not reflect the needs and demands from the market. Consumer does not like the products because it is not well positioned and no natter how well innovative or creative it is, without well return on investment the products will be discontinued or fail in market causing losses to the company.
* Few or no empowerment in organization because all employees must follow a strict rules and regulation, formalities and culture that the organization enforce. They cannot think or act freely and thus this will be a barrier for creativity enhancement.
* Comfort zone. When organization already achieve a certain success there will be a comforts zone for employees to develop further. All benefits, systems, business revenues and etc are at their best and employees will think there is nothing more to improve.
* No young driving force. Organization sometimes too depends on all old employees inside without recruiting any young workforce from outside. This old employees which already in comfort zone does not able to think freely like new recruits and their knowledge is not developed because they depends on old past experience and norms in doing their job.
* No training provided by organization to drive and enhance the skills and knowledge of employees in area of creativity and innovative.

10 ways to make staff in organization more creative and innovative.

* Create an open environment where all employees can meet up and share their knowledge, skills and experience during working or non working hours such as having an open system cafeteria in the company. Company can also initiate an open office systems with less cubicle or closed office type because people are more exposed to each others and have ample time to interact to each other more frequently. Allow people to go through with their ideas without going through much of the bureaucratic levels or phases in organization. This wills enhance speed of creative ideas generation and flow in the organization. For example put up a quality ideas box where employee and put suggestion in the box or the company to review it.
* Company must be generous to provide a budget for training and development in the area of creativity development such as sending employees to external training classes related to this area. Employee must be given freedom to choose their preference course titles and write their progress before and after go for the training and what they can contribute to the company.
* Organization must recognized creative ideas and talents and must reward their contributions to the company whether it is in the shape of financial gifts, moral support or public recognition. This will shows that organization is impressed with their employee success and values their contribution to the company in term of innovation, cost saving or other improvement area that is important to every party involved. Sometimes a big thank you appreciation, small tokens such as pen or a informational employee recognition poster on white boards from the top management is enough to satisfy the employees because they knew their work done is not a waste because company already recognized it.
* Free flow of information and knowledge is encourage in the organization to ensure the creative ideas are passed down, shared and analyzed to ensure its feasibility for execution in the organization. Sometimes there are creative people who are introvert or not able to express their ideas through words confidently and persuasively. Be patient with this kind of person and allocate ample time for them to develop their communication skills and on the same time during meeting give them opportunities to talk and expressing their ideas.
* Create a diverse and multi-disciplined team. Nowadays organization began to use more and more multi function teams to solve complex problems that plagued the organization. Multi functional teams consisted of experts from different background such as marketing, engineering, human resources, business, production and logistic who will come together and share their experience and knowledge from different perspective. It is important because problems are viewed in wider angle and team members can understand the market better. For example a team in designing a car can cooperate with marketing people understanding market preference; engineering people discuss on feasibility or design for manufacturing and production or its capability to produce. This will be important because if only engineers opinion are used, may be the car produced its not a taste for the market and if only marketing ideas are taken maybe the car is hard to produced because ideas from marketing people cannot be translated into engineering capabilities. Include also diversity in teams such as different races and cultures.
* Create a more loose working structure to let the employees freedom such as non uniforms requirement, flexible working hours, more relax office styles with small resting area, no language barrier, and of course less rules. These relax and flexibilities can help to ensure the people in organization are not stress by rigid and formal working environments thus enabling them to contribute for efficiently. For example in flexible hours, some people may work better after lunch while some from morning. So to utilize their best advantage working hours, employees can perform better in the organization.
* Not surprising money is one of the main motivators people work in the organization. If there is a budget to compensate for employees for providing creative ideas or works, employees will be motivated and perform even better in the future. The budget will depends on the organization financial status and organization must set a clear guideline how the money is going to be pay to deter any confusion among employees. It is better if the incentive or compensation system is based on team’s performance because it will discourage employees to seek for personal achievement, glory and attention.
* Provide a constructive clear feedback to employees’ ideas contribution whether it is a successful type or a failure. For those who fail give them a channel to improve themselves and contribute for the second time.
* Ready to recruit potential candidates from external to give new ideas as current employees are ease with their current situations and mentality is not agile to receive new things from outside the organization. This will also create a healthy competition among employees in the organization to bring out the best in them.
* Organization can give a sabbatical leave to employees as long leaves abroad can helps employee to think something new from their new sight, experience and findings at the new place.