South African companies, many of which are operating at between 50%-60% of their potential productivity, will need to urgently address inefficiencies in several key areas if they are going to remain competitive in global markets.
This is according to Arjen de Bruin, operations solutions MD at OIM International – one of South Africa’s leading business consultancy firms – who says that current low levels of labour productivity have the potential to cripple South Africa’s economy as cheaper imports crowd the market. “As productivity decreases and cost per unit increases, local products become more expensive to sell and margins become harder to earn.”
He says stunted productivity is particularly prevalent in South Africa’s financial services, mining, manufacturing and retail industries.
“Even the companies with highly sophisticated technology and the best training programmes have administrative centres that are operating at 50% of their potential levels. We have found that, across a variety of industries, most staff only work 6,5 hours a day including time for meetings and machine failure or downtime,” he says.
Lack of management
According to de Bruin, one of the biggest barriers to productivity in South Africa is the lack of proper measurement. “Companies are either not measuring productivity at all – or the methods being used to assess productivity are out-dated and inaccurate,” he says.
Other barriers to productivity are management’s inability to properly coordinate and execute production plans, a lack of transparency between management and employees and poor first-line supervisory leadership skills. Furthermore, de Bruin says while many companies are very good at formulating detailed strategies and plans; they fail to execute these plans effectively.
De Bruin explains that companies have detailed forecasts that calculate how many employees they will need at certain times such as low seasons, peak seasons and stock arrival days. However, when it comes to practically implementing these time schedules, instead of altering employee working hours and remuneration accordingly, most companies continue as normal.
“As a result, during times when productivity and profit should be peaking, there are too few staff to attend to customers leading to a loss of business and productivity,” he explains.
According to de Bruin, in many cases there is a disconnect between management and front-line employees. He says this leads to a lack of transparency where staff are not informed of what they are supposed to be producing in terms of volume and quality of productivity – and therefore have no way to measure their performance.
In order to address these concerns, de Bruin says management need to ensure not only that they have set the right standards for staff and product lines, but that these standards are communicated to employees and that performance and behavior are frequently reviewed in structured team meetings. It is also necessary that leaders and their teams can anticipate potential obstacles and decide on appropriate action plans to deal with these – thereby engaging everyone/all staff members to improve productivity.
It is therefore critical that leaders are equipped with the ability to execute strategy. This involves management and leadership training at all levels to enable leaders to:
- Create shared purpose and direction among team members
- Establish alignment and focus – establish role and team alignment with clear performance targets and measures
- Build leadership credibility and climate
- Facilitate employee engagement
- Enable continuous improvement of cost, quality and services
- Facilitate measurement and feedback – performance and behaviour measurement and feedback