Journal of Management Development 15,7 16

Productivity improvement: a working persons view

Lawson K. Savery
Curtin University of Technology, Perth, Western Australia
Introduction Increase your productivity has been the catchcry of the 1980s and 1990s and appears certain to continue into the twenty-first century. Leaders in business[1, p. 12], unions[2, p. iv] and government[3, p. 33] have all urged the Australian workforce to become more efficient and increase productivity. Indeed, the Western Australian State Government created the Western Australian Productivity Council in October 1989, which was chaired by the Minister for Productivity and included leaders in business, labour, government and academia. Such initiatives are intended to raise the overall level of productivity within the workforce and increase the communitys economic wellbeing. Indeed, 77 per cent of respondents in a Western Australian sample thought that improving productivity was very important while only 3 per cent considered it was unimportant[4, p. 3]. It would seem, therefore, that there is considerable interest in productivity improvement in all sectors of the community and leaders of the community should be interested in understanding if there are perceived problems in the community, possibly preventing it happening. Moves to raise the communitys awareness have also been supported by the formal industrial relations systems in Australia. For example, the Industrial Relations Commission (formerly known as the Conciliation and Arbitration Commission) has tried to create a climate for increased productivity at least since 1987 when it introduced the restructuring and efficiency principle. Increases in pay or improvement in conditions of employment were to be negotiated by the parties in exchange for measures designed to increase efficiency or promote restructuring[5, p. 156]. The restructuring and efficiency principle was aimed at achieving a number of objectives, one of which was improving productivity. However, as Dawkins et al.[6, p. 38] have argued, some of the objectives are in conflict, especially if productivity growth is slow. Chances of improvements in productivity were given a significant boost in the August 1988 National Wage Case by the introduction of structural efficiency principle[7, p. 111]. The emphasis in this wage case was to improve productivity by attempting to remove obstacles that existed in awards, whether shopfloor or management practices. Indeed the process of wage determination, since at least 1987, has led to some forms of decentralization in the wage and working conditions determination processes. However, there has been little attempt to understand a communitys, particularly workers, views about issues and how people are likely to react to

Journal of Management Development, Vol. 15 No. 7, 1996, pp. 16-26. MCB University Press, 0262-1711

suggested changes. It would seem that some understanding would be essential, because without the support of the workers, the idea of productivity enhancement would remain just that an idea. Further, without this understanding, the leaders of business or government will have a difficulty selling the concept to the workforce. The present study attempts to provide such information by reporting the results of a gainfully employed workers survey which, among other things, measured respondents views about productivity. The following sections deal with the sample selection, questionnaire design, analysis undertaken, results obtained and some tentative conclusions. Sample The sample was drawn randomly from the population of metropolitan Perth, Western Australian, using a random area cluster sampling technique initially to select dwelling units. Only one person chosen randomly and aged 18 or over, was interviewed in each household. If no one, or the person chosen, was not at home, a re-call was made and, if after this, there was still no response, or there was a refusal to answer, a new household was chosen by taking the nearest house to the right of the non-response house. Because of Western Australias size a postal survey could have been used. However, because of the range and sensitivity of some of the issues raised and the need to obtain a random sample of adults in a household, a structured personal interview was felt to be the only practical approach to data collection. The structured interview was personally conducted by trained field interviewers who had attended a seminar on the purposes of the questionnaire before undertaking the data collection. The number of contacts made was 536, with 402 usable questionnaires being obtained, resulting in a response rate of 75 per cent, which is acceptable for the type of data collection method used. Of these responses, only those people who were gainfully employed (i.e. those not presently in the workforce e.g. home duties were excluded) were considered. Questionnaire and analysis The questions were formulated and the content validity of the instrument was determined, using a method recommended by Sax[8, p. 168]. A group of eight specialists examined each item of the instrument to see that no item contained vocabulary above the level of difficulty for grade seven schoolchildren and that the items were focused on the influences of productivity enhancement in general and not on a specific industry. A total of 22 questions, which are outlined in Table I, were obtained from this process and respondents were asked to agree or disagree with each statement using a five-point Likert scale, ranging from (1) strongly disagree to (5) strongly agree. Three questions about respondents perceptions of the workforces capacity to improve productivity, outlined in Table II, were also collected as was a series of traditionally collected background data (e.g. age, gender and education) and information on respondents workforce and union experience. The results obtained from analysing the data collected are outlined in the next section.

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Journal of Management Development 15,7

Item

1 5 6 1 12 1 1 1 1 13 17 7 4 1 3 17 1 31 10 6 10

2 10 11 2 20 4 2 3 6 7 29 34 22 18 1 3 32 4 40 23 10 19

3 24 25 10 33 27 16 7 24 35 29 25 34 39 16 29 29 11 21 37 28 32

4 34 37 34 23 39 39 36 40 33 20 17 30 33 56 46 19 42 5 22 39 27

5 27 21 53 11 29 44 54 29 25 10 8 7 7 26 19 3 42 3 9 17 12

Mean 3.68 3.56 4.36 3.01 3.91 4.24 4.41 3.90 3.76 2.84 2.66 3.08 3.20 4.07 3.73 2.59 4.21 2.11 2.98 3.52 3.11

Workers will have to work more efficiently Workers will have to work more flexible hours Workers and management will have to co-operate more 18 Workers will have to work harder Firms need more up-to-date plant and equipment Workers need to be better trained Better management would improve productivity Workers will have to work smarter Most Western Australian organizations could easily increase their productivity Workers will bear most of the cost of improved productivity Increases in productivity will lead to job losses Increases in productivity will lead to lower prices to customers Increases in productivity will lead to higher wages for the shopfloor workers Increases in productivity will lead to better dividends for the shareholders Increases in productivity will lead to better compensation packages for the management Increases in productivity will lead to shorter hours for the shopfloor workers Giving workers a say in how the organization is run will help increase productivity Increase in productivity will lead to poorer occupational health and safety Increase in productivity will lead to fewer industrial disputes Increase in productivity will lead to better quality goods/services for customers Increase in productivity will create more problems for older than younger workers Increases in productivity will be achieved more Table I. by changing shopfloor workers activities Attitudes to productivity than management activities Statement

21

30

30 Yes 71 79 89

15 No 24 16 2

2.50

Do not know 5 5 9

Table II. Ability to improve productivity

Do you think you could improve your productivity? Do you think your colleagues could improve their productivity? Do you think the workforce as a whole in Western Australia can improve its productivity?

Results Demographic data The sample consisted of 65 per cent males with an average age between 35-39 years. Just under 40 per cent of the sample (39 per cent) were under 34 years of age and 2 per cent were aged 65 or more. A majority of the sample (70 per cent) were either married or living in a de facto relationship and 30 per cent were single. Two-thirds of the sample were Australian born with UK and Ireland birthplaces being the next highest (13 per cent) followed by New Zealand (3 per cent) and Malaysia (2 per cent). When Australian citizenship was considered 92 per cent claimed such citizenship. Nearly all of the respondents (96 per cent) claimed English as the major language in the household. As can be seen in Table III, just over one-quarter of the sample had, at best, completed high school, while 42 per cent had graduated from a tertiary institution. Further, approximately one in eight of the respondents had graduated with some form of trade certificate from the technical and further education (TAFE) section of the education industry.

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Type of education Primary school Completed three years high school Completed five years high school Attended a TAFE college Graduated from TAFE Attended a university Graduated from university Still at school

Percentage 1 14 13 3 12 10 42 5

Table III. The highest level of education

Union membership Just under 30 per cent of the sample (27 per cent) were presently trade unionists and this compares favourably with the West Australian figure of 34 per cent for June 1994[9], considering that the percentage of the workforce who are members of trade unions has decreased regularly over the last few years (it being 44 per cent of the workforce in June 1993). Another 38 per cent of the sample had been union members at some time during their working lives. Consequently a majority of the sample had first hand experience with at least one union. The average length of time that present trade union members had belonged to a union was approximately 12.5 years. Of those who were or had been members, and were still gainfully employed, approximately one in three (36 per cent) joined because they believed that they were required to while 11 per cent felt they were required to join but would have joined in any case. Over half of the people who had been or were union members (53 per cent), could be classified as volunteers. It seems from this study, at least, that there has been a change

Journal of Management Development 15,7 20

in the motivation for joining a union and people who join are much more enthusiastic about joining a union than previous studies[10, pp. 41-3; 11] which indicated that most Australian unionists were, at best, reluctant members. It may be that the apparent freeing up of the demand to belong to a union has led to less people being members of a union and consequently those that do belong are more enthusiastic and supportive of the union movement. Although people who were not members of trade unions were not asked if they would like to be trade unionists it seems unlikely that the number would be large considering the option to join an employee association is available in most occupations. Ability to improve productivity There has been a discussion concerning the influence of unions on productivity of workplaces. Some people have suggested that union membership has a positive influence[12,13] while others suggest the influence is negative[14, pp. 206-21]. It would be interesting to see if the membership of a union influences a persons view of his/her productivity level; productivity of his/her immediate work colleagues; and productivity of the workforce in general. The analysis of the data suggests that there is no significant difference between unionists and non-unionists concerning their view of the ability of the respondent to increase his/her productivity or that of the local or general workforce. There is some evidence, however, which indicates that the more remote a group seems to be by an individual the more likely that the group would be perceived more easily to improve its productivity[15]. This feeling also appears to be true for the present study as can be seen from Table II. As can be seen from Table II, just over 70 per cent of the people who were currently gainfully employed in a randomly chosen community sample felt that they could improve their own productivity. Such a large figure would imply that there is a large reservoir of productivity improvement available which is currently untapped. Further, those parts of the workforce which were more remote from the respondent were perceived to be able to improve their productivity more than those closer to individual. This suggests that some people may well believe they were working relatively well but others might not be. This view is one which leaders of business, government and unions must overcome if they are to make productivity enhancement programmes effective and relevant to individuals so that the untapped productivity can be harnessed. People responsible for increasing productivity in an organization It appears from Table IV, that people directly involved in the enterprise, particularly owners and managers, are perceived to be responsible for increasing the productivity of an organization. It can be seen that nearly 60 per cent of the sample believed that the owners and managers were the most responsible group for improving organizational productivity. It is interesting that shareholders were not perceived to be responsible for productivity enhancement within organizations since they own the organization. This is a surprising outcome because one would expect that they would be perceived to be ultimately

responsible for the improvement in productivity to protect their investment. One reason for the findings could be that shareholders are perceived to be the ones with a small number of shares and/or little influence on the organization and, therefore, have little effective control over the organization. This conclusion may well explain the finding that the most important group responsible were owners/managers who could have more at stake than small shareholders. Nevertheless, any increase in productivity must be divided between the three stakeholders, namely the managers/shareholders, workers and customers. When consideration was given to the percentage of the saving due to productivity enhancement that each of these stakeholders within the organization should get, the average percentage for management/shareholders was 29.5 per cent. It is interesting (see Table V) that 17 per cent of the sample suggested that this group should get nothing while less than 1 per cent suggested they get everything. Concerning workers, the average percentage to be received was similar to the management/worker group (28.9 per cent). However, 15 per cent thought that workers should get nothing and 1 per cent thought they should get everything. The customer average percentage was 25.5 per cent with 18 per cent believing that the customers should receive nothing from the productivity enhancement and nobody believed they should receive all of the savings. It can be seen from Table V that 19 per cent of the sample believed that management/shareholders should get 50 per cent or more of the rewards, while 12.1 per cent thought that workers should receive such a split and only 8.4 per cent thought that customers should receive such a margin of the rewards.
People responsible for increasing productivity Business owners/managers Shareholders State government Workers/workforce Government at all levels All Australians Managers and workers Percentage 58 1 1 11 1 7 21

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Table IV. People responsible for increasing productivity in an organization

There was no significant difference between current members of the trade union movement and non-members when it came to the split of the benefits obtained from productivity enhancement programmes between the three stakeholders. When asked to rank the four groups who were most important for pushing productivity enhancement programmes it appears from Table VI that the management of the organization followed by the Governments, at both State and Federal level, were considered the most important in pushing for increased productivity.

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Percentage 0 10 20 30 40 50 60 70 80 90 100

Managers/ shareholdersa 16.6 19.4 27.5 45.5 81.0 95.3 95.7 97.6 99.1 99.5 100.0

Workersa 15.0 16.8 23.8 51.4 87.9 93.5 97.7 98.6 99.1 99.1 100.0

Customersa 17.8 22.8 34.2 54.0 91.6 98.0 99.0 100.0

Table V. Split of rewards caused by productivity enhancement

Note: aThese percentages are cumulative

The findings (in Table VI) are interesting because they identify that the working people in the community are of the opinion that it is the political leaders rather than business and union leaders that are important in pushing for increased productivity. However, the most important group was perceived to be management at the organization level but this group does not seem to have infused the importance of such an idea into their own workforce. This is a major problem because if the workers are not supportive of the productivity enhancement programmes, and they are certainly not seen as an important group pushing the programmes, then the programmes are likely to fail because
Groups Rank 1 14 22 2 1 1 3 27 9 8 1 Rank 2 23 11 4 2 1 1 3 20 11 6 1 Rank 3 12 12 3 1 3 5 5 18 9 12 4 Rank 4 28 17 7 1 5 4 12 12 10 9 3

State government Federal government Union leaders State opposition Federal opposition Shopfloor representatives Workers in the organization Management of the organization Shareholders of the organization Table VI. Percentage of respondents Employers association who ranked the group Industrial tribunals in the four most important categories Note: 1 = most important

it is this group which is directly involved in producing the improved productivity and this may be one reason why such a large percentage of the sample said they could raise their own productivity. Another reason may be the peoples attitudes to productivity. Respondents were asked to respond to a set of 22 questions which tapped a variety of aspects of productivity. The results obtained are outlined in Table I. It is interesting to note that the respondents believed that an increase in productivity will yield better returns to the shareholder (82 per cent agreeing and 2 per cent disagreeing) and better compensation packages to management of the organization (63 per cent agreeing and 6 per cent disagreeing) than yield shopfloor workers higher pay (40 per cent agreeing and 22 per cent disagreeing). This finding, coupled with the belief that an increase in productivity will create more problems for older workers than younger workers, could be a major detractor from increasing productivity, particularly since workers were ranked so low as one of the major pushers for productivity enhancement (see Table VI). The negative affect of productivity increases on workers is the view held by 58 per cent of the respondents who thought that they would have to work flexible hours and one third of the respondents who believed that workers would have to work harder. Many people who are supportive of productivity enhancement are of the opinion that workers need not have to work harder but, rather, can work smarter or more efficiently. A majority of the sample (69 per cent and 61 per cent respectively) agreed with this argument, but many of these also saw that workers would have to work harder. There are some significant differences between current members of the trade union movement and non-members. It appears that unionists are more likely to perceive that productivity improvement will have a negative influence on the working lives of workers than non-unionists. For instance, current union members believe that workers will bear most of the costs of any productivity improvement (t = 3.12, p = 0.003) while not receiving higher pay (t = 2.46, p = 0.016). The costs born by the workers for increasing productivity could include job losses (t = 2.75, p = 0.007), no reduction in industrial disputation (t = 2.55, p = 0.012), older workers facing more problems ( t = 2.71, p = 0.007) and, although not significant at an acceptable level, poorer occupational health and safety (t = 1.92, p = 0.056). These findings suggest that unionists are less happy with the productivity enhancement programmes than non-unionists. If consideration is given to those people who believed that productivity increases would mean that people would work harder they also perceive that people would have to work smarter, more efficiently and be more flexible (2 significant at p < 0.001). It is interesting to note that less respondents believed that people will have to work harder than accepted that people would have to work smarter, be more flexible and be more efficient (t-test significant, p < 0.001). It seems that the higher a person is in an organizational hierarchy the greater will the perception be that an increase in productivity will be due to workers working harder (2 = 22.63, p < 0.001). There is, however, no difference between hierarchical positions when considering if workers would have to work smarter,

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Journal of Management Development 15,7 24

be more efficient or be more flexible. Further, the higher managerial hierarchy seem to believe that increased productivity would lead to an increase in shopfloor wages but this is not a view shared by the lower echelons of the organization (2 = 14.82, p = 0.022). This suggests that the higher levels of management are more likely to see an increase in productivity of an organization to be related to increasing workloads for workers but workers are less likely to see this converted in monetary rewards. Workers and first-line supervisors, on the other hand, were more likely to perceive that an increase in productivity would lead to job losses (2 = 12.96, p = 0.044) and lower occupational health (2 = 14.47, p = 0.025). This view, that workers are not going to benefit from productivity improvement is indicated, even if not at an acceptable statistical significant level, by the view that workers will bear most of the costs of productivity (2 = 11.66, p = 0.069) and the view that productivity improvement will produce shorter hours for the shopfloor workers which is held more by higher management than respondents in lower hierarchical positions (2 = 11.06, p = 0.086). Over a third of the respondents (37 per cent) believed that increased productivity would lead to lower prices for customers (29 per cent disagreed), while over a half (56 per cent) suggested that productivity enhancement would produce better quality products and/or services. These findings would suggest that there was a group of respondents who perceived that the customers, namely the third stakeholder, would receive some of the benefits of productivity improvement but that the major beneficiaries would be shareholders and managers. The perception of who would be the major beneficiaries is interesting because when the respondents were asked to identify the groups who were responsible for increasing productivity in an organization nearly half of the sample (49 per cent) named the business/owner managers followed by the workers (9 per cent) while only 1 per cent of the respondents named the shareholders. Therefore, while workers were considered to have a major responsibility for improving productivity compared to shareholders the latter group were expected to be major beneficiaries of improved productivity. Nearly one-third of the respondents (30 per cent) believed that the workers would bear most of the costs of improving productivity, one in four were of the opinion that increase in productivity would lead to job losses and 33 per cent considered that industrial disputes would not be decreased by productivity improvements. These rather negative feelings towards productivity enhancement by a sizeable minority indicate that some care should be taken in explaining productivity enhancement programmes. Conclusion It appears from this study that people who are gainfully employed are more likely to believe that those groups furthest away from them are the ones who could best improve their productivity. This finding suggests that the leaders of the community, be they politicians, union or industry must be aware of the factor

that many people believe that other people will find it easier to improve their productivity than they could do personally. Since productivity enhancement is going to involve active participation of an individual then the individual must believe that productivity enhancement is a responsibility of each person. Managers and owners were considered by the majority of the respondents to be responsible for increasing the productivity of the organization while only one in ten of the respondents thought workers were responsible and only 1 per cent thought it was shareholders. These findings were supported by the view that management of the organizations were ranked as the most important group for pushing productivity improvement followed by governments at both State and Federal level with shareholders ranked fourth. It can be seen that workers were considered not to be very important for pushing productivity but responsible for productivity improvement. The increase in productivity will have to be divided between the three stakeholders, namely managers/shareholders, workers and customers. It appears that the working people believe that managers/shareholders should receive approximately 30 per cent of the savings, workers 29 per cent and customers 26 per cent. There was no difference between union and non-union members concerning the split of rewards, caused by productivity enhancement, between the stakeholders. It can be seen from the results that customers were considered to get only slightly less than the other two stakeholders. Further, from the reported results, even though the people perceived a similar split for the three stakeholders concerning the savings, in reality they perceived that the rewards would favour management and shareholders. The rewards were perceived to lead to better dividends for shareholders and managers than for shopfloor workers in the organization. It seems unlikely that workers will increase their productivity if there is a perception that there will be very little immediate reward. This problem is further exacerbated because the respondents believe, as said earlier, that workers have a larger responsibility for increasing productivity in an organization than shareholders but are seen as likely beneficiaries of productivity enhancement programmes. Political, union and industrial leaders must make an effort to convince workers of the benefits of increased productivity and offer rewards commensurate with the increase achieved. They must also ensure that the rewards are equitably distributed between the stakeholder groups. While there is some support for productivity improvement it is far from universally accepted and needs appropriate encouragement from the relevant authorities, particularly the management/owners of the organizations.
References 1. Confederation of Australian Industry Industrial Council, Employee Participation: A Guide to Realizing Employee Potential and Commitment, Confederation of Australian Industry, Melbourne, 1987. 2. Confederation of Australian Industry and Australian Council of Trade Unions, Joint Statement on Participative Practices, Melbourne, 1988.

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3. Department of Employment and Industrial Relations, Industrial Democracy and Employee Participation: A Policy Discussion Paper, Australian Government Publishing Service, Canberra, 1986. 4. Benjamin, C., Report on Attitudes to Productivity, Productivity Information Series No. 3, Productivity Policy Unit, Government of Western Australia, 1989. 5. Petridis, A., Wages policy and wage determination in 1987, Journal of Industrial Relations, Vol. 30 No. 1, 1988, pp. 155-62. 6. Dawkins, P., Dufty, N. and Norris, K., Wages Policy Developments and Western Australian Labour Market, Discussion Paper No. 88/4, Western Australian Labour Market Research Centre, 1988. 7. Norris, K., Wages policy and wage determination in 1988, Journal of Industrial Relations, Vol. 31 No. 1, 1989, pp. 111-7. 8. Sax, G., Empirical Foundations of Educational Research, Prentice-Hall, Englewood Cliffs, NJ, 1968. 9 Australian Bureau of Statistics, Trade Union Statistics, No. 6323.0, Australian Government Printers, Canberra, 1994. 10. Rawson, D.W., Unions and Unionists in Australia, George Allen and Unwin, Sydney, 1978. 11. Savery, L.K. and Soutar, G.N., Community attitudes towards trade union effectiveness, Australian Bulletin of Labour, Vol. 16 No. 2, 1990, pp. 77-89. 12. Freeman, R. and Medoff, J., What Do Unions Do?, Basic Books, New York, NY, 1984. 13. Hirsch, B.T. and Addison, J.T., The Economic Analysis of Unions , Allen and Unwin, Boston, MA, 1986. 14. Crockett, G., Dawkins, P. and Mulvey, C., The impact of unions on workplace productivity and profitability in Australian workplaces, The Economics and Labour Relations of Australian Workplaces: Quantitative Approaches , Australian Centre for Industrial Relations Research and Teaching, The University of Sydney, Sydney, 1993. 15. Savery, L.K. and Soutar, G.N., The effects of productivity enhancement: some community views, The Economic and Labour Relations Review, Vol. 3 No. 1, 1992, pp. 178-87.