PRODUCTIVITY AND EARNINGS – PART I

         When it rained for a good part of the morning on Thursday last week, I knew that my gardener and maid had a perfect excuse not to come to work, and yet it did not surprise me when they did not turn up they did not even bother to call me and yet I have bought both of them mobile phones and I occasionally also buy them talk time. This kind of behavior is typical among uncommitted employees (both at domestic and enterprise-level) and they do not even see the relationship between committing to work and earning a salary, let alone contributing to an organization's profitability and the nation’s Gross National Product.
The average Zambian employee will miss work at the slightest opportunity. You can understand the challenge that those who live in places such as Misisi and Kanyama compounds, where the access roads get flooded. But a committed employee who lives in an area that gets flooded will either find a way to wade through the floods and get to work or communicate the challenge to his or her employer. An office assistant at my sister’s workplace managed to get to the office, through the rain and arrived at the office at 10h00 instead of 07h00. To everyone’s amazement, when he arrived, he requested permission to go back home and change because his clothes were wet as he had been soaked by the rains. My sister wondered why this worker did not carry extra clothes in a bag or even plastic so that he could change into dry clothes upon arrival at the office.

God must indeed have had a reason to ensure that we do not experience British weather in Zambia otherwise we would certainly have been poorer than we are as heaven knows how many people would fail to report for work for half the year on account of bad weather. As we discussed the issue, one of my friends stated that it is difficult for people who do not drive to get to the office when it is raining but I reminded him that when we were growing up, we walked to school or jumped onto buses come rain come sunshine. When we started work none of us drove but we still tried our best to get to work on time.

As a nation, we have for a long time now been mourning low productivity. The Minister of Labour and Social Security, Hon Fackson Shamenda, has been for some time now been talking about the need to increase national productivity. For the next three weeks, I will address the topic of productivity and relate it to profitability, customers service and Gross National Product (GDP).

We cannot achieve higher productivity levels until we deal with a mindset change and change our work culture to a more positive one.

The McKinsey Global Institute, in one of their reports, argue that individual companies should strive to improve their labour productivity. Increased productivity will directly result in improved profitability for the company that achieves it, but the relationship between productivity and profit is more complicated over the long term.

The relationship between productivity and profitability can best be explained with a hypothetical example. Imagine a situation where two companies compete in the same regional market with access to the same input factors. Both have similar levels of productivity and profitability. If one company manages to increase its productivity, it will by definition be able to produce the same quantity of goods and services at the same quality level with less input, thereby enjoying a cost advantage.

The company then can use the resulting profit for new investments, or it can distribute profit to shareholders as dividends. The company may also choose to offer lower prices to gain market share or pay higher wages to attract higher-skilled labour.

A one-time increase in productivity, however, will usually not lead to a sustainable profitability advantage. To stay in business, the other company will have to follow suit and improve its productivity. Once the two competitors reach the same productivity levels, they will start to compete on price until the original profitability advantage has disappeared.

In the competitive environment described, the most sustainable source of profitability is constant productivity improvement. In other words, profitability is the fleeting reward of productivity improvement. Feel free to add comments or questions below. Thanks

The author is Managing Consultant of Career Prospects Limited, human resource recruitment and consultancy firm based in Lusaka. 

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