From the Editor: Pacing Productivity

September 2, 2009
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While there is debate about whether the economy is still in a recession or in recovery mode, one thing is for sure, companies are doing more with less. Worker productivity-the output per hour of all individuals-rose at a seasonally adjusted rate of 6.4% in the nonfarm business sector during the second quarter of 2009, following a pace of 0.3% during the first three months of the year, according to a report released in August by the Bureau of Labor Statistics. This increase in productivity is the largest increase in almost six years.

In manufacturing, productivity increased 5.3% according to the report. The increase in productivity in manufacturing is the result of hours falling faster than the output.

Historically, productivity climbs sharply as the economy begins to turn from recession to recovery.

Will companies respond to the productivity gains and start to rehire employees, thereby alleviating some of the pressure of their current staffs?

According to Quality Magazine’s Annual State of the Profession Study, (Quality Magazine, July 2009, p. 46) when asked how companies meet the quality needs that exceed in-house capacity, the majority of companies, 62%, work overtime-for many it is unpaid overtime-27% outsource the work to a third party and 23% hire temporary workers. Still, another 18% of respondents said, “We don’t. The work simply doesn’t get done.”

But not all companies are facing the same issue. According to the study, during the past year, 43% of companies have maintained the number of employees, while another 20% of companies have increased the number of employees.

Some analysts are predicting that this will be a jobless recovery where businesses will learn to do more with fewer people, meaning the economy grows but employment does not. Other analysts argue that as corporate profits climb, company investments will increase including investments in new employees.

How is your company poised to deal with the recovery? Are they looking to hire full-time, part-time or temporary workers? Will they keep plugging along with the employees that are already in place? What solutions do you have in place?

Share your thoughts with me at campbellg@bnpmedia.com or with other Quality Magazine readers on LinkedIn at http://www.linkedin.com/groups?gid=1876808.

*****

The Business Innovation Conference takes place October 5-7, 2009, at The Illinois Institute of Technology in Wheaton, IL.

The premier event is designed to bring together innovators from leading businesses. Exchange your knowledge, experience and excitement with fellow innovators and aspiring innovators from a broad range of industries and organizations. Highlighted sessions include: Innovation in Tough Times, Opportunistic Innovation, Supply Chain Innovations, Overcoming Barriers to Innovation and Leadership for Innovation. Register now at www.businessinnovationconference.com.

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