Top Issues An Entrepreneur Must Know About Productivity – Part 2

Welcome once again.

Being the second part of this article, today I would like to briefly consider the major production resources, and try to bring out productivity issues regarding them. As I mentioned last time, most people talk about productivity in relation to staffs or human resource, but forget that there are other areas of productivity that are even more critical.

All productive resources be it labour, materials, money etc have to be looked at in terms of productivity. Don’t you think so? Would it not make a lot of sense to ensure that whatever you have in your entrepreneurial hands are well managed to ensure maximum productivity and return on investment? So, we will take a quick look at these resources below.

  • Labour – I will start with labour productivity, at least to make some people happy, as I mentioned before that many entrepreneurs and leaders talk about productivity with special emphasis on labour. Anyway, what do you get per hour of labor input Mr. Entrepreneur? Are you content in having staffs clock in and out daily, with a well- kept log-in register but hardly anything to show for the countless man-hours? Of course you can explain away your poor business circumstances and blame the economy, not knowing that you are paying money for near-nil labour productivity. Couldn’t this be possible?
  • Machinery – What about making those poor machines run for countless hours and produce hardly anything. You could call it scrapping by or hard work. Isn’t it? Do your understand machinery productivity? What output does your enterprise have for every hour the machines run? It is not just about running machines Mr. Entrepreneur. Do you get what I mean? I know some people do not even oil and grease the machines, leave alone other forms of maintenance, not knowing that these determine what they get per hour of running the machines. If machines could talk, I think they would blacklist some entrepreneurs! Are you among them?
  • Materials – Again, some people have a faint idea of material productivity. You might think I’m not speaking the truth but I am. I have met people who easily explain away 40% material loss. It’s even worse when they think this is normal and they defend their waste very seriously. Now, don’t get me wrong. You might be in some extractive industry where the 40% loss is normal. OK? But what is the normal material waste or loss in your industry? Do you have an idea? Have you considered ways of improving output per unit of material you put into the process in your enterprise? Have you considered the impact of your machines and labour on materials productivity and waste?
  • Land – When I talk about land some people’s minds run to farming, a thing that some people do not like at all and yet they expect food products to be available in the market. For you to appreciate land productivity, think of any piece of land that you own or have control over in terms of use. Even when your enterprise is purely a manufacturing one, your plant and machinery and factory premises still sit on land anyway, not in space. What returns are you getting from the utilization of that land under your control? How does it compare with what others are gaining from the same land? How does it compare with the potential?
  • Money – Finally, we have money, the thing that speaks the language that everybody understands. If you gave 10,000 dollars to two individuals and allowed them say 10 years to multiply that money, you might be very surprised by the result of comparing the outturns or returns after that period. Money begets money – though this rule does not apply to everybody. Some people are so daft, I mean so financially unintelligent, that even a zillion dollars inflow cannot redeem them because they would lose it all in a short time. They would just remain as poor and as hopeless as they were simply because they have no clue about managing the money. Money productivity differs depending on how you manage it and what you invest it in. Keeping your money in the bank certainly will not give you the kind of returns you would get when you invest in a profitable business. Don’t you think so? As an entrepreneur, do you consider money productivity or returns before choosing your investment options?

So, as I conclude this brief article today, you had better start looking at productivity from a broader perspective. Bring into focus all the productive resources you have, those that you have mobilized and those that you have borrowed. Make decisions that will rapidly multiply the talent (read resource) that you have. To him that has more, more shall be given. If you choose to do the opposite, that’s up to you, but don’t come back crying about losses in your enterprises, because low resource productivity is a good friend to business losses.

At least, we have looked at productivity (output per unit of input) without all those numbers and calculations that some people fear like a plague. Haven’t we? Cheers!

Till then,

The Wise Entrepreneur


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