Raising productivity growth

I REFER to the report “Malaysians lag in productivity” (see the related posts below). The recent findings by the Malaysian Productivity Corporation (MPC) shows that our worker productivity levels, productivity growth and productivity value are lower than several leading industrialised economies and even some developing countries in our region.

That’s serious and calls for a more specific analysis of the situation to identify the real causes and institute urgent remedial measures involving all factors that influence productivity. MPC is of the view that even with our 2011 productivity growth rate of 4.55%, we are still on track to become a high-income nation by 2020.

It must, however, be understood that when any single factor of productivity or total factor productivity is low, economic growth will not be sustainable over the long-term and will instead decline and with it bring down both employment and incomes.

Some reasons have been cited for our low worker productivity levels, such as workers who prolong working time to perform a job thus increasing costs, poor working conditions, low-level of worker motivation and lack of incentives, among others.

As the Malaysian Trades Union Congress (MTUC) and the SME Corp have pointed out, a major factor that keeps worker productivity levels low is the massive hiring and continuing dependence on low-skilled, especially foreign, workers, who make up a fifth to a third, or even more, of the workforce in various industries.

Also, the use of low, or even medium, level technology and the preponderance of low value-added industries dominating the economy, contribute to low worker productivity levels.

Clearly, in order to boost overall productivity levels, there is an urgent need to pursue quality growth by investing in and providing incentives for:

1. > Upgrading skills;
2. > Increasing local worker employment levels;
3. > Encouraging high value-added industries in all sectors of the economy; and,
4. > Tightening foreign worker policies.

Other measures should include increased partnerships with leading global companies, developing the talents and skills needed to support such businesses, promoting high-end local enterprises and investing in a strong 21st century education system.

While rewarding employees through increases in wages and benefits might please them, it should never be done on an adhoc basis nor as a mere handout exercise for whatever reason.

If rewards are to serve as incentives to increase productivity levels, such benefits must be for better performance that is measurable, and that leads to higher level and quality of output and gains.

Underlying the need to raise productivity growth and worker productivity levels is the importance of cooperation between the management or employers and workers in fostering a conducive working environment and increasing the quantum and value of goods produced or services delivered.

There has to be genuine scope for ongoing mutual dialogue among these “social partners” that promotes consensus-building and the democratic involvement of those with vital stakes in raising performance, productivity, profitability and personal rewards.

RUEBEN DUDLEY Former United Nations / ILO Regional Deputy Director for Asia & the Pacific

Related posts:
Malaysians lag in productivity 

Performance culture lacking, Malaysian workers!

Are we competent with competencies?  

Are we competent with competencies?

Are you thinking of having or reviewing a competency model? Here are some tips on it

UNFORTUNATELY, the answer to this question, for many organisations, is a resounding NO!

Ever since psychologist David McClelland suggested that we should move away from the traditional measures of predicting job performance in Testing for Competence Rather than for Intelligence, in the early 1970s, many businesses and organisations have used some form of competency model as a key business tool.

Think about your own business or organisation, I am sure that you “have had, have, are thinking of having or are reviewing...” a competency model at this time.

Where are you on that continuum? The key questions are, “Why hasn't competency modeling delivered on its promise for many organisations?” and “Do competencies really add value to businesses and organisations?”

Have competencies been “a HR toy” and not a business tool? Let's look at some of the research behind competency modeling and see if we can answer these questions.

The use of competency models started with McClelland's work in the early 1970s.

A decade later, in 1982, Richard E Boyatzis illustrated a logical, integrated model of managerial competence in his seminal book called The Competent Manager.

His model provided a context for understanding the demands of management, and helped managers understand the competencies required to be more effective.

So, given that we had a reasonable start to the use of competencies in business why haven't competency models delivered greater impact into organisations?

In The Leadership Machine, Lombardo and Eichinger showcase research indicating that most organisations and their leaders identify the wrong competencies for success they don't know how to get at the essence of competency requirements.

They also show that many competency models are too compound trying to cram too many competencies into just five to 10 statements and hoping that will do the job!

In addition, a set of “Core Competencies” can't do the whole job for an organisation either jobs and roles are unique and generally require 20-25 competencies to describe the “Success Profile”.

The truth is all organisations need multiple competency models to fit their many different needs.

Yet, many organisations seem to think that a “one size fits all” approach will work. It's not that easy, I'm afraid.

A great starting point for an organisation, however, is a “Strategic Leadership Model”.

At least, that will let your leaders and aspiring leaders know what the organisation (normally the CEO and the board) thinks is going to be required to be a successful leader over the next five years or so.

A global Conference Board study from 2012 asked senior executives what were the most important items on their talent agenda. The top four (in order) were:

• Grow talent internally;
• Improve leadership development;
• Provide training and development; and
• Hire talent in the open market.

These are all great things to do high on your agenda, too, no doubt!

My question is the same for each point grow to “what”, improve against “what”, develop to “what”, hire against “what”?

I'm sure that you get my point.

Unless you can clearly define what you need in each area usually through a good Competency Model then you really don't know how to direct, focus or orient your growth, leadership development or hiring. Competency models are very powerful tools in this regard.

There are many good researches that show how the effective use of competency models can make a powerful business impact for an organisation.

Here are just a few. A longitudinal study by Russell in 2001 showed that top-level corporate executive performance can be reliably predicted by a leadership competency model. In addition, he showed that a competency-based executive assessment and selection process lead to an increase of US$3mil (RM9.29mil) in annual profit per candidate selected into the organisation.

Pluzdrak conducted a study in 2007 on the effectiveness of a Leadership Development programme and showed that positive changes on the key leadership competencies of individual leaders were positively correlated with both increase in net revenues and profitability!

A 2008 study by Clark and Weitzman used regression analysis to show that the demonstration of 13 core management competencies accounted for 54% of the difference in first-year sales commission and 30% of the difference in levels of retention.

They also found that developing people to be one standard deviation better on the key competencies driving performance generated an additional US$467,000 (RM1.45mil) per person every year!

The original question for this article was “Are we competent with competencies...?” Take a good, hard look at your own organisation and ask the same question.

If your answer is “No, not really... Not as good as we should be...” then remember that you can be and that there is every reason “Why you should be” and “Why you need to be”.

Talking HR with Graeme Field

Graeme Field believes that doing the basics' right getting the fundamentals in order is key to driving organisational success in the future. What we do operationally' today really does impact what happens strategically' tomorrow!