ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
CORPORATE PLANNING AND CONTROL OF
PRODUCTIVITY - AN EMPIRICAL STUDY
J. M. Mclnnes
WP 1324-82
June 1982
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
CORPORATE PLANNING AND CONTROL OF
PRODUCTIVITY - AN EMPIRICAL STUDY
J. M. Mclnnes
WP 1324-82
June 1982
CONTENTS
I.
II.
INTRODUCTION
RESEARCH DESIGN
2.1 - Questionnaire
2.2 - The Survey
2.3 - Data Analysis
III.
DATA TABULATION
3.1 - Response Rate
3.2 - US Responses
3.3 - International Comparison
IV.
CONCLUDING COMMENTS
Footnotes and references
TABLE
2:
TABLE 3:
US RESPONSES TO QUESTIONS
US INDUSTRIALS, UK AND JAPANESE RESPONSES TO QUESTIONS
APPENDIX A - QUESTIONNAIRE
INTRODUCTIO N
I
Considerable concern has recently been expressed about the decline
the
rate
growth
of
attention
of
been
has
productivity
focussed
at
in
United
the
national
the
that
to say,
is
the
of
relatively
with
level,
being accorded to the problem at the micro level,
Much
States.
in
less
at
the
level of the individual firm.
reports
paper
This
results
the
of
survey
a
corporate
of
managerial
practices in respect to the planning and monitoring of productivity.
study
The
part
is
of
a
program
broader
research.
of
comprises a number of strands, including the following:
a
normative
and
economics
management
prescriptive
and
corporate
of
productivity
corporate
planning
productivity;
of
framework,
in
US
literature
the
guide
study
companies;
industry and firm-specific movements
analysis of
to
the
of
the
2
in
(c)
program
development of
(a)
on
control,
empirical
an
(b)
managers
and
drawing
The
a
of
corporate
role
of
longitudinal
productivity,
and
the
relationship between productivity and profitability, based on the US airline
industry;
3
and
(d)
case studies in a number of
,
of new technologies
companies of
paper
begins
by
describing
the
research
4
design,
the
choice
sample of companies, and the approach to the analysis of the data.
section
comments.
presents
The
adoption
(specifically, computer-aided design and computer-aided
manufacturing methods) aimed at enhancing productivity.
The
the
the
data
analysis,
along
with
brief
some
of
a
The next
interpretive
paper concludes with a discussion of the research, including
suggestions with regard to a continuation of the investigation.
II
In view of the
dearth of information about corporate approaches to the
management of productivity,
at
beginning
to
RESEARCH DESIGN
compile
an
this particular phase of the research was aimed
empirical
base
relating
to
the
problem.
A
was
approach
questionnaire
limitations of
this
as
Follow-up
research method.
a
were provided for
by asking on
respondents would
be
willing
the
considerable
the
telephone
interviews
the questionnaire whether
face
spend
to
recognizing
even
adopted,
some
on
time
the
or
telephone
not
with a
member of the research team.
2.1 - Questionnaire
A
copy
of
questionnaire
the
reproduced
is
Appendix
as
It
A.
was
pre-tested using a sample drawn from among the participants on an executive
program being run in the School.
The intent was that
should require no
it
more than 15 minutes to complete.
Briefly, the topics covered by the questionnaire are:
of productivity as a managerial issue
any
increase
problem
in recent
(questions
1
years
and
the salience
and an identification of reasons for
,
degree
the
of
urgency attributed
outline
broad
the
(2)
2);
approaches to productivity,
of
in
(1)
the
managerial
formal
of
to
including the degree of overall centralization
productivity management
(question
3)
,
whether
not
or
strategic
goals
relating to productivity are explicitly defined (question 4) and if so the
degree
of
centralization
quantification
(question
goal
of
4-ii)
,
the
definition
degree
of
(question
centralization
and
4-i)
of
planning
aimed specifically at attaining productivity goals (question 5), aspects of
the measures used to track productivity performance (question 6),
the extent
to which performance in the area of productivity explicitly enters into the
managerial review and reward process (question 7),
not
a
corporate
executive
has
been
and finally,
designated
as
having
whether or
explicit
responsibility for productivity and, if so, some of the details of the role
and the person filling it
which
conflict
performance
exists
areas
(question 8);
between
(question
(3)
productivity
4-ili)
;
(4)
a
perception of the degree
goals
perceptions
and
of
goals
in
to
other
managerial beliefs
.
productivity,
and attitudes about
its
sources of
factors
and
improvement,
hindering its improvement (question 9); and (5), some descriptive background
data relating
including its
company,
the
to
past
and
expected performance
(question 10)
2,2 - The Survey
The main focus of the research was defined to be large US corporations.
Questionnaires were sent to the 300 largest US industrial companies (ranked
sales revenue)
by
largest 50 companies of each of
and the
,
commercial banking,
industries:
diversified financial services,
insurance,
retailing, utilities, and transporation.
following
the
Thus,
total of 600 US companies
a
were included in the sample.
It was also considered of
Two foreign countries were chosen,
in other countries.
and Japan.
The
interest to compare US practice with practice
chosen
UK was
because
the
of
the United Kingdom
longer
period
economic
of
difficulty (accompanied by a relatively low rate of growth of productivity)
which
the
country
experienced
has
chosen for the opposite reason.
compared
with
the
Japan
And
US.
was
The 100 largest companies in each of these
countries were included in the sample.
In total, therefore, 800 companies were surveyed.
questionnaire
The
Planning
"Chief
companies
in
respondents;
offered.
bias
use of
to
fluency
to
with
a
covering
a
letter
addressed
to
the
each
of
the
corporate headquarters
the
A tabulation of
sample.
respect
widespread
sent,
Executive,"
in addiition,
The
in
the
was
copy of
the
the
of
survey data was
working
paper
offered
(Mclnnes
[1])
to
was
English was not considered to be a serious source of
the
in
Japanese
English
sample
among
of
Japanese
companies
in
executives.
view
The
of
the
executive
responsible for planning was chosen because of the questionnaire's emphasis
on
the
linkage
between
productivity
and
the
planning
and
monitoring
of
resources at a corporate level.
2«3 - Data Analysis
questions
Most
perceptions about
the
anchored
were
scale
asked
respondents
scale
a
topic addressed by each question.
by
qualitative
statements,
ends
The
order
in
1-7
of
their
of
the
allow
to
an
A mean score for each question was
aggregation and comparison of responses.
.
on
convey
to
computed for each defined population of companies in the total sample;
the
standard deviation was also computed to provide a rough indication of
the
dispersion of individual responses around the mean score for each question.
For
few
a
questions
"yes-no"
a
type
requested.
was
response
of
In
compiling the data, a "yes" was given a value of 1 and a "no" a value of 2;
mean scores were then calculated.
The population of US industrial firms was used as a basis of comparison
for
the
industry groups
surveyed,
were compared with
from the
and
the mean responses
of
firms
the
in
the
other
the
samples
UK and Japanese
respective
the
groups
and
sample
the
"difference-of-means" test (T-test) was used.
statistical confidence
the
from
of
US
firms,
industrials
US
To indicate whether or not a difference exists between the' responses
group.
from
The mean responses
other populations of firms.
respective
sizes
(given
value
the
the' samples
of
of
firms
a
This test simply measures the
difference
the
of
industrial
US
and
compared,
being
in mean scores,
the
standard
deviation from the mean score of responses in each sample) with which the
hypothesis
can
be
rejected
effectively the same.
a
difference
results,
it
is
means
that
the
mean
scores
two
the
of
A 95% criterion is used in the analysis.
indicated
that
as
there
being
is
at
significant
least
a
the
in
95%
samples
are
Thus, where
tabulations
probability
that
of
the
difference is real as opposed to being simply a random measurement error.
The
analysis
is
undeniably
crude
at
this
stage,
and
will
require
considerable
subsequent
refinement.
In
particular,
the
T-test
normal distribution of responses, which may not be the case.
If
assumes
a
responses
are not normally distributed, a non-parametric test of differences should be
employed.
The justification for .using the current approach is simply one of
parsimony of effort to get a "first cut" at the information contained in the
data.
Ill
DATA TABULATION
3.1 - Response Rate
The
response
rate
to
the
survey
is
shovm
responses are included.
TABLE 1:
RESPONSE RATE
Number
Sample
US Industrial Companies
Commercial Banks
US:
Insurance Companies
Diversified Financial Services
Retailing Firms
Utilities
Transportation Companies
British Companies
Japanese Companies
TOTAL SAMPLE
in
Table
1.
Only
usable
3.2 - US Responses
responses
The
The
;
the
firms
US
presented
are
Table
in
2
(see
indicate
that
Some interpretive comments follow.
pages 17-21).
Ur gency
for
responses
mean
industry
all
in
groups
productivity is a managerial issue viewed as having considerable urgency; it
moreover,
has,
assumed
greater
importance
recently.
firms
The
the
in
transportation industry perceive productivity as a particularly significant
recent
problem,
and
concern.
It is likely
events
precipitated
have
acuteness
the
their
of
that the de-regulation of much of the transportation
industry underlies the level of concern for productivity expressed by these
firms.
An analysis of the factors causing increased concern over
suggests
that
productivity
the
problem does not
(or
profitability)
from measured
stem directly
itself.
productivity
other
In
trends
in
adverse
words,
circumstances external to the firms have induced a managerial response which
is
directed
particular,
internally
to
the
productivity
escalating factor costs appear
In the case of
the
industrial firms,
the
of
to
Increased
over
competition
productivity,
(although
respective
the
the
also
is
especially
insurance
foreign competition).
inputs
an
so
companies
each
in
important
in
the
are
of
all
factor
inputs
presumably reflecting the
industry's
reason
banking
for
and
significantly
Faced with less latitude
and with escalating costs,
In
For the other industry groups some
input factors have had greater or lesser impact,
of
operations.
have been a major stimulus.
increasing cost
has induced a concern for productivity.
composition
firms'
to
cost
function.
heightened
insurance
less
concern
industries
concerned
increase
output
about
prices
productivity gains may be seen as a main avenue
for sustaining profitability.
Managerial Approaches
dominant response indicates
The
;
that
balance
a
is
struck between centralization and decentralization in the overall approach
to
management
the
centralized
its
in
decentralized.
period
approach,
the
In
case
banking,
the
investment
in
of
industry
banking
The
industrial
and
substantial
very
of
productivity.
of
is
the
most
the
most
and utilities
firms
industry
through
going
is
with
technologies,
new
a
the
potential for radical improvements in productivity, and the coordination of
these
programs
investment
direction.
the
In
approach.
of
production
and
business
case
may
degree
The
require
industrial
technologies
utilities industry is surprising.
opportunity
effect
to
investment,
view of
in
the
currently
stressing
be
amount
diversity
the
necessitate
may
expressed
by
central
of
lines
in
of
decentralized
a
firms
the
in
the
Perhaps it reflects a diminished current
productivity
improvements
relatively slow rate
reduced capital spending in the
may
firms,
decentralization
of
significant
a
industry;
tactical
thus,
through
new
capital
of
growth in output and
the
productivity emphasis
improvements effected largely
through
localized efforts to find better methods to conduct work.
As might be expected, goal definition is the most centralized aspect of
the
managerial
process,
followed
successively
by
quantification
goal
and
planning for goal attainment.
A substantial number of firms do not have explicitly articulated goals
relating to productivity.
far
is
have
to
performance.
featured
allocation
in
of
a
But
the
large
Consistent with this, the most common approach by
battery
productivity
managerial
rewards.
This
of
measures
performance
review
seems
for
tends
process,
and
surprising
in
monitoring
not
to
even
light
urgency with which productivity improvement is viewed.
productivity
be
less
of
the
explicitly
so
in
degree
the
of
The explanation for
this state of affairs - which was derived from telephone interviews,
rather
than
-
responses
questionnaire
from
there
that
is
considerable
is
doubt
Lacking a sound measure, which
about how productivity should be measured.
unanticipated adverse consequences
can confidently be used without fear of
in terms of managerial decision making, it is problematic to arrive at clear
goal
statements,
and
were
be
measures
to
significant
reinforced
problems
through
could
created
be
managerial
the
unsound
if
review
reward
and
process.
transportation
The
approach
managerial
exhibits
industry
from
rest
the
different
management
The
industries.
the
of
significantly
a
of
productivity is considerably more centralized, and productivity performance
than in
more strongly featured in the managerial review and reward process,
other
industries.
productivity
most
for
can,
this
for
in
firms
this
relative
the
is
industry,
While several aspects are
managerial terms.
is nonetheless
reason
The
be
important,
with
ease
which
operationalized
in
significance
their
overwhelmed by the single aspect of equipment,
capacity,
or
utilization.
Goal Conflict
;
The most striking aspect of the responses about the conflict
between productivity goals and goals in other dimensions of performance is
the relative lack of perceived goal conflict.
popular managerial
long-term
press
about,
-
levels
responsiveness
-
conflicts
investment
the
and
seem
required
curtailed by
achieved
perhaps
market
product-line
by
customer
to
While
effectiveness.
plausible
enough,
demands,
the
at
data
internal
rationalization,
and
an
freezing
anecdotal
suggests
that
for
short-term
Another popular example is the conflict between,
efficiency
designs
example,
productivity growth 'being dominated and
earnings goals.
of
for
Much has been written in the
reduced
product
of
level
these
overall
their
severity may be being exaggerated.
Attitudes
and
Beliefs
:
If
a
score
8
between
3.0
and
4.0
is
taken
as
indicating a neutral attitude towards a statement, attention can be given to
the statements for which there is agreement, and to those for which there is
disagreement.
There is strong disagreement with the idea that productivity improvement
'
stems largely from getting people
to
work harder,
that
productivity
is
a
short-range issue best dealt with by setting high performance targets, that
marketing has a key role
play in improving productivity,
to
and
that
the
government should take greater responsibility for the nation's productivity.
There is strong agreement with the idea that top management leadership
is a key to establishing the right attitudes in an organization which will
lead to productivity gains, and that productivity is an issue which has to
be viewed in a broad, total-system perspective.
with
Compared
industrial
companies,
banking inductry appears tc be ciuch
insurance
the
industry have
concern
internally orientated.
nicra
perceptions
similar
appear to accord marketing more importance.
a
particularly
industrial
strong
firms)
negative
about
sentiment
union
productivity
for
In the
is
pressures
those
to
in
the
Managers in
in banking,
but
transportation industry
expressed
Impeding
(relative
efforts
to
to
the
improve
productivity.
Background Data
Company
with
one
minor
Expected growth
;
exception,
lower
across the whole sample of firms
than
.
in
past
both
growth
sales
in
and
sales
earnings
and
Is,
earnings
Despite the expected lack of growth in
sales In the transportation industry, an Improvement in earnings performance
is
expected;
productivity.
logically,
this
will
have
the
otlier
be
achieved
through
gains
in
The banking Industry perceives itself to be in a particularly
dynamic period with regard to technology.
in
to
financial
services
industries
industries in the sample.
is
Finally, the lack of unionization
quite
striking
compared with
the
3.3 - International Comparison
The responses
compared with those
from the British and Japanese firms,
Brief
from the US industrial firms, are shown In Table 3 (see pages 22-26).
interpretive
comments
While
responses.
comparison
a
between
differences
Important
are
there
with
beginning
offered,
are
the
US-UK
of
and
US
UK
responses, they are minor compared with the differences between the US (and
the UK) responses and those from the Japanese firms.
US/UK Comparison
Productivity
;
is
regarded
firms
UK
the
by
significantly greater urgency than in the case of the US
stagnation
stem from the
sales
in
firms during the past decade.
expected
is
to
remain
at
optimistic about
most
by
UK
While the growth in sales for the next decade
low
a
level,
average
on
prospects
the
earnings
for
UK
the
anticipating relatively rapid growth in earnings (in fact,
the
of
may
This
firms.
experienced
growth
earnings
and
being
as
firms
are
the UK firms are
growth).
will
This
have to be achieved throgh growth in productivity, since it cannot come from
a
high rate of growth in real
concern for escalating factor costs,
escalating
labor
and
costs,
arise
firms.
example,
For
contracts.
external
sources
from
they
Productivity
a
balanced
zero in particularly on
relatively
little
concern
about
They perceive productivity goals as being in
stability
with employee
have
have
firms
US
the UK firm's
they
shortages of critical skills.
conflict
Whereas
output.
to
stem
on
legislation
from
other hand,
the
stability goals
employee
organizations
managerial
the
may
goals,
Perhaps
goals.
and
would seem
the
of
union
from
to
UK
support
earnings goals and, in the absence of prospects for any significant growth
in
output,
real
Consistent
internal
disagree
with
might
this
perspective
that
logically
interpretation,
on
productivity
productivity
stems
counter
run
UK
firms
than
do
from getting
10
employee
to
take
stability.
significantly
a
US
firms,
people
to
less
more
strongly
work harder,
and
from a determination
starts
This
goes
earnings,
on
to
obstacle
an
as
UK managers seem to be making
Overall,
improvements.
unions
about
view
negative
more
a
take
signify
improve
to
that
a
strong statement.
rate
future
the
productivity
to
growth
of
means of achieving this
the
of
through
is
enhanced productivity, and finally indicates that increased labor efficiency
is the primary focus for the achievement of productivity gains.
Formal
US
betv/een
designate
to
productivity
to
a
corporate
specific
identical
virtually
are
The only significant difference is
and UK firms.
tendency
lesser
approaches
managerial
the
in
UK's
having
executive as
an
explicit responsibility for productivity.
Comparison
US/Japanese
problem
urgent
that
The
;
do
US
the
firms
Japanese
view
moreover,
firms;
productivity
their
as
a
more
concern has emerged
much more recently.
During the pasc decade Japanese liimb uavc acuieveu
growth in earnings.
than US firms, but similar rates of
Not
and earnings.
than either the US or
they less
only are
the UK firms,
What is startling
rather
than
an
incremental
sanguine about
the
future
when compared
expectations,
their
but
with their own past performance levels,
shock
sales growth
pessimistic view the Japanese firms express about future growth
is the very
in sales
gi-eatei"
represent a sharp discontinuity, a
change.
This
appears
to
motivate
their
very acute concern for productivity.
The
Japanese
themselves
as
firms,
compared
experiencing
with
US
industrial
dynamism
greater
in
firms,
technology,
perceive
being
less
diverse in their businesses, and having very substantially greater levels of
unionization.
Capital costs are of less concern to Japanese firms.
competition
productivity.
is
an
important
factor
in
causing
a
Increased domestic
heightened
As growth in international markets diminishes,
11
concern
it appears
for
as
if Japanese firms may be
turning their attention to their positions within
their own market.
In formal managerial approaches
similar
remarkably
American
the
to
to productivity,
The
firms.
the Japanese firms are
area
one
significant
of
difference is in the managerial accountability and reward process.
firms
appear
much
be
to
demanding
more
managers
their
of
Japanese
terms
in
of
productivity performance, and have a greater tendency explicitly to reward
good performance in this area.
this seems to run counter
In some respects,
to the popular image of American and Japanese managerial practices.
difference
dramatic
The
between
Japanese
shows up in attitudes and beliefs
however,
and
rather
approach,
managerial
US
than in formal methods.
Compared with US managements, Japanese managements put significantly greater
emphasis
on
marketing,
production,
productivity
research
and
Furthermore,
gains.
sources
of
greater
confidence in long-term planning as
This is
productivity.
the
skills
specialization
of
integration
these
of
recognizing
relationships with
technologies
will
in
and
orientations;
long-term
impact
on
ensure
that
the
First,
around
the
the
balance
organization
adoption of
administrative
provide
requisite
the
administrative
the
suppliers and customers which
cause,
key
significantly
express
provide
next,
through
as
means of attaining improved
organization
the
specializations
the
they
development
powerful managerial prescription.
differentiation
necessary
finally,
a
a
and
and
process;
and
its
emerging
mechanisms
are
organized within a long planning horizon.
The other dramatic difference between Japanese managerial attitudes and
beliefs
managers)
and
is
those
the
of
very
American
managers
strong disagreement
(and
even
more
that
union
pressures
so
of
British
frequently
impede efforts to improve productivity, and that the work ethic has greatly
diminished.
It appears as if Japanese managements and workers conduct their
12
(and UK) managements have a
joint efforts in a cooperative mode, whereas US
greater tendency to operate in a conflict mode with unions.
Their concern for productivity does not stem from
productivity.
to
regard
the Japanese firms appear to be much more proactive with
then,
Overall,
problems v/ith past levels of performance, but rather from an anticipation of
Even so, their concern for productivity is greater
problems in the future.
This concern appears to be translated into managerial
than among US firms.
terms
broadly-based strategic,
in a
than tactical,
rather
approach
the
to
problem.
CONCLUDING COhMENTS
IV
Even recognizing the preliminary nature of the survey and data analysis
contained
interesting
some
paper,
this
in
international comparison in particular
iiie
Japauc&c
ctppi.(jcn_li
wlLu
,
1L.:<
provides
j^i-ucn-Lx vc
,
conclusions
some
loii^ tctui
provocative
insights,
Strategic
emphasis,
would seem to constitute a straight "text-book" prescription.
exemplifies
somewhat
the
of
descriptions
reality
Nevertheless,
survey.
despite
with
odds
at
their
advanced
arguments
gloomy
the
the
idealized
tend
that
Mclnnes
by
to
Japanese
No
[1].
expression
captured
be
firms
seem
prognostications about future
Certainly it
doubt
of
through
to
The
emerge.
be
growth
reality
and
aspirations
a
questionnaire
that,
signalling
in
is
output,
they
will continue to be formidable competitors in the international arena.
seems
There
to
be
sufficient indication of information content in the
research data presented in the
the
analysis.
applied
patterns
in
of
an
In
particular,
attempt
to
relationships.
paper
to
justify further efforts
correlation
elicit
from
the
and
data
to
regression methods
additional
And non-parametric methods
of
insight
analysis
refine
will
be
to
the
may
be
appropriate.
One area of concern which clearly emerges from the study is the limited
13
degree
of
operationalization
managerial
of
the
concept
of
productivity.
While the concept is fairly clear-cut in aggregate terms, its inclusion in a
strategic goal set for a firm,
and
definition of managerial
the
consistent with strategic goals, is problematic.
measures
The problem stems from the
jointness of factors leading to changes in productivity - for example,
jointness
of
productivity.
capital-asset,
labor,
So
far,
the
financial
and
literature
on
this
capital
has
tended
the
contributions
to
approach
to
the
problem from a rather narrow technical perspective, and from the standpoint
of an after-the-fact monitoring of performance.
Greater attention has to be
given to constructing causal interpretations which can provide the basis for
managerial
approaches
to
the
formation
long-term advances in productivity.
to terms with the
have
the
of
strategies
which
Central to this is an ability
implications of emerging technologies,
potential
to
cause
will
radical
re-design
of
lead
to
to
come
technologies which
work
systems
and
the
relationships between organizations and the external parties with which they
conduct business.
more
importantly,
This is only in relatively small part a technical issue;
it
requires
sound
management
of
the
political dimensions of the dynamics of organizational change.
U
behavioral
and
Footnotes and References
Monitoring Productivity - Linking
Sloan School of Management Working
1.
Mclnnes, "Planning and
J. M.
Strategy and Operations," Alfred P.
Paper 1290-82, April 1982.
2.
See S. L. Sieferman, "Productivity Management in Print and in Practice,"
Master's Thesis, Alfred P. Sloan School of Management, Massachusetts
The study indicates the following
Institute of Technology, 1982.
the role of a corporate productivity manager exhibits wide
conclusions:
the
role
is
organizations;
general,
however,
in
variety across
facilitative, rather than executive, carrying little direct authority or
power; a large part of the job of corporate productivity manager appears
to involve information transfer, both from outside the organization to
the line managers in the organization, and within the organization
is
aimed at keeping managers abreast of current
this
itself
developments in managerial techniques aimed at productivity improvement;
finally, corporate productivity managers in industrial firms appear to
have a significantly greater long-term perspective than in service firms.
3.
See R. F. Bayer, Jr., "Productivity Trends in the US Airline Industry,"
Master's Thesis, Alfred P. Sloan School of Management, Massachusetts
The study focusses on the eleven
Institute of Technology, 1982.
domestic trunk carriers, tracing movements in their total and partial
the
1971-80.
Some
of
productivities
during
the
period
factor
no correlation could be found between
conclusions from the study are:
negative
be
a
appears
to
profitability;
there
productivity and
correlation between productivity and size of firm (measured by asset
base), and indeed the domestic trunk airlines as a group exhibited, in
1980, significantly lower productivity than a sample of local service
carriers; and there was, until 1980, a steady gain during the period of
the study in productivity for the industry and for most of the domestic
declined
productivity
individually,
but
in
1980
airlines
trunk
apparently reflecting
the
de-stabilizing
effect
of
substantially,
industry de-regulation.
4.
See G. L Burkart, "Productivity Improvement via Computer Aided Design
and Manufacturing:
A Manager's Perspective," Master's Thesis, Alfred P.
Sloan School of Management, Massachusetts Institute of Technology,
The study reports the results of case studies, in four different
1982.
firms, of the introduction of computer-aided methods.
The study points
the implementation of computer-aided
to the following conclusions:
methods is considerably more advanced in the design than in the
in
manufacturing
savings
function;
judged
simply
in
terms
of
labor-liours,
and even more so in terms of savings in labor-costs,
computer-aided methods yield returns which are marginal at best, and
downright disappointing at worst; there are very substantial intangible
(i.e., not quantified, at least in advance of the decision to proceed)
benefits and costs associated with the implementation of computer-aided
methods; the success of the innovation hinges on the ability of the
organization to foresee and manage these "intangibles," in such a way as
to minimize the costs and capitalize on the benefits; finally, the
immediately preceding point suggests the need for a corporate overview
function which, as a minimum, helps to rationalize the technical aspects
of choice and implementation of methods, and beyond that can anticipate
See
15
organization
to manage the fundamental effects within the
and
design
between
required
integration
closer
much
the
(e.g.,
its customers
manufacturing operations) and between the organization and
and
help
and suppliers.
16
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APPENDIX A
QUESTIONNAIRE
CORPORATE PLANNING AND MONITORING - A PRODUCTIVITY PERSPECTIVE
Would you like to receive a copy of the tabulated responses from this survey?
Yes D
No D
Would you like to receive a copy of the working paper entitled "Planning and
A Corporate Perspective"?
Monitoring Productivity
—
Yes
No
D
Would you be willing to spend about half an hour on the telephone with one of
our researchers, covering some of the questionnaire topics in more depth?
No D
Yes
If you have checked "Yes" to any of the above, please provide the following
information:
Name:
Company:
Title:
Telephone:
Address:
In most of the questions we are seeking a response on a scale; for these
questions please circle the number which in your judgement most closely
conveys the situation at your company.
1.
Is improvement of productivity for your company:
A matter of urgency,
among the top few issues
which must be dealt with
during the 1980 's
2.
12
3
4
5
6
7
Just one of the many
on-going concerns
which must be dealt
with in the normal
course of events
Has productivity improvement assumed greater significance as an issue for
your company in recent years?
Very definitely so
1234567
Definitely not
If you circled 1 through 3 in this question, please indicate below the
general reasons for increased concern:
Strong
(i)
Escalating costs of
-labor_
-capital_
-energy_
-materials and supplies_
Shortages of people with critical skills
Maturing markets/slackening growth of demand_
Increasing competition -from domestic sources_
-from foreign sources_
Stabilizing of production/product technologies
(v)
Declining profit levels
(vi)
(vii) Declining productivity growth
(viii) Other - please specify:
(ii)
(iii)
(iv)
1
4.
Does your company have strategic goals which explicitly and directly address
Yes n
No n
productivity improvement?
If so:
(i)
Is the primary influence on the definition and form of expression of
these goals located at?
Corporate level
(ii)
2
3
A
5
6
7
Throughout the organization
Is the primary influence on the quantification of these goals located
at:
Corporate level
(iii)
1
1
2
3
A
5
6
7
Throughout the organization
In planning for goal attainment, and managing on-going operations,
please indicate below the degree to which conflict is perceived to
exist between the attainment of productivity goals and goals in other
areas:
No
Considerable
Conflict ^
^ Conflict
12
Market share goals
Current earnings goals
Cash flow/financial goals
Employee stability goals
Technical innovation goals
Other - please specify:
5.
3
4
5
3
5
3
A
A
4
3
A
1
2
2
3
1
2
1
2
3
A
1
12
5
5
5
5
6
6
6
6
6
6
7
7
7
7
7
7
In developing strategies and plans for attaining productivity goals, are these;
Articulated clearly and
in detail at the
corporate level
12
3
4
5
6
7
Delegated to operating
levels; it is up to them
to find ways of achieving
improvements
.
6.
In the routine information used to monitor on-going performance, is there:
(i)
(ii)
(iii)
(iv)
No direct measure of productivity
A single measure of overall productivity
A small number of measures of productivity
A large number of measures applied differently
to the various activities of the company
D
D*
D
^
If one, or a few, measures are used, can you please describe them:
7.
(i)
In the mangerial review and reward process:
Managers know precisely
what is expected of them in
the area of productivity,
and are held tightly
accountable for results
(ii) Managerial incentives are
12
3
4
5
6
7
Productivity performance is
not explicitly identified
and focussed on in the
accountability process
12
3
4
5
6
7
There is no explicit connection between productivity
performance and managerial
incentives
tied explicitly to productivity performance
8.
Is there a corporate executive explicitly responsible for productivity?
Yes
D
No
D
If so:
When was the position created (or responsibility expanded to include
(i)
productivity explicitly)?
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
What is the title of this executive?
To whom does this executive report?
Was appointment made from within the organization?
Yes
D
No
a
From what kind of functional, or experiential, background did the
person come?
In terms of the time-frame of this executive's work, it is directed to:
Improvement of current-year results
Long term issues
12 3 4 5 6 7
Does this executive exercise considerable influence in long-term
resource allocation?
Yes D
No D
(viii) Does this executive exercise considerable influence in short-term
performance budgeting and evaluation?
No D
Yes
9.
Among the managers of your company, what do you think would be the climate of
opinion with regard to the follov/ing statements:
Strong
Agreement^
productivity is primarily a matter of
internal methods and efficiencies
(ii)
better production management is the key
to improving productivity
(iii)
improving productivity is largely a
matter of getting people to work harder
(iv)
productivity gains come from attitudes
which must start right from top management_
(v)
improved marketing is the key to enhanced
productivity
(vi)
productivity gains come largely from
capital investment
(vii)
productivity is a short-range issue,
best dealt with through setting high
performance targets
(viii) research and innovation are the key
sources of continued productivity gains
(ix) productivity gains involve the whole
environment, including suppliers, customers
and new technologies
^A^
p^„_^- „^ ,^>,j y^-.i ,^ j.>^^\j1L J.U1II ualUTUl
long-term planning
(xi)
the government must take greater
responsibility for the nation's
productivity_
(xii) union pressures frequently impede efforts
to improve productivity
(xiii) the work ethic has greatly diminshed,
resulting in lagging productivity
growth
Strong
^ Disagreement
(i)
1
1
2
3
A
5
6
7
1
2
3
A
5
6
7
3
4
5
6
7
3
4
5
6
7
3
4
5
6
7
3
4
5
6
7
3
4
5
6
7
3
4
5
6
7-
3
4
5
6
7
3
4
5
6
7
12
12
12
12
12
12
12
12
12
12
3
4
5
6
7
3
4
5
6
7
12
3
4
5
6
7
10.
Background Information:
During the I970's, what was your company's experience, in real
(i;
terms, for:
Compound
Sales
Growth
Over 10%
Between
Below (K
(ii)
D
D
D
and 10%
Higher
About the same
Lower
(iv)
(v)
(vi)
D
d
D
Compared with the 1970's, what is your company's expectation
in the 1980' s, in real terms, for:
Compound
Sales
Growth
(iii)
Compound
Earnings
Growth
-____.
:
Co.nnpound
Earnings
Growth
D
D
D
a
D
n
What currently is the value for your company of the following ratios:
- Sales revenue divided by capital employed (owners' capital plus
long-term debt)
- Sales revenue divided by average number of employees
Relative to other industries, do you perceive your company to be in an
industry (or industries) characterized by:
Very dynamic technologies
Stable technologies
12 3 4 5 6 7
In terms of product and market diversity, is your company:
Conglomerate
Single business
12 3 4 5 6 7
What is the degree of unionization among your company's employees:
All employees are unionized
12 3 4 5 6 7 Virtually none of the
employees belong to a
union
Thank you for your time and cooperation.
in the addressed envelope.
Please return the completed questionnaire
3 lOflO
004 S7b
To
m&.
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