02 September 1985 Productivity measures of New Zealand firms researched

Productivity-measurement practices by firms in the New Zealand private sector are being studied by the Professor of Finance and Accounting at Lincoln College, Professor Roger Juchau.

Professor Juchau is involved in a joint project with Professor Robert Chenhall, of the School of Economics at Melbourne's La Trobe University.
Professor Chenhall is carrying out his survey on Australian firms.

They have sent copies of a nine-page questionnaire booklet to firms in both countries.

The firms are asked to give information on turnover, annual sales, assets and employees of the firms, and to answer questions on productivity practices and measures, technology and organizational structure .

Professor Juchau said that improving productivity was seen as a prime objective by both industrialists and politicians.

Productivity was touted as being a useful measure of how well a firm, an enterprise and even the country was doing,

But improved productivity in itself was no achievement if input costs rose higher than the rate of productivity, he said.

Countries were rated on their productivity, with Japan the obvious leader in industrial productivity continuing to move even further ahead.

Professor Juchau said Japan was reported earlier this year to be ready to quadruple production soon with the rapid introduction of unmanned factories.

Japan was able to increase productivity in this way, while at the same time keeping down input costs.

Considerable investment was needed in management and information systems to improve productivity and to measure this improvement.

Professor Juchau said he was puzzled when Ministers exhorted productivity improvement, but did not look to their own departments,

In government departments there needed to be regular measurement of productivity, and reports on these measurements should be made available for public scrutiny.

Professor Juchau said he hoped to be able to recommend to New Zealand firms how their productivity-measurement practices could be improved.

Measuring productivity was important in any moves by a firm to improve productivity, he said.

Such measurement gave valuable information on how a firm was performing, and could help in planning for improved productivity.

Proper productivity measures could motivate and create positive attitudes to work .

"A measure must be acknowledged by those being measured as fair, relevant and useful," Professor Juchau said.

"Employees having a share in creating a measure are more likely to work towards the measure than against it."

Professor Juchau said productivity measured useful output gained from the inputs, such as the cost of labour, facilities, equipment, raw
materials or components, energy, sales, marketing, research and development, and administration .

"Feedback on how well a group, division or firm is working is always necessary , and traditional financial signals can be misleading," he said.

"Good productivity measures give a much clearer indication of what is happening, and such measures are important in planning strategy ."

Professor Juchau said many managers in New Zealand were now seeing the potential for greater profits and were accepting the challenge of greater productivity.

Managers had to educate themselves about productivity improvement, and then look for opportunities in their own departments, divisions or firms.

"Enduring productivity improvement does not come from a single action, nor will one management method or technique alone make a dramatic
improvement in productivity," he said.

"Increases in productivity are rather the result of an evolving combination of successful management practices.

"Firms which succeed in improving long - term productivity reinforce this by other management s y stems and practices."

Professor Juchau said establishing a management process for growth in productivity required resources and the commitment of top managers.

Further information from Professor Roger Juchau, Professor of Finance and Accounting, Lincoln College 8150, Canterbury , New Zealand.