US business managers told: 'You share blame for low productivity'
Chicago — Will France, West Germany, Canada, and Japan all outdistance the United States in overall productivity within the next 10 years? They will if present trends continue, warns C. Jackson Grayson Jr., chairman of the American Productivity Center in Houston and former head of the Federal Price Commission. But along with the warning comes an assurance that management , regardless of labor or government inaction, can correct the skid by facing up to past and present failings.
Mr. Grayson is not alone in warning that America is in danger of skidding from first to fifth in productivity among the world's industrial powers. There is broad agreement among experts on the economy that the US is slipping backward fast.
Yet, when it comes to naming causes for this "productivity crisis," every economist, industrialist, and government official seems to have his own favorite culprit. Among the most popular explanations are that the problem springs from:
* A labor force increasingly affected by poor motivation, declining skills, and union-fed uncooperative attitudes.
* Government tying industry's hands with overtaxation and overregulation while bailing out antiquated industries at the expense of fresh growth.
* Inflation drying up investment capital, starving industry of the money urgently needed for new plant, modern equipment, and research and development.
* The breakdown of infrastructure, with such vital "support systems" as transportation and education deteriorating rapidly through lack of federal, state, and private investment.
Workers have been natural prime targets for criticism, since they mark the spot where productivity is measured. By definition, productivity figures are based on company, industrial sector, or national output per worker.
Many experts have advised business managements and governments to concentrate on increasing output per worker at the production-line level. This approach has focused attention on automating assembly lines to turn out more goods with fewer human hands, setting off spinoff problems such as declining worker morale in the factory and rising unemployment in the nation.
One key protester against blaming the work force has been statistician W. Edward Deming. While he insists on many assembly-line improvements, he also demands a thorough overhaul of industry starting from the top. Based on his statistical analysis of industrial operations, Dr. Deming concludes that 85 percent of all productivity problems relate to management, while only 15 percent relate to worker performance.
Without naming such exact figures, US Secretary of Commerce Malcolm Baldrige has come out in support of the view that today's need is not for labor productivity but for "management productivity." Speaking in Chicago recently, Secretary Baldrige identified the problem: "From 1960 to 1973, US manufacturing productivity grew 3.1 percent annually, about half as fast as the average for our 10 major competitors. From 1973 to 1979, our manufacturing productivity growth fell to 1.4 percent annually, less than one-third as fast as our competitors." In 1980, the figure turned into a net decline of 0.4 percent.
Baldrige concluded that "between our own complacency and the rise of management expertise around the world, we now too often do a second-rate job of management, compared to our foreign competitors."
One top executive delivered a similar message at the recent Chicago World Trade Conference.
Bell & Howell Company chairman Donald Frey said the nation's productivity problems have been caused by a wide variety of factors. But Mr. Frey came out strongly against centering blame on workers. "Since 1967," he said, "the productivity of labor in the US private domestic economy has increased at a higher rate than the economy as a whole." He added, direct labor "accounts for just 12 percent of the American manufacturing sales dollar" --and therefore can't represent more than a similarly small slice of the productivity problem.
Frey's bad news for business managers is that their own poor performance is largely responsible for productivity problems, since more than 80 percent of sales revenue is tied to areas directly controlled by management. His good news is that this percentage means that management can correct problems itself without waiting for either government or the work force to change.
Specifically, Frey said, American management must develop new products and improve purchasing, planning, and scheduling to cut down on material costs, which average 57 percent of sales revenue for manufacturers.