Productivity is Not about Cost-CuttingMany people (even quite a lot of managers and directors) think that productivity improvement involves cutting costs. It can – and certainly cutting costs should improve productivity. However this should not form the basis of a productivity improvement strategy. Concentrating on cutting costs tends to lead to, at best, sub-optimal changes in the organisation and, at worst, a disastrous s loss of vital skills and expertise. Productivity improvement should not form part of an organisation’s strategy – it should BE the strategy. The aim should be to make revolutionary and/or incremental changes to what the organisation does – and how it does it – in pursuit of improved quality, resilience and overall excellence. Such changes should then drive improvements in revenue and lowering of costs (pro rata to output). So cost-cutting is the result of an effective productivity improvement strategy, not the basis of it.
Many people (even quite a lot of managers and directors) think that productivity improvement involves cutting costs. It can - and certainly cutting costs should improve productivity. However this should not form the basis of a productivity improvement strategy. Concentrating on cutting costs tends to lead to, at best, sub-optimal changes in the organisation and, at worst,