As manufacturing industries are steadily replaced by services industries, the concept of productivity assumes new meanings and dimensions. Improving productivity automatically reduces costs incurred by companies, thereby boosting the bottom line. As a consequence, the company has more resources at its disposal to spend on R&D and supplementary services. So, there is incentive for managers to improve service productivity. Productivity is usually measured as the quantity of output produced with respect to the quantity of inputs. So, a higher ratio indicates higher productivity. Compared to manufacturing industries, it is much difficult to measure productivity in services industries, especially those that are enabled by Information Technology. (Saari, 2006) Yet, management gurus have identified a few proven techniques for improving service productivity, which are discussed below.
One way of improving service productivity is by applying operations-driven strategies. This entails reducing costs and wastage of resources, setting production capacities to meet demands, computerizing mechanical or routine tasks, upgrading systems to latest standards, re-training employees to adapt to upgraded systems, expanding the range of tasks that an employee can perform, redesigning service process where applicable, etc. All of these improvements in operations will lead to overall improvement in service productivity. (www.slideshare.net, 2011)
There is another approach to increasing service productivity, which is via Customer-driven strategies. The first component of these strategie is to “change the timing of customer demand”. The rationale is that “by shifting demand away from peaks, managers can make better use of firm’s productive assets and provide better service”. (www.slideshare.net, 2011) Similarly, involving customers in the production process is also helpful. By getting customers to practice self-service (Interactive Voice Response systems are a good example) and by encouraging them to proactively seek out information on products/services, significant improvements in productivity could be achieved. Another component of customer-driven approach is “delegating delivery of supplementary service elements to intermediary organizations”. (www.slideshare.net, 2011)
Managers can further break down productivity into back-office and front-stage operations and focus in each in detail. Improvement in either area is likely to have a cascade effect on the other. Since, front-stage efficiency is most visible to the clientele, it makes sense to improve productivity in this domain first. Employment of Six Sigma method to improve and redesign service processes can also indirectly improve productivity. But, irrespective of the particular technique used by the management, the following questions need be kept in mind which devising strategies: 1. How best to exploit incurred input costs and derive profitable outputs? 2. Is there a balance between productivity and quality? – for productivity improvement without complementing quality improvement is undesirable. 3. How best to automate routine tasks?, and 4. How to increase customer involvement in the service process? By satisfactorily answering the above set of questions, the manager would be able to come up with the best suited technique for improving productivity. (Saari, 2006)
Improving Service Quality and Productivity, SlideShare, retrieved from <http://www.slideshare.net/koustuv/improving-service-quality-productivity-7283227> on 21st March, 2011
Saari, S. (2006). Productivity. Theory and Measurement in Business. Productivity Handbook. MIDO OY. pp.272.