British Management and Productivity - Essay Example

Running head: BRITISH MANAGEMENT AND PRODUCTIVITY IN THE 1980S AND EARLY 1990S British management and productivity in the 1980s and early 1990s Insert Name Insert Grade Course Insert Tutor’s Name 10 December 2010 British management and productivity in the 1980s and early 1990s Employee productivity is considered as the major factor that may lead to the success or failure of an organization or country. Managers therefore try to ensure that the employees are performing at their peak in order to have maximum production and earn good profits. The managers will institute different measures to ensure that the employees will perform at their peak. Most of the measures instituted by the managers are mainly aimed at motivating the employees in order to have better output. However, the change in the management format is not a guarantee that the productivity will increase. Therefore, for managers to effectively increase productivity, they must have a clear understanding of these factors. Moreover, in calculating productivity, many assumptions are also made thereby necessitating the effective knowledge of the assumptions to effectively determine the productivity. During the 1980s, productivity in Britain reached its peak. For many years, the productivity ratio of Britain used to languish in the lower positions when compared to other OECD countries. However, during this time, the productivity ratio increased considerably, making Britain was among the countries with the highest productivity ratios in the OECD. However, during the early 1990s, the productivity ratios declined drastically. This was despite the fact that most of the industries had instituted management changes in order to ensure that the productivity ratios remained at their peak, as they were during the 1980s. Germany has been a major British competitor in terms of manufacturing. During the 1960s to 1980, the productivity gap of the two countries increased comparatively, such that by 1980, it has reached a peak being advantageous on the Germans. However, during the 1980s, the British productivity ratio increased considerably and by 1987, the difference in the productivity ratio was very small. In Britain, 1987 – 88 was characterized by a consumer boom; the productivity of the workers was so high. Compared to other OECD countries, the productivity of Britain was among the highest. During the time, the average annual growth of productivity was 4.7 %, while other countries had a growth rate slower than that of Britain. For instance, USA had a growth of 4.1 %, Japan 3.2 %, France 3.1 %, West Germany 2.3 %Italy 2.7%, and Canada 2.7% (Smith, 1993). However, the preceding years were characterized with a significantly reduced manufacturing productivity growth levels. The productivity levels could not reach that of the late 1980s, which was considered the peak productivity of Britain. In addition, the productivity levels of Britain in the many subsequent years remained below the peak values of the 1980s. However, the levels of productivity in Britain are slowly catching up with that of other countries, which Britain is slowly catching up with other countries, which have higher productivity levels (Anon, 2007, p 9). There has also been a reduction in the imbalances in the productivity of other countries as each country strives to increase its productivity and therefore increase its economic growth. The main factors that determine the productivity is the rate of output of a worker per hour and the number of hours that the workers work. The output per hour of the workers in Germany and Britain is almost similar. However, the German workers generally work more hours than the workers in Britain do. The longer hours worked by the workers therefore result in greater productivity of the workers. This will ultimately be exhibited in the productivities of the workers making the German workers also have a higher productivity compared to the British workers. The tendency to work more hours is also in the culture of the Germans, unlike the British who spend more time on holidays. Several people have argued that the increase in the productivity of Britain during 1987 – 88 was not reflective of the general increase in the productivity and the individual production units. This is because the increase in the productivity was mainly brought about by the entry and the exit of firms into the industry. The new firm was bound to have higher productivity as they had a higher output per worker compared to the other firms. The exiting firms converted their capital into labour rates (Disney, Haskel and Heden 2003 p 691). These two factors accounted for a very large proportion of the increase in the productivity levels. However, the productivity of Germany was not due to the entry or exit of new firms into the manufacturing industry. The productivity was based on several factors that gave Germany a competitive advantage over the other countries. Another factor that significantly affects the productivity is market competition. For a company to effectively compete with the competitors several factors must be present. The company should have efficient technology to effectively compete with the competitors. Innovation is also another major factor affecting competition. Competition affects productivity as it leads to efficient allocation of the resources in the organization and it ensures that the organization’s activities are mainly centered on satisfying the needs of the consumers (OFT 2007 p 19). Availability of technology, innovation, and skilled labour gives one a competitive advantage over the other. The above factors make Germany to effectively compete with the other countries. Due to the above factors, the quality of goods that Germany produces in diverse field is usually far much better than that of its competitors. These products include clothing, furniture, and motor vehicle (OMahony, 1992 p 3). British products do not have the above qualities and hence the products do not effectively compete with the products from Germany. Due to the fact that productivity is largely affected by competition, this makes Germany to have a greater output compared to Britain. However, German goods are considered to be of higher quality compared to the goods from other countries. This usually gives Germany a competitive edge over the other countries and thus affects its productivity. The increase in the productivity in Britain resulted in huge job losses to the population. This was because fewer employees could perform what was originally performed by several people. Therefore, this made the employers not to employ new workers when the productivity went down. They hoarded workers in the hope that the productivity would increase and hence did not find the need for employment of new staff (Wells 2007). This measure turned out to be detrimental to the productivity of the workers as the levels of productivity continued to reduce. Government intervention was necessary to prevent further hoarding of the jobs. As explained above change in the management practices could not help in increasing the production as some of the factors that affected the production were beyond the control of the managers. Reference List Anon. 2007. Productivity and competition: an OFT perspective on the productivity debate, Crown. (Online). Available from: http://www.oft.gov.uk/shared_oft/economic_research/oft887.pdf (Accessed December 10, 2010). Disney, R., Haskel, J. and Heden, Y., 2003. Restructuring and productivity growth in UK manufacturing. Oxford, Blackwell publishing. (Online). Available from: http://www.res.org.uk/economic/freearticles/ecoj_825.pdf(Accessed December 10, 2010) OMahony, M., 1992. Productivity levels in British and German manufacturing industry. (Online). Available from: http://www.allbusiness.com/human-resources/employee-development-employee-productivity/291281-1.html (Accessed December 10, 2010). Smith D., 1993. UK: The odds on building up manufacturing. Management today. (Online). Available from: http://www.managementtoday.co.uk/news/410285/UK-odds-building-manufacturing/?DCMP=ILC-SEARCH (Accessed December 10, 2010). Wells, J., 2007. Not very productive: public policy research. (Online). Available from: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0041.1994.tb00025.x/abstract (Accessed December 10, 2010) Read More