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22 responses to “Productivity and Australian management”

  1. hannah's dad

    Here is another report that apparently puts at least some onus on managers.

    http://www.abc.net.au/news/2012-11-12/report-shows-australia-productivity-not-so-bad/4367440

    ” …a report commissioned by the McKell Institute think tank..
    ….[ Professor Green] says it is Australia’s managers, not its workers, whose skills and performance are lagging behind other developed nations.”

  2. hannah's dad

    Oops – same report. Sorry ’bout that.

  3. wilful

    What can anyone do about it? Apart from the business owners themselves I mean.

  4. hannah's dad

    Third time lucky?

    It is a different report, here is a direct link:

    http://mckellinstitute.org.au/wp-content/uploads/2012/11/McKell_Productivity_Report_A4.pdf

  5. Doug

    Peak business groups could help drive an agenda by encouraging exposure to improved practices. The response from Peter Anderson from one of the business groups this morning wasn’t encouraging we had their standard wish list trotted out with nary a fresh idea – it’s all a problem created by government and the unions apparently.

  6. Chris

    What can anyone do about it? Apart from the business owners themselves I mean.

    There’s quite a bit of sponsorship/subsidy money going to businesses from governments. They could tie that money to improved management practices.

  7. Geoff Henderson

    Government, unions, corporations, managers all seem to be nominated as part of a solution. Missing, as I see it are consumers. We don’t demand good management and the benefits that can flow as a consequence. Perhaps we are just complacent and accept poor quality as a norm.
    My view is that we (people/citizens) should accept more responsibility for many social and economic outcomes – the bottom up approach. Top down solutions just don’t seem to be forthcoming and the implicit expectation that “government will fix it” is constantly frustrated.

    Another issue with more efficient management might be that it can involve capital expenditure. Moreover it can also require a quantum leap in technological ability. The change from (say) a manual lathe to a computer driven lathe (with huge production benefits) still requires capital and a further investment in intellectual ability to program and operate the new equipment. These are real factory floor problems.
    This can be a slow process even after the need for new technology is realised. Further, the first manufacturer to adopt new technology may cause his competitors to fail leading to unemployment.

    A political call to greater productivity at this time is really just banging a drum. Increase in productivity is a slow process requiring creative thought, entrepreneurial effort and a sharing of responsibilities to make it happen.

  8. duncanm

    how abot stop propping up bad companies with Gov’t subsidies (Holden, I’m talking to you).

    Let them die – that’s the ultimate outcome of bad management or productivity.

    Unfortunately, the same commercial pressures don’t apply to the Gov’t, so imbecilic management will continue in the upper echelons of the public service.

  9. Patrickb

    “Increase in productivity is a slow process requiring creative thought, entrepreneurial effort and a sharing of responsibilities to make it happen.”
    Agree completely. This is not the norm for most of the business managers I meet; I’m an IT manager. Solutions from a business perspective are orientated in two directions: panic and look for a quick fix in a crisis or procrastinate because making a decision will mean taking responsibility. Planning, in my experience, is given lip service by most non-technical managers.

  10. Graham Bell

    Let’s look at the core culture of Australian management – and from this we may see how it compares and contrasts with management other developed countries.
    1. Treat your employees like dirt. Or better still, just ignore them. Then whinge loud-&-long about falling productivity.
    2. Blame ALL your industrial relations problems on The Unions – even if they are absent from your firm’s workplaces.
    3. Treat your customers like dirt. That guarantees repeat business …. for your competitors.
    4. Shout out your adoration of Free Enterprise and your hatred of Socialism and Big Government …. then bludge on the taxpayers as you enjoy your latest unjustified government hand-out.
    5. Don’t change – and don’t put up with any funny new ideas or strange innovations, especially if they come from within your own workforce.
    6. Treat your suppliers and sub-contractors like dirt too – that keeps them on their toes …. (“What do you mean ‘like in a starting block – and ready to bolt’ ?”)
    7. Avoid learning about any processes that are used in the operation of your business. That’s what workers are for – you’re a manager and so you don’t have to know what workers do.
    8. Blame all your own blunders on the Exchange Rate – whether that is USD 0.48 to the AUD or USD 1.06 to the AUD, it’s still a handy excuse.
    9. Always hire by credentials and never by demonstrable skills.
    10. Treat the shareholders like dirt – they love it.
    11. When dealing with foreigners, don’t waste time learning anything about them – either bully them or grovel to them (just flip a coin to see which you will do each time).
    12. Don’t take any risks at all – even if your underlings have analysed all the potential risks and benefits.
    13. Apart from colluding to fix prices and to lower quality, do not co-operate at all with others in your industry …. having pointless squabbles and personality clashes is much more fun.

    With this winning formula, how come Australia still isn’t the world leader in management excellence?

  11. Brian

    My predilection is to blame the authoritarianism of the capitalist class. But from the report:

    Since the late 1990s, Australia’s productivity performance has slipped from being one of the OECD leaders to a laggard. This structural deterioration in our economy was masked in recent years by windfall gains from the commodities boom, which reversed the longstanding decline in our terms of trade and reduced the policy focus on management and productivity.

    In fact the report finds us as average (7th out of 15), rather than a laggard. Could we have slipped because the miners have been prepared to pay high wages, driving up labour costs and other firms have effectively found themselves as training institutions for the miners?

    We already have superior labour market flexibility. We could sell all of our firms to multinationals, because they rate better. Or we could benchmark and educate our managers.

    The two things we are worst at are ‘instilling a talent mindset’ and education levels. The report identifies 18 aspects of management, so we need to address each one.

    BTW, the survey was limited to the manufacturing industry sector.

  12. Graham Bell

    Brian @ 11

    Or we could benchmark and educate our managers.

    The big problems there are:

    [I] We have tons and tons of benchmarking already – all buzzwords, bovine nightsoil and whatever is the latest fad. Real, effective, beneficial benchmarking? Hardly! That would scare the blighters right out of their comfort zone.

    [2] We have too much education already – and all the wrong sort! The chances of reforming – even revolutionizing – education are next to zero. On the one hand, you have an education system that unintentionally teaches the future workforce to despise honest work as menial and to glorify chair-polishing activities; on the other hand, future managers are inculcated with the same diseased culture that has taken Australia from opportunity to looming stagnation. As for the current herd of managers: trying to haul them into the 21st century would be as much a waste of our precious time and scant resources as would be trying to plough the sea – three-quarters of them are next-to-useless; just give them pretty toys to play with and shove them aside to where they don’t make too much of a nuisance of themselves.

    Yours is an excellent idea – but it this is Australia.

  13. Ken_L

    ‘BTW, the survey was limited to the manufacturing industry sector.’

    Exactly the problem with most commentary on Australian management. See also (no disrespect) comments #7 and 8. But most of our economy and even more of our employment is in post-industrialised industries that consist mainly of people processing information. Education, telecommunications, entertainment, health care, finance, retailing (to an increasing extent online retailing) – these are the industries that increasingly dominate our economy. And which also tend to suffer (with notable exceptions of course) from bad management.

    These industries are all about influencing behaviour and managing systems, not crunching numbers in spreadsheets or dreaming up great marketing campaigns. Unfortunately, most of our managers have little or no grasp of organisational behaviour or of how to work with people to achieve multiple goals that serve the interests of everyone involved.

  14. Graham Bell

    Ken_L @ 13
    You left two very important ‘post-industrialised industries’ off your list: Modern farming/grazing …. and …. High-quality manufacturing.

    Unfortunately, most of our managers have little or no grasp of organisational behaviour or of how to work with people to achieve multiple goals that serve the interests of everyone involved.

    That’s about the size of it.

  15. Graham Bell

    They’re hopeless. Here they are kicking yet another own goal: http://www.abc.net.au/am/content/2013/s3802485.htm

  16. John D

    Brian @11: To quote your quote

    Since the late 1990s, Australia’s productivity performance has slipped from being one of the OECD leaders to a laggard.

    The problem I have with this statement is that much of the “productivity improvement” was based on productivity measured as “output per manhour”.
    Encouraging managers to improve this particular measure had some undesirable outcomes:
    1. Outsourcing became popular since the manhours moved disappeared from the managers books while their output remained the same. Bingo. Productivity appeared to rise.
    2. “Productivity” was improved by getting rid of people who were working on long term projects. Smart managers left while they could boast of improved productivity on their CV.
    3. Many of the improvements were the result of multi-tasking. What this often meant was that jobs that used to be done by people with a few years of secondary education were merged into a new job that needed trade qualifications. Often good from the companies point of view. Not so good from the country’s point of view because it led to poor utilization of the limited pool of skilled tradesmen while adding to the pool of people who couldn’t get a job because they didn’t have what it takes to get the skills needed for the multi-tasked jobs.
    A country’s productivity should be measured in terms of output per “available hour”. “Available hours” should include the hours that the unemployed are willing to work and the hours that part-timers would like to work. It may includes the hours that adults would work if they weren’t being educated. (Educational productivity is an area that deserves discussion.)
    If productivity during the 90’s had been measured in terms of available hours many of the alleged gains would have disappeared.

  17. Helen

    how abot stop propping up bad companies with Gov’t subsidies (Holden, I’m talking to you).

    Not to mention the woodchippers and fossil fuel industries.

  18. Graham Bell

    John D @ 16

    Excellent concise analysis of a major cause of our impending crash.

    The trouble is, knowing this, just what the heck can we do to stop the impending crash?

    Forget the news media; they’re too busy worshipping duds who aren’t worth even a nipper’s job on a road gang. The only time the news media will say anything impolite about the failed COEs driving Australian business into the ground is when influential shareholders get fed up with seeing THEIR dividends being plundered by THEIR most senior employee. There’s no journalist in Australia willing to risk their job – and risk being ostracized – for exposing just how incompetent and downright foolish much of management in Australia has become …. and it’s not a lack of awareness of the problem that keeps them silent because they all have family and friends in the general workforce who would have told them what things were like in their work-places.

    Politicians? Nah. they know what side their bread is buttered on.

    Academics? Who wants to rock the boat?

    Union officials? Not likely; they’re part of the problem.

    Hold protest rallies and street demonstrations? …. that are then reported by the compliant news media – that would put us back to square one.

    Engage dud managers directly and demand they shape up or ship out? What do we do? Ask for an appointment? “Mr X does have a spare moment in his busy schedule; how about 7am 29th May 2019?” Ambush them in the carpark and call them rude names? …. and thereby give you an opportunity to be the star of a magistrates court session?

    Honestly, I cannot think of any way at all that we can off-load the multitude of fakes and duds pretending to be managers in Australia and replace them with managers who can actually do the job. The diseased culture of Australian management is too deeply entrenched.

  19. paul walter

    The sort of LP thread I like best, a clear thread starter and no wasted words from posters. Over all, it seems to me to be heading back to the incongruities involved between national economies and the realities of globalisation, basically as a community we are euchred in a similar way to the way we are euchred as to community inputs into gas fracking, say, when local business are usually just just shopfronts for international capital with other fish to fry.

  20. John D

    GB @18: Part of the performance problem is managers that have risen to (or above) their level of incompetence. But blaming the managers is easy. I have seen numerous cases of subordinates (or peers) castigating managers when the real problem is castigators who are simply not competent to understand what the manager is doing or aren’t very good at managing their managers. Think of subordinates who really think managers should be perfect when, in reality, they have strengths and weakness’s like all of us.
    Good managers understand subordinates strengths and weakness’s. They also use people’s strengths and either avoid giving them tasks that will be affected by the weakness or do something about the weakness. Subordinates and peers need to “manage their managers” or peers.
    The other problems can be more systematic. For example, superannuation funds have put pressure on CEO’s to “add to shareholder value”. This might be OK if the super funds understood the business and took a long view. Problem is that super fund managers are being evaluated on the basis of what they achieve over short time frames. Which means CEO’s are pressured to achieve short term results which means……… Smart managers often need to be subtle and patient. Problem is that subtle and patient is not good enough for a fund manager who needs a share price rise over the next few months.
    @ 16 I mentioned the effect of poor productivity measures on manager decisions. It is not the only situation where poor measurement and reward causes problems. One of the key problems behind the GFC was that people were being rewarded on the basis of new loans written and not being punished for putting the organization (and world economy at risk.)

  21. Graham Bell

    JohnD @ 20
    Good points about subordinates not understanding their managers, nor being aware of pressures on them and also about having unrealistic expectations of perfection. My experience was that such situation didn’t arise or become a significant problem when a manager was in daily contact with her or his staff . Terribly clever chaps and chapesses chucked off at ‘management by wandering around’ way back in the ‘eighties but it did have its good points, one of which was that staff did see their manager as a normal human being; familiarity doesn’t always breed contempt.

    You did hit on one core problem: that of inappropriate, unjust and punishments. But …. how do we ordinary citizens, customers, suppliers, shareholders or employees rectify this destructive imbalance?

    Paul Walter @ 19
    What you have mentioned is now markedly exacerbating the existing problem of a chronically diseased culture of management in Australia.

  22. Graham Bell

    Oops. That should have been ‘inappropriate, unjust rewards and punishments’.