Increasing productivity is key to strong businesses. Here’s how some are doing it.
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Increasing productivity is key to strong businesses. Here’s how some are doing it.
One of the brighter spots in this economy over the last few years has been labor productivity: how much stuff we’re all making compared to how much time we’re doing it.
Productivity increased 1.2% in the fourth quarter of last year, according to the Labor Department. That’s the ninth straight quarter of growth.
Growing productivity is important because a more productive economy is a more prosperous economy. Higher productivity can cause incomes to rise and push up standards of living. It can even help keep a lid on inflation.
One way that businesses can boost productivity is by hiring skilled workers.
At a machine shop at the Simi Institute for Careers & Technology, Liz Valdez, a student, is setting up a tool called a vertical mill so she can shape a piece of metal.
Valdez used to wait tables. But last summer, she quit, and became a full-time student at the machine shop. A big reason she signed up for this class, she said, is because a job in manufacturing will pay much more than she was making waiting tables — especially if she’s fully trained and certified before she even starts.
“The more you do it, the more you practice, it becomes easier,” Valdez said. “I’m so glad that I can trip and fall here and not over there.”
Hiring someone who can hit the ground running improves productivity because it can help a business boost output without sacrificing much time, said Oygar Lindskog, lead instructor of the Machine Technology program at the Simi Institute for Careers & Technology.
“Typically, most employers, if they’re in the position of hiring, they need someone to come in and do work, and not take one of their already-skilled machinists out of the production line to train new people,” Lindskog said.
Companies can also improve productivity by investing in technology.
“We placed on order a new state-of-the-art piece of equipment that’ll be arriving here in Q1,” said Wayne Woodard, CEO of Argonaut Manufacturing Services, a company in Carlsbad, California that manufactures drugs and diagnostic tests for health care companies.
The equipment he bought is an automated filling line that packages drugs into vials, syringes and cartridges.
“That’s the final stage in that manufacturing process for delivering those products into the market,” Woodard said.
Woodard said all of this has traditionally been done by hand. Automating it can help take human error out of the equation, which means fewer mistakes and more product. It also speeds things up and requires fewer workers to begin with, which could lead to fewer jobs.
“You’re down to three or four folks on a line, maybe a little bit more, depending on how big the line is, where before you might have had ten, twelve humans doing that kind of work,” Woodard said.
Not every business can improve productivity with a machine. Matt Hetrick runs an accounting firm called Harmony Group. He said the only way he can make his business more productive is to make his staff better at their jobs. And that requires years of experience.
“If you’re a tax CPA, for example, your first tax season is the first time you’ve seen how different forms work, how these conceptual ideas actually play out for a client,” Hetrick said. “You simply can’t teach that in a book, you have to learn how to do it.”
So Hetrick said his strategy for boosting productivity is to retain the staff he has, so workers stick with the company and have time to develop. Hetrick said he gives every employee a clear plan to move up within the company. He also hosts regular training sessions and weekly office hours. Plus, he lets all of his staff work from home.
“We find that’s amazing for retention,” Hetrick said. “Because what we’re saying to our staff is ‘Hey, you come here, we’re going to treat you like professionals. We’re not going to micromanage you. Yes, you’re working from home, but yes, you’re a professional who’s on a growth path.'”
As a result, Hetrick said accountants who’ve stuck with the company are able to take on more clients, which means the business can pull in more revenue.
He said that’s helping his firm stay afloat, especially since right now he feels like charging his clients more is not an option.
“We don’t have pricing power to drive pricing up,” Hetrick said. “So we have to be more productive, to sell the same service at approximately the same price.”
And he said higher productivity also helps him pay his workers higher wages.
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