Why is productivity rising in the US?

Productivity – usually expressed in terms of output per worker – is a really important term in business.  In fact, it’s up there near the top of the list of the most important measures of business efficiency.  So is it good news that productivity continues to rise (at least in the US)?  And what forces are driving this improvement?

It might just be that productivity is rising because workers are feeling a squeeze.  According to The Economist, some analysts expect productivity growth to stall soon. Hard-pressed workers are feeling grouchy: workforce surveys report record levels of job dissatisfaction. Many firms have been “starving the organisation to see how it can do with a lower cost structure,” says one observer.

Two things could keep productivity rising. First, workers might be terrified of losing their jobs. This makes it easier to persuade them to put in extra hours or take on new tasks. Even in relatively highly unionised firms, there have been reports of greater flexibility. Second, tough times are forcing firms to strain every brain cell to become more efficient. Continuous improvement might lead to a series of tweaks, such as upgrading machines so that output increases with the same number of workers.

Regrettably, in the UK firms seem much keener to hoard cash or buy back their own shares than spend it on more efficient machinery or information technology.  There are hefty gains to be made from using more automation and service businesses are also wringing efficiency improvements from new technology. Hertz allows customers to rent cars at automated kiosks, just as airlines have for some time allowed passengers to check in without talking to anyone. Fast-food firms, such as McDonald’s and Starbucks, are continuously innovating with their products and service.

Measuring the competitiveness of a business [18 May 2012]
Revision Presentation - Operations and Technology [17 May 2012]
Revision Presentation - Making Operational Decisions [17 May 2012]
BUSS2 Magic Formula [15 May 2012]
A cracking business lesson video on my favourite product - Jaffa Cakes! [7 May 2012]
Predictions of a dramatic change in the way goods are produced - and how it may change business [25 Apr 2012]
Video resource: Do bonuses work as an incentive for better performance? [10 Feb 2012]
Happiness in the workplace still proving elusive [6 Feb 2012]
Leadership - what qualities does an effective leader and manager have? [29 Jan 2012]
Technology in action: inside the transparent factory [27 Jan 2012]
Strategy Lessons from the Tesco Downfall [15 Jan 2012]
Revision Presentation - Operational Objectives [3 Jan 2012]
Revision Presentation - Economies of Scale & Resource Mix [3 Jan 2012]
How much does a Premier League point cost? [5 Oct 2011]
Nurofen Plus and the importance of quality - [28 Aug 2011]
Automation and the arrival of 290,000 robots [2 Aug 2011]
New study shows CSR pays dividends [11 Jul 2011]
An end to outsourcing? [18 May 2011]
CSR - Can better social responsibility boost the UK economy by £17bn? [12 May 2011]
Lesson Worksheet - Capacity Utilisation [5 May 2011]
Life in the chocolate factory - automation, productivity, motivation and culture [24 Apr 2011]
Nestle - using branding & productivity to overcome commodity price increases [17 Feb 2011]
Q&A - Explain what is meant by labour productivity and how it can be measured? [28 Dec 2010]
Some amazing images to help teach economies of scale [14 Dec 2010]
Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service and Smart Operations [26 Nov 2010]
Rationalising & Redeployment at Alliance Boots [9 Oct 2010]
Recession Strategy - Manufacturing Emerges Leaner and Fitter [25 Aug 2010]
37 Ways for a Business to be More Competitive [24 Aug 2010]
Emerging Stronger - How UK Businesses Responded to the Recession [14 Jun 2010]
BUSS4 Recession Strategies - The Crucial Role of the Business Model [6 Jun 2010]
BUSS4 - Recession Strategy Lessons from Four Female Entrepreneurs [6 Jun 2010]
Managing People - Will Staff Turnover Increase as the UK Emerges from the Recession [2 Jun 2010]
Recession Strategy - For Airlines it is all about Unit Costs [2 Jun 2010]
BUSS4 Research - a Corus of Disapproval [1 Mar 2010]
Strategy in a recession - cost optimisation not cost minimisation [25 Feb 2010]
Strategy in the UK Recession - What 69 UK CEOs Did About It [22 Feb 2010]
Strategies for the Recession - Insights from Six Restaurant Group CEOs [19 Feb 2010]
Is the cost-conscious UK consumer here to stay? [16 Feb 2010]
Amazing Production Video [15 Feb 2010]
Measuring labour productivity - Google revenue per employee [29 Jan 2010]
Video case study - New Balance quality in a successful UK factory [28 Jan 2010]
Revision presentation - labour productivity [17 Jan 2010]
Revision Presentation - Capacity Management [19 Dec 2009]
“Promoting mental wellbeing at work” - superb resource materials [5 Nov 2009]
Q&A - Explain “delayering” [1 Jun 2009]
Q&A - How does a business benefit from having a well-motivated workforce? [1 May 2009]
Q&A - What is motivation? [1 May 2009]
How the car makers responded to the downturn [17 Feb 2009]
Highest Productivity in the Industry - But Still Crippled by the Crunch [8 Jan 2009]
The Corporate Jet Under Pressure [4 Jan 2009]
Valuing Apprentices [29 Dec 2008]
Cutting costs for a railway by switching the engines off [10 Sep 2008]
Job losses become a core part of business strategy [27 Jul 2008]
Is training the key to survival in a downturn? [13 Jul 2008]
Counting the Cost of Workplace Sickness [17 Mar 2008]
Capacity utilisation in focus as the credit crunch tightens [16 Mar 2008]
Team spirit, innovation and business success [9 Feb 2008]
Lego’s Renaissance [27 Jan 2008]

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!