Productivity and the High Cost of Resources

Firms in mature, resource-intensive industries are facing a productivity dilemma. Shrinking profit margins are exerting intense pressure on management to increase productivity (output per worker) but they are saddled with old factories which are equipped with yesterday's capital. The solution seems obvious, but in an environment of slow market growth and expensive, scarce investment capital there is little prospect for recapitalization. Attempts to increase productivity by modifying methods of operation, like methods time management, may be moderately successful: however, attempts to increase productivity by exhorting or compelling operators to work faster may be unprofitable. Paradoxically, it will be shown that the opposite response may be called for in some industries, and workers should be motivated to perform tasks more slowly but with greater care than in the past.