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  Productivity Up. Vulnerability Up
By Roger E. Herman, CSP, CMC, FIMC

Productivity, the amount of goods and services Americans produced in each hour they worked, grew rapidly in the third quarter, the Labor Department reported this past week. The gain was the fifth consecutive quarterly increase, a much stronger performance than usual in times of economic weakness. The continued progress suggested that a significant share of the step-up in economic efficiency achieved during the boom of the late 1990's could continue over the longer run.

Technology is being applied liberally to push productivity gains, and employees are being driven to accomplish more in the same number of working hours. Compared with the second quarter, the productivity of workers in non-farm businesses rose 4 percent in the third quarter while the number of hours they logged changed little. The Labor Department also announced yesterday that first-time claims for unemployment benefits slipped to 390,000 last week.

In other times of slow economic activity, employers would be reluctant to lay off employees. Optimism was part of the rationale for keeping people on the payroll, as was recognition of the high expense of hiring replacements when business picked up again. In recent years, that philosophy seems to have changed. Over the past two years, layoffs have been rampant as employers have shifted their perspective. Those employees who were so valuable during the go-go years of the late 1990s are often seen as replaceable commodities today.

Productivity gains can be achieved by putting more of a burden on the backs of those people who are still on the payroll. If an employee resists carrying more of a load, there are plenty of out-of-work people ready to take their place. The practice of pushing people under stressful conditions can cause quality, safety, and morale problems. But, if the productivity numbers are strong, corporate leaders may ignore the human side of the enterprise.

On the surface, current practices seem to make sense: we're enjoying high productivity and profits. However, when you look at the big picture, thousands of employers are setting themselves up for major problems. Workers have long memories and deflated loyalty. They're working to put food on the table, not to be part of a community of employees dedicated to the success of the company. Loyalty becomes so tenuous that a large proportion (a majority?) of employees are ready to jump to a new job at the first opportunity.

Smug employers aren't concerned. There don't seem to be that many opportunities in the job market, so companies have a captive workforce. Or do they? "Warm chair attrition" is prevalent in almost every organization. Even though the workers show up every day, their heart is not in their work. They've already made the decision to leave; it's just a matter of time.

As the economy picks up, hundreds of thousands of workers are going to leave their current jobs for something else. For some, anything else will do. They want to escape from the tyranny of overbearing productivity pressure that isn't balanced with a sense of caring about employees.

Many employers, complacent today, will be caught unaware when their best people jump ship leaving the low competency workers behind. With intensifying competition, hiring replacements will be more difficult and more expensive. In those companies where taking care of employees has been low on the scale of importance, short-sighted executives may find themselves with insufficient human resources to meet customer expectations. Without major changes, extinction may be just around the corner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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