** Managers are obviously obsessed with Cost Cutting* But across every organization I can see they are Obsessed with Employee Productivity,Efficiency etc.* And nobody gives it a deeper thought than just using the terms Efficiency, Productivity,Utilization, Cost interchangeably and in the same sentence to mean one and the samething.* It seems All managers in the world agree that Work needs to be broken down into taskswhich need to be monitored and measured. So they assign „x‟ „planned‟ hours to a taskand measure the „actual‟ hours „y‟ taken to do it. Obviously Productivity = Efficiency =Utilization = 1/Cost = ratio(x,y)* And then Managers across the organization(s) spend a lot of time benchmarking,comparing, blaming everyone else.* This is so ingrained in the Managerial Psyche that we need atleast a betterunderstanding if not a complete demolition of these concepts as they exist today.* For our purpose, lets us call the Aggregate Result of Employee Effort as Output* Allow me to build a parameterized Model which is closer to Reality and Data* Which will also show how Abstract and Poor this Managerial Obsession is and how farfrom reality it is even within the Model.
** If Utilization = Usage / Capacity* Then Efficiency = Output / Usage* Allow me to exemplify* If you could work 40 hours but rather work just 30 then yourUtilization is 30/40 = 0.75 (or 75%)* Within 30 hours which you work if you do 50 hours worth of workthen your Efficiency is 50/30 = 1.67* And the simplest answer for Output would be f(Utilization *Efficiency) = f(1.25)* We have not come very far but even this model is a lot better thanmeasuring ratio(x,y)* This model would work if you were in Manufacturing or if you werelifting stones from A to B, but atleast not in The Knowledge WorkIndustry
**Ok! Now we have Efficiency and Utilizationsorted out in the Context of Knowledge Workand other things other than Manual Labor*Some people and teams simply do more, so wehave to multiple our formula in the model w/Capability Value or Capability Index*So we have*Output = Capability * Efficiency * Utilization
** Things like Resources, Tools, Automation etc. impact theoutput considerably so we need to accommodate for that* Also we know from Empirical Data that the Best Employeesdeliver 100x compared to Mediocre Employees* And we have seen earlier that what separates Geniuses fromRegular People is Learning and Learning How To Learn* We include all of the above into one factor called IAL(Innovation & Learning) which empirically has even gone upto100 in some cases.* So we have* Output = Capability * IAL * Efficiency * Utilization
**In a lot of models usually there is a parameterwhich is more abstract than others*In our case we call this Synergy, the factor thatexplodes outputs in Groups & Teams undersome favorable conditions*So we have*Output = Capability * IAL * Synergy * Efficiency* Utilization
**If you think I‟m out of Whack here…*Then the Productivity = Efficiency = 1/Cost =Utilization obsession doesn‟t make our Managersvery Sane Either*At least this 5 parameter model is closer to reality*Though it can be and I have applied itscientifically…*Even as a Mental Model it is a great modelcompared to what Managers use…