Productivity within Allstate Insurance Corp - Assignment Example

Aftab 01 Productivity within All Insurance Corp. Table of Contents Page No Introduction 02 2. Importance of productivity 02 3. Analysis 02 4. Information Technology and productivity 03 5. Incentives and Productivity 04 6. Synthesis 04 7. Trends 06 8. Challenges 06 9. Application 07 Aftab Ahmed Aftab 02 Karachi, Pakistan. Introduction Importance of productivity in the service sector: A conceptual analysis with reference to the insurance business. I have selected this article to elucidate the concept and importance of productivity especially in the service sector. Importance of productivity Productivity growth involves producing more or better quality output with the same inputs or producing the same output with less inputs, and thus at lower cost. In today’s market a company can not survive without increasing productivity. Productivity plays significant role in any industrys ability to control costs and to accelerate growth and thus giving competitive edge over other companies. Analysis Productivity can be defined as “a measure relating a quantity or quality of output to the inputs required to produce it.” (1) Productivity is influenced by many factors. Even very small factors may contribute to productivity of an employee. As a study of “The economist” has revealed Aftab 03 that even rhythm can observed to know the productivity of an employee. In The economist’s words “GOT rhythm? If so, you are likely to be more productive than your arrhythmic colleagues. That was one conclusion drawn from a study carried out recently by Benjamin Waber and Sandy Pentland of the Massachusetts Institute of Technology.” (2) Although the methods for achieving the same or better outcomes with fewer resources may vary, improved productivity will not occur unless it is pursued actively. Ineffective searches and wasting time looking for information is a cost of a company. “Employees performing ineffective searches and wasting time looking for information can cost companies up to 10% in salary expenses, research shows.” (3) Major factors involved in increasing the productivity can be summarized as follow: Information Technology and Productivity. Many service economy jobs could enjoy substantial productivity growth through better application of information technology. For example, every time you check in at the airport, you wait several minutes as the agent frantically taps away at a hidden computer. Most of this time is wasted due to airline softwares horrendous usability. With a better user interface, agents could process passengers much faster, which would immediately increase their productivity and save time for customers. Aftab 04 “Unlike the United States, European countries have not seen the same surge in productivity growth in the last 10 years. Why the difference? The answer, according to Nick Bloom, Raffaella Sadun and John Van Reenen, researchers at the Center for Economic Performance at the London School of Economics, is that American companies make much more effective use of information technology than European companies.” (4) Incentives and Productivity The importance of incentives to employees on the productivity is well known fact. Even socialism has admitted it. As Gerard Roland says “Prior to the privatization, It was China that went the farthest in trying to give managers better profit incentives. Data on 769 Chinese enterprises between 1980 and 1989 in four provinces (Sichuan, Jiangsu, Jilin, and Shanxi) analyzed by Groves and colleagues (1994) showed that increased autonomy to managers led them to give more incentives to workers by increasing the shares of bonuses in total wages payments and the share of contract workers relative to permanent workers. Increased incentives also had a positive effect on productivity.” (5) Synthesis Paul J. Meyer says “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.” (6) Aftab 05 Companies can increase productivity in a variety of ways. The most obvious methods involve automation and computerization which minimize the tasks that must be performed by employees. Recently, less obvious techniques are being employed that involve ergonomic design and worker comfort. A comfortable employee, the theory maintains, can produce more than a counterpart who struggles through the day. In fact, some studies claim that measures such as raising workplace temperature can have a drastic effect on office productivity. People are the worlds most valuable resources. Many productivity researchers suggest that education and training are the basic foundation for raising productivity levels. The acquisition of expertise through education and training, coupled with the best equipment and resources within an efficient and safe environment, can be maximized by developing employees into people who want to learn, who want to work at their potential, and who want to continuously improve. These factors are best achieved when an employee is motivated to take pride in the work he or she does. A motivated, self-starting employee is one who adds value to an organization and contributes to the overall productivity of him or herself, a work group, an organization, and the economy. Many businesses devote much time and effort to finding ways to motivate employees. Worker enhancement programs (for an individual, team, company, etc.) that are built on ways to motivate workers (toward self-motivation and long-term motivation) can optimize productivity. Organizations that are most successful in motivating workers provide a variety of programs (formal and informal avenues within and outside the Aftab 06 organization) to meet the needs of their employees. Some organizations offer employees sports and recreational activities, fitness and leisure activities, and family-oriented programs (work-/job-augmented incentives). Incentive programs may be totally separate from or incorporated into work-team meetings, seminars, and education/training programs. Such a comprehensive approach toward enhancing worker performance may capitalize on quality measures (such as value, total quality management [TQM], quality circles, innovation, etc.) and performance standards (such as profitability, efficiency, customer satisfaction, on-time delivery, etc.) and include a wide range of personal and team rewards and incentives. Through methods such as field studies, task analysis, and user testing, organizations can discover new ways of working and better ways of supporting work with information technology. In particular, immense gains are possible through better collaboration interfaces, better knowledge management, and better decision support. Trends Like other insurance companies there is an incredible focus in Allstate Insurance Corp. on reallocating resources, increasing the client base, writing more business and retaining current clients. Of course the goal is to achieve all of these efficiencies by spending less cash and hiring fewer employees. Unique software has been developed to help combat these woes and streamline commercial insurance business. Challenges Aftab 07 With growth comes the accompanying problems and challenges of increased expectations. This is especially true when it comes to reaching the highest level of productivity and efficiency. Departments are facing very difficult times to reach optimal productivity at the lowest cost. Workflow process, coupled with an effective workforce strategy, is the key to reaching optimal productivity at the lowest possible cost. Effective workforce strategies are often at odds with the advancement of technology making it diffcult to achieve the highest level of production at the lowest labor cost per unit. Application The keys to motivating employees to higher levels of productivity can be described in seven simple steps: 1. Make all employees in your company aware that because of the potential economic problems of the country and your industry, they will be expected to do a better job than they have ever done. Let them know that the company is dependent on their becoming dedicated to excellence in every aspect of their work. This information can be imparted during a company meeting, or to employees in each department via managers and supervisors. 2. Work with your managers and key employees to establish a plan for attaining this increased excellence in every department. This plan could include special financial incentives/perks, employee recognition awards and employee training. During a downturn, the morale of many employees is probably low. They too will be influenced by Aftab 08 the "experts" gloom and doom economic reports, which often make things seem worse than they are. Motivating your staff and pulling them together will help them focus on whats important: continuing to do a great job. 3. Before organizing and establishing a plan, learn all you can about ways to motivate employees, always focusing on ways to enhance their involvement in the company and inspire feelings of responsibility for the companys overall success. 4. Set up employee suggestion systems, focusing on the topic "How to increase productivity to offset an economic slowdown." Employees know their jobs inside and out and would welcome making suggestions to help the company survive hard times. 5. Encourage managers to step to the front lines and become as pragmatically involved in the day-to-day operations of the business as possible. Though many managers view themselves as being somewhat removed from the "rank and file" employees, this viewpoint can be disastrous during difficult financial periods. 6. Be creative and encourage creativity throughout your organization. Always look for ways to do things better, cheaper, faster and more efficiently. 7. Increase your focus on customer service. Youll find that many companies will cut back their staff during hard times, meaning that customers will notice a decrease in service throughout a wide array of industries. Your company can shine during this period if you increase, not decrease, the quality of your customer service. Aftab 09 Finally, note that these suggestions did not include increasing employees hours without pay, or actually reducing salaries. Such actions should be taken only as a last resort, because they strike directly at the heart of your relations with employees. Aftab 10 Work Cited (1) Abut.com a web based dictionary. 30 August 2008 (2) The Economist. 20 August 2008. 30 August 2008 (3) Network world. 31 August 2008 (4) The New York Times. By HAL R. VARIAN. Published: January 12, 2006. 31 August 2008 (5) Transition and Economics - Politics, Markets and Firms by Gerard Roland Pp.225 ISBN 026268148X, 9780262681483 Published by MIT Press, 2004 . 01 September 2008 Aftab 11 (6) 01 September 2008 Read More