Effective productivity towards profitability

9. 15. 2016

In today’s industry, being able to capture market share is challenging as there are many competitors in any industry. With human capital increasing and rapid advancement of technology, it is even more challenging for firms to achieve the competitive edge.

Author: Catherine Muthu

In today’s industry, being able to capture market share is challenging as there are many competitors in any industry. With human capital increasing and rapid advancement of technology, it is even more challenging for firms to achieve the competitive edge. Management plays a pivotal role in building the entrepreneurial attitude and manifesting innovation, so as to be innovative and unique in their offerings to customers and stakeholders. Employees’ and stakeholders’ management is important and their contribution is utmost important for firms to achieve innovation and explore their competitiveness in markets with boldness and ever ready to face any challenges, amicably. 


Benchmarking, challenges, change management, communication, employee moral, human capital, innovation, organizational growth, productivity, stakeholders.

Intense competition in any industry arises, and this leads to a discovery of a new chapter, a new approach to be competitive in the market. Price alone does not guarantee competitiveness and sustainability. In order to gain economic security, firms compete in ways other than price. Customer value-based competition represents the next major shift. This requires effective managerial practice and very different way of managing through rethinking organizational culture, structure, and managerial capabilities (Woodruff, 1997). This brings to the concept of entrepreneurial start. When entrepreneurship is being mentioned, creating a business concept comes in mind. However, entrepreneurship is beyond mere business idea, it is how we close the need gap which has not been identified by many firms. The need gap is where customers have not met the ultimate satisfaction of either products or services or both (Oluleye and Olajire, 2001). Hence, need gap can be overcome by productivity and quality that create value for customer and company.

Quality focuses on the benefits for customers and productivity lowers the cost and increases the profits for the company (Gummesson, 1998). Service quality is important for customer satisfaction and the main focus of management attention should be in customer satisfaction of which service quality is an important antecedent. Hence a clearer, understanding of the need gap of customers can help ensure targeting and the use of limited maketing resource (Caruana, 2002).

It is entirely up to the firm to identify the gap and work towards closing the gap. And this requires a wealth of intellectual and capable employees. By identifying and investing on these employees, firms can then produce the right products or services or even substitutions,  leverage resources that leads to low cost of production, operations and even marketing and penetrating new markets. This is all possible if firms hire and place the right candidates or employees in the right positions and find new ways to manage and administer the workplace and conduct business routine affairs with stakeholders (Edward, 1997).

Employees‘ motivation contributes to productivity. Hence, to attract and retain talented employees, the organizations need to offer a reasonable pay and conditions to them (CIPD, 2005). Besides that, the reward system of an organization can induce employees' performance and commitment (Locke, 1996). Leader‘s communication skill is a forceful impact in organizations (Senior and Swailes, 2010).The organizational outcome such as employee’s performance, job satisfaction, motivation, attendance and loyalty to the organization are influenced by effective leader‘s communication. For example, performance appraisal is an effective tool for managers to evaluate employees’ job performance such as provide feedback and communicate to the employees how to improve their performances (Addae, Praveen Parboteeah and Davis, 2006).

Job satisfaction can cause an emotional reaction that affect employees' commitment towards the organization, and its satisfactory level is based on the personal and organizational influences (Mowday, Steers and Porter 1979; Lumley, Coetzee, Tladinyane and Ferreira, 2011).  Whereby, having a negative work unit climate could affect employees’ job satisfaction. According to Coetzee and Martins (2009), “positive work climate could help to enhance retention rates, whereas a negative work climate could cause to a high employee turnover rate”.

In addition, trust is another important aspect of faith or concept in employees’ performance. The trustworthiness between employees and the management result through effective management in organizations (Morgan and Zeffane, 2003). Employees’ dissatisfaction and distrust are caused by lack of communication (Lewis, 2011). Few factors that lead to distrust through communication are dishonesty, broken promises and vituperation (Morgan and Zeffane, 2003). Therefore, distrust can affect the organizational growth and performance of employees and it is the reason why trust between employees and management is important (Lines, Selart, Espedal and Johansen, 2005).

Increased stress leads to reduced productivity. However, increased satisfaction leads to higher productivity. When work begins to overlap with employees’ personal life, this implies a negative effect on productivity. First, when work starts to intersect with the employees’ personal life, this has a negative effect on productivity. Second, work load is not connected to the lack of quality in everyday work, thus quality work is more related to conscientiousness and personal satisfaction than work load. And third, energetic and active individuals do not affect productivity negatively, but positively, and stress is termed as creative and it is useful when employees are passionate and satisfied with their job (Halkos and Bousinakis, 2010).

Effective use of resources simultaneously generates profit for firms. Hence, profitability-enhancing strategies are pivotal. Innovation is the key to effective approach.  According to Morgan and Zeffane (2003) work unit climate as organization policies, practices and procedures sustain by the employees’ action and behavior. Benchmarking on the other hand highlights firms to identify the missing element of innovation. Attitudes between managers and employees contribute to this innovation.

Managerial group has influences on productivity in employees (Lawson, 1998). Managing the behavioral aspect and counteract all negativism by highlighting the importance of these employees and stakeholders to the firm. Moreover, the firms‘ transparency of conduct is an effective practice to instill the importance and fairness in being part of the firm. Being satisfied and contributing towards innovativeness results to effectiveness and efficiencies and therein leads to productivity and quality which determines competitiveness and sustainability.


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