Peace, Productivity and Industrial Relations Prosperity IS Productivity Prosperity is created by production. We become prosperous, individually or collectively, by providing goods and services which people want and need, either for our own personal consumption, or for trade with others. But production is only half the story. If we want to enhance and increase prosperity, production needs to be productive, it needs to be efficient. You can't increase your prosperity simply by working harder or longer. More hard work may increase your financial wealth, but at the expense of leisure, family time, and possibly also your health. No. To increase prosperity we need to work not harder but smarter, producing more and better goods tomorrow with less work than it took yesterday. The formula sounds simple enough and indeed it is. Productivity is a frame of mind, an attitude to work wherever it may be undertaken, from home and garden to office and factory. It is an attitude of constantly monitoring your activity, checking whether anything you're doing could be done more easily or more efficiently, or whether certain jobs may in fact not be necessary at all. Productivity is an attitude of mind, and it has high potential rewards in terms of greater prosperity and more leisure time to enjoy it. We can and should practice productivity in the home and personal life; and certainly in any business run from home. For most of us however, the greater part of the working day is spent working with and for others. Here the same rules apply. If the business we work for is productive and efficient it will offer its customers good products at competitive prices. As a result it will prosper. If it is not productive and efficient then it must eventually fall by the wayside. It is in the interests of everyone concerned in a business that it should be productive – and stay in business. And "everyone concerned" can mean quite a crowd: owners, investors, and employees of course, but also suppliers and distributors, and the host community which is dependent on the company's wage-earners for Shopping Centre and High Street trade. The problem is that these different interests may often see their own point of view to the exclusion of the whole. If business is to survive and prosper without the waste and distress caused by failures and bankruptcies, then a holistic view of business in its totality must be maintained. The Reality of Inter-Dependence: A Holistic View It is a basic fact of life that commercial inter-activity involves others. It involves managements and workforces, accountants, designers, production and sales staff, as well as suppliers and distributors, perhaps also the environment and the social fabric of the host community, and last but certainly not least, in fact probably first - the consumer. There is a term for these wider participants in a business: they are called the Stakeholders. This term moves regularly in and out of business fashion. But the reality is that this interdependence is always there, fashionable or not. Where there is inter-activity there is inter-dependence, and this inter-dependence must be respected, for it is very largely on mutual reliability and trust that good business relations and productivity are built. The term "stakeholders" is generally considered to consist of five groups – management, investors, employees, consumers, trade connections, and community. This listing is not especially contentious. The debate centers not around the existence of these groups but rather, their relative importance. This Article proposes the following, perhaps unconventional order of priority: CONSUMERS EMPLOYEES INVESTORS TRADE COMMUNITY The customers come first. Before you even think of raising finance, leasing premises, buying machinery, hiring staff, or opening your doors for business, you have to know who your customers are, what they want in the way of product or service and quality, and what they expect to pay. If you don't know that, then you have no business. Consumers are the Alpha and Omega, the Beginning and End of any and all business and productive activity. And it is important that all employees should realize this and bear it constantly in mind. This reflects on the importance of sales staff, who are the company's front line, interfacing with consumers, listening to their comments, continuously assessing their satisfaction level. After Customers: Employees. The employees are the substance of a company, the people who make it work. If they have what they need in the way of proper equipment and constant flow of materials, if the workplace is clean and pleasant, and if there is a strong bond of mutual trust and loyalty throughout the company based on fair treatment and open information, then productivity will be high, and continuous improvement will be a standard feature. What about Management? Nothing special. "Management", including the owners, accountants, planners, administrators and other office-dwellers... they are all employees of the company. Even the owner of the business is an employee in the sense that he/she is equally subject to the disciplines of the market. Indeed, as the man or woman placed where the buck stops, the owner is the "ultimate company employee" in the eyes of the consumer, suppliers, and other employees. All those who work within a company at whatever "level" and in whatever capacity are employees of the company, responsible to it and for it, subject to the anonymous and unyielding rules of the market-place and the bottom lines of accountants' reports. A well-run company is a company in which "managements" and owners instinctively accept their employee status. Now for the Investors. What, only now? Why so far down the list? Surely Investors come before Employees if not before Customers too. Without Investors there'd be no company. Investment is what buys the machines, what sets up the company. But thereafter, Investors take third place after Customers and Employees. The investors want it that way! "Do we?" "Sure you do!" Sensible investors want no frills or fancy treatment, just a well-run ship. And a company that puts Customers first and treats its Employees properly by respecting them and seeking their advice - that is a well-run company. So what about ROI (return on investment) and "Shareholder Value"? These are measures of productivity, among several others, and useful as such. But maximizing the return on investment at the expense of customer satisfaction and employee loyalty is a dangerously short-term strategy. Customers must come first - then Employees – and only then Investors in third place. Investors whose companies put customers first and treat employees properly will enjoy stability and a fair, predictable return. Investors whose companies show little or no respect for customers and staff may well find themselves in bottom place behind the liquidators. Trade Connections. Many companies simply fail to recognize the importance of good relationships and loyalty between themselves and those who supply them, as well as their distributors. They buy from the lowest bidder, and sell wherever they can. Certainly such considerations are important. But so are long-term relationships with good suppliers and distributors, who will support you in difficult market conditions and give your products priority treatment. Finally, comes the Host Community. In any listing there has to be a last place, but that does not mean that it is unimportant, or that it can be disregarded altogether. Companies having a major presence in any community must recognize the dependence of that community on the company's continuing activity, and they must understand the economic realities that for every paid employee, there are many dependents, not only family members, but the Shopping Centre and High Street traders who supply them. When a town's major employer gets in trouble the economic life of the whole community takes a downward turn. "So am I responsible for the whole town now, just because my business is a major player here?" "Yes you are responsible. It's a fact of economic life. Are you afraid of it?" Responsibility and loyalty and mutual support can work both ways. The community can serve the business too, by cutting unnecessary red tape, promoting the company in its business directories and literature, and by its educational facilities working with the company to provide the skills and personnel needed currently and in the predictable future. Social Accountability An employee whose slipshod and careless work-style puts equipment and co-workers at risk while turning out faulty products, will soon be reprimanded by management and dismissed if there is no improvement. Such conduct can put the whole firm in jeopardy. Surely the same applies to poor management, which can have a far more devastating effect. But when management arrogance or incompetence endangers the company, who dismisses the management? German industry makes widespread use of the Aufsichtsrat or Supervisory Board representing the company’s major stakeholders – employees, investors, significant suppliers / distributors, community and consumers. A case can certainly be made for their representation in the overall company management. When products are poorly designed and inefficiently or wastefully manufactured, when services are careless and slipshod, when quality is poor, the consumer suffers. But so also do the investors if the firm concerned fails to gain its potential market share. And employees suffer both from inefficient working conditions, and from the insecurity and potential job losses inevitably incurred in a poorly run company. The maintenance of high standards in any business is clearly in the interests of all its co-workers and investors, as well as the host community that depends on it for employment and prosperity. In the wider context, businesses and industries are highly dependent on one another, for the supply of materials and components, for subcontracted work, for marketing and distribution. So the quality and reliability of one business affects, and is affected by that of several others. This total integration and inter-dependence of co-workers at all levels and in all departments, together with investors, suppliers, distributors, host community and consumers, clearly reflects the reality that avoidable incompetence in any part of the chain affects others adversely if not disastrously. Suppliers and distributors, as well as co-workers at all levels and in all departments should have the right to expect from one another the highest standards of professional conduct. And consumers should have the right to expect that products and services reflect and embody the highest currently available techniques and capabilities in efficiency, quality and reliability. Prosperity, for a nation collectively and for its component businesses and people, is generated by production, and by constantly increasing the productive efficiency of production. With teamwork, mutual trust and mutual respect, this will work. With mutual distrust, suspicion and resentment between managements and employees within the workplace, it will not. Many of the industrial world's more forward-thinking executives have spoken out in favor of the need for an "employee charter". John Dasburg, CEO Northwest Airlines: "My concern about the capitalist model is that while it seems to work and we're all involved in capitalism in an incredibly existential way, the fact of the matter is that there is, in my view, the need for some type of balance. Democracy didn't work without certain rights being guaranteed, what we call a Bill of Rights. And in my view there is somewhat of a bill of rights to capitalism. You just simply must take into consideration all of the various interests in society in the enterprise. And if you fail to do that, capitalism will fail. And we, as CEOs have a responsibility to see to it that we take into consideration all the stakeholders. And I just simply don't buy the view that maximizing shareholder value and disregarding other interests is a sensible way to run an organization. And certainly, in the long run, I think, it places in jeopardy the entire underlying economic system." Government for Peace would begin with Pay, Profit and Price Evaluation as discussed in a previous article. The need for and availability of investment for industry has also been discussed - investment wisely applied being a vital ingredient of productivity. This must then be carried through to the observance in all industries and workplaces of Standards which maximize productivity, including proper working conditions. It is important that any and all opportunities or causes for distrust or dissension be removed from all workplaces. Only through strong bonds of mutual collaboration, together with a dedication to the maximization of quality and productivity, can an industry, and collectively a nation's industry prosper, and with it, the nation's good citizens. Needless to say, full employment (also previously discussed) is a vital contributor to the maximization of productivity - no one wants to contribute to productivity increases which mean job insecurity, unless alternative employment is readily available. Prosperity comes from Productivity, and Productivity in industry is dependent on conditions of fair remuneration, a feeling of mutual trust, and an absence of exploitation – in short, industrial peace. Next: A Green and Pleasant Land