closing of some of the square footage- inthe industry with. its outmoded capitalfacilities, anct a need to focus on returnon invested capital rather than percent-age sales relationships im determiningthe profitability of a given errterprise.The percentage sales relationship tendsto emphasize overly large stores to geta spread on fixed cost but is achievedfrom the standpoint of much higher capi-tal investments. The return on invest-

ment concept emphasizes what you put intoit, what you got out of it, and was it

worth it. In emphasizing ROIC, the indus-

try has to focus on product line profi-tability. In combination with the scan-ning data a~d the m~rketing data, anoperator should be able to put somegeneral space allocation information intohis computer and come up with some productline profitability which allocates costsbased on space allocation. Only thraughattacking the problem of product lineprofitability on a product-by-productbasis can the overall mix in the storebe significantly changed to result inimproved returns on the capital employed.

HEALINGEMPLOYEEPRODUCTIVITY--

BANDAIDSOR MAJOR SURGERY

by:

Robert M. StressCreative Management Institute

St. Louis, Missouri

A modern day Rip Van Winkle who wentto sleep decades ago and awakened in thesummerof 1980 would have asked himself,“Hey man, what’s happening. What’s mis-

sing here?”- We coulcF tell him produc-tivity. It’s the crunch of the times in-volving a triple assult by big government,inflation, recession, and problems ofenergy. You see, Rip, these things gotto growing and productivity matters justseem to get lost. So much for Rip andhis long sleep. But why are we nowawakening to this need for productivitygrowth?

All of us here will agree we areawakening because major problems we wantto solve as a nation depend upon it.Without increases in output per hour ourstandards of living cannot increase.Poverty cannot be reduced and envi ronmen-

t~l quality cannot be improved. Withoutimproved productivity performance in in-dustries, specifically our own industry,we may continue to see the value of thedollar erode with the current inflationarypressures.

If we want to heal employee produc-tivity, do we need bandaids or majorsurgery? If we look at our organizationor business as a whole and compare it tothe human body, we know that a bandaidwill suffice on occasion. We also knowthat ba-ndaids will only cover so muchoutside territory and when bandaids won’twork, when the disease or wound is in-side the body we must consider majorsurgery.

Mr. Horgan did an excellent job thismorning defining productivity and its im-

February 81/page 38 Journal of Food Distribution Research

pact on the food industry. And Jim Doyleshared with us an explanation of how thesources and uses of capital can impactthe productivity problem. Now let’s takea look at the human resources side ofproductivity. As we have learned, pro-ductivity is the relationship between theoutput of goods or services and the inputof basic resources, including capital andnatural resources and labor. Higher pro-ductivity is achieving more output throughmore effective use of resources. As sim-ple as that definition sounds, the con-cept is one of the hardest to define andthe mc~t complex to measure.

Let’s look at human resources produc-tivity at three levels in terms of theUnited States as it stands in the worldeconomy, productivity within the UnitedStates itself, and finally productivitywithin the grocery industry. First, let’ssee how we compare with other countriesover the past thirty years.

It seems important to put into his-torical perspective the fact that ourfree enterprise system upon which themodern industrial organization is basedwas created and developed more than twohundred years ago. The “Father KnowsBest” authoritarian values as of twohundred years ago still exists in manyindustrial and service organizations andunions they bargain with. Even though

the society outside the plant has radi-cally changed its values, and more impor-tantly, its expectations, we have seensignificant technological and innovativechanges in the food industry which havedirect impact upon overall productivityin the 801S. We are also witnessing as

employers and managers of human resourcesa new way in which many Americans arelooking at work itself.

Today’s food industry employee can-not serve us, the employer, if theirwork does not permit them to fill theirneed for personal responsibility, per-sonal productivity, and personal develop-ment. What many of these people are say-

ing is that they want to be used better.They want the work portion of theirlives to be meaningful and significantas they define it, not just as the em-ployer or the organization defines it.So many contemporary job turnovers re-

sult from those people searching for an-other job or another employer whosedefinition of meaningful coincides withtheir own.

We are finding, for example, in ourIGA supermarkets that a most importantelement in productivity is the manner inwhich work is directed. Effective manage-ment in the literal sense is no longersufficient, an additional element isrequired, that of leadership becauseleadership encompasses the ability to in-spire others with a desire to cooperate.The idea that employees should be givenmore say in their work is the basis forwhat is being called labor managementcooperation or even more broadly thequality of work life movement. Thisconcept of quality of working life is arelatively new one in organizationallanguage, since many employers and man-agers continue to claim to the tradi-tionally firm productivity ideas.

These two concepts, quality of worklife and traditional productivity, giventhe level of understanding by managementon the one hand and employees on theother can be married into quite an ef-fective, positive work experience. WeIllsee evidence of this in just a few moments.

Improving productivity becomes theresponsibility of each and every employeeof the work unit. In a conveniencestore, a supermarket, a warehouse office,or in a corporate environment efforts toadvance the qual ity of the work life meangreater self-esteem for individual employ-ees and groups, increasing involvement onthe job, reinforcing stronger ties to thework group in the organization and stress-ing personal dignity. These serve tobuild productivity on an individualbasis which accentuate positive perform-

Journal of Food Distribution Research February 81/page 39

International Productivity Growth

1950- 1978’

February 81/page 40

t,

\

I“h,,

*Imlv

.

Journal of Food Distribution Research

ante on the job. That’s the bottom lineof the quality-of work life. That’s thebottom line for increased worker produc-tivity.

Let’s review points of studies whichhighlight the changing values and atti-tudes of the contemporary American worker.Both of these studies were conducted forgrocery industry employees. The first isa summary of employee attitude surveynotes from a February 1980 Chain StoreAge employee survey. Some of tne rrlajorconclusions of the study are as follows:first, pay is only the fourth next impor-tant factor effecting worker’s satisfac-tion. Next, 43% of the store employees

surveyed intend to carve a career in foodretailing. Next , store level employeesin the 36 to 40 age group and the over 40segment expressed the greatest pleasurewith the work that they do. At the oppo-site end of the spectrum are the 21 yearolds, with a level of satisfaction ofwork of just 26.L8%. And, the most dis-satisfied group of workers ranked by age,those under 25 in non-managerial posi-tions.

The results of this survey indicatethat the work itself--not the pay--wasthe most important factor contributingto worker’s job satisfaction. Estab-lishing a formal suggestion procedure isone of the easiest ways for a retailerto improve employee satisfaction. Goodpay does contribute to worker satisfac-tion yet the obvious conclusion is thatother factors including the work itself,the quality of supervision, have more todo with the job happ[ness than does goodwages. Workers overall are more satis-fied when good job performance is recog-nized by supervisors and rewarded bymanagement. Accordingly, those companies

in the study with provisions for meritpay increases showed more satisiers than those firrrts which didnthem.

Not only are better satisfers more productive, but improv

ied work-t have

ed work-ng people

programs seem to offer the best hope forcombating two of retailing most seriousproblems, employee turnover and absentee-ism. Let me share with you some resultsfrom the recent Ralph Young attitude sur-very, summarized in Progressive Grocer’sRetailing in the 801S. Concerning qua]-ity of work life, employees want theopportunity to grow, to get more respon-sibility, to participate in the manage-ment of the company. The younger gener-ation is asking for more information oncareer pathing opportunities. They wantto know how long it will take to grow,what the financial rewards will be. It’sa crystal ball question with a crystalball answer we all would like to see.Another quote, they want to be heard andincluded and gi’ven a voice. Still another,I’ve seen more and more people in lower“level jobs who want to take part inthirtgs rather than having things man-dated.

As people become better educated,the higher their job expectations become.We have to recognize that grocery indus-try employees have contributions to make,some }arge, some small. Back to theRalph Young study. Another quote, adefinite trend towards more awareness ofself-contentment and more “me first”attitude of the 70’s carrying over tothe next decade. Those employees con-sidering relocation options in the yearsa“head will place their most importanceon number one-- recreation and culturalfacilities in the new location; two--climate; three--job position; and four--environment. That is quite a contrastfrom relocation preferences of five toten years ago. In the late 60’s andearly 70’s the emphasis in personaldevelopment was on opportunity. Youwould move your family on moments noticeif the job was right and future bright.

The results of these and similarstudies conducted over the past twoyears indicate that nowhere in recordedhistory have work values changed sodramatically in such a short period of

Journal of Food Distribution Research February 81/Paga 41

time as they did during the early 601S andnow in the 801S. Through the eyes ofSkelly and Yankolovich on the results oftheir study in changing work values, theHoratio Alger work ethic of work, work,and work for the firm is basically dead.In fact, only 15% of the population sur-veyed by Skelly even attributed theircharacteristics to that kind of ethic.What is taking its place with 85% ofthose surveyed is the focus on self-fulfillment, not on self-denial, butrather on self-fulfillment and self-exper-ience. We are experiencing as we enterthe decade of the 80’s another era ofchange in education and roles of malesand females in our responses to governmentand to changes in our leisure time andwork time. Values have changed. Theimplications to those of us here are veryobvious, We must modify assumptionsabout our employees. Reaccess the waythat we manage and lead our people andtherein lies some self-surgery, minorfor some of us, major for others, whichcan result in improving the productivityof our human resources.

I listened to a speech not long agoby Rich DeVoss, President of the AmwayCorporation of Ada, Michigan. He wastalking about young people and letparaphrase one of his key ideas inspeech entitled Selling America.people today can be, classified onethree ways. They can be cop outs,outs , or all outs.” Let’s spend amoments talking about the all outs.

mehis“Youngofdropfew

Let’stalk about the high school senior whoplays defensive tack on the football team,who is an officer in the senior class,who maintains a B+ average, and who worksat your supermarket two nights a week out-side of football season and all day Satur-days. Then there is the 33 year old gro-cery buyer who has been in your distribu-tion center for 8 years. He is married,

has three children, his first home andjust last month was awarded a bachelordegree in Business Administration aftersix years of night school, These aresamples of the all outs. There are mil-

lions of all outs in our country today.They are different colors and have dif-ferent backgrounds. Their goals andaspirations for themselves and for theirfamilies are as varied as the individuals.But their basic work values are in linewith the quality of working life move-ment. These people most often work forpretty good companies, with good employers.It is funny how it seems to work that

way. When you travel a great deal youmeet a lot of people at airports, in air-planes, in hotels, and in training ses-sions. And it is interesting how theattitudes of people you meet reflect thetypes or organizations they’re in. Neg-ative people generally find themselvesworking in negative organizations, whilepositive people most often work in posi-tive environments. My best guess wouldbe that positive people working in posi-tive companies probably most often usebandaids to heal employee productivityproblems, whereas negative people fromnegative companies probably require majorsurgery.

I would like to show you a simpletechnique for determining your company’sor your organization’s posture on im-proving productivity, employee produc-tivity. The diagram is called the pro-ductivity position diagram and on thisdiagram there are four basic types ofcompanies, one of each of the four cells,Table 1. This is something to thinkabout on your own time. Try to figureout where your company fits in the pro-ductivity position chart. Now let’slook at the chart for just a moment. Theamount of activity focused on productiv-ity and improvement is on the verticalaxis from low to high. Examples of ac-tivity might include establishing pro-ductivity measures, setting productivitygoals, progress reviews, and the recogni-tion of successful productivity programs.On the horizontal axis, again from lowto high, left to right, is management’slevel of awareness of productivity con-cepts. The best example here is the de-gree to which top management commits to

February 81/page 42 Journal of Food Distribution Research

HIGH

ACTIVITY

FOCUSED

Ot’i#Productivity

IMPROVEMENT

Low

TABLE 1.

Productivity Position Chart.

11 IWORKHORSE STAR

111 IVDEADWOOD PROBLEM CHILD

.,

LOWifANAGEMENT AWARENESS

OF PRODUCTIVITY CONCEPTS

Journal of Food Distribution Research

.,HIGH t.

February 81/page 43

improving employee productivity. Pos i -

tion number one is what we call the starcell. This is a company high in activityand in management awareness. Managementdecisions are based on data, they arelogical and problems are solved in a ra-tional manner. In position two we havewhat we call the workhorse. This is acompany where there is a lot of activity,but no management awareness. A companyin this situation most often follows thatHoratio Alger work value system of work,work, work. In position three, we havewhat we might call the deadwood position.This type of company has low productivityand low management awareness. A dead-wood company has no strategy and notactics, perhaps does not perceive em-ployee productivity as a problem. Pos i -tion four we’ll call a problem child.Indicative of a company whose managementis either satisfied by the present level

of productivity or a productivity improve-ment program is on hold because of lowneed, high risk, low pay off, lack ofagreement on the problem, etc. In thistype of company there is high managementawareness, but low activity. Everybodytalks about the problem,nothing concrete. I Wouindustry the majority ofin either position two o

We are workhorses with hawareness or we are prob

but there” isd say in ourcompanies we

position four.gh activity, lowem chi Tdren with

high awareness, low activity. We’ll takea look in a few moments at some conterrrpor-ary examples of the position one companiesor star companies.

Let’s take this approach one stepfurther and look at sourcesand solutions. In a retailtribution center, a chain,any classification there isinteraction between systemsures , technology, productiv

of problemsstore, a dis-ndependent ,constantand proced-ty measures,

and employee characteristics. I havegiven you a separate handout, shown hereon the T.P. a diagram for this, Table 2.

The first is a probable cause sheetand then a problem solving form very sim-

ple in format. It may isolate the prob-able cause or problems in your companyand through defining the problem, thenisolating the causes you might find iteasier to come up with specific actions,action plans if you will. The produc-tivity chart and the simple forms thatgo along with it are one road to actionas we consider ways to heal productivity.Whether your firm relieson bandaids ormajor surgery, any solution to employeeproductivity entails action. A-C-T-l-O-N.In looking at that word--action--letterby letter, I would suggest to you thatfor our purposes today, it means allcommitted to improving operations now.

Let’s look again at those all outs,at some of the good news, some instanceswhere improved employee productivity hasbeen accomplished in recent years in ourindustry. Here we can share some quotesfrom retailers expressing successful pro-ductivity results. And I will sharethese with you one after another.

Ilwe have turned to ordering by

electronic tape by phone to the ware-house. We have created a new quarterlyincentive bonus plan. We used more sci-entific labor scheduling, utilizing thecomputer for programming. We have inten-sified our training in all areas. Wehave a non-contributory profit sharingand retirement plan for all employees.It gives them a sense of security. Newprice marketing methods and new orderingsystems to speed orders electronically.Bonus arrangements with our managers forholding down manhours while getting allnecessary jobs done. We communicate dif-ferently, keeping all employees aware ofwhat our problems are and asking for theirhelp in solving them. We have gone topallet loads so we are unloading fasterand trying to cut down on deliveries.The manager sits down with the new em-ployee and tells him store policy, moti-vates him to be honest and to have integ-rity and loyalty to the company, showshim his job and starts him out right.”

February 81/page 4! Journal of Food Distribution Research

TABLE 2.

Problem/Solution Sources

TECHNOLOGY

SYSTEMS 8 PROCEDURES

/: \

EMPLOYEE

CHARACTERISTICS

(E)

PROBABLE CAUSE

PRODUCTIVITY

MEASURES

(M)

POSSIBLE PROBLEM/CAUSE THEORY DATA ;;;;;RCH ;;~;;&YELEMENTS

ASSUMPTION

(T)

(E)

(M)

IACTION PI ANS

CAUSES II

PROBLEM

1

Journal of Food Distribution Research February 81/page 45

,..

These retailers and thousands morelike them across the country are takingaction to improve employee productivity.Of a more general nature, major produc-tivity advances in recent years of retailstem from a variety of developments.They include more improved receiving andhandling techniques, equipment, increasedcentralized meat processing away fromstore or produce preparation, the econ-omies of scale provided by larger stores,more advances machinery, preassembledmass display and tray packaging for gro-ceries plus electronic ordering and theexpanded use of the computer. Each of

these systems following acceptance andimplementation by employees has and con-tinues to result in increased employeeproductivity. Hirotaka Takeuchi, assis-tant professor at the Harvard BusinessSchool , in his continuing research intoformulating the standard productivitymeasure for the food industry suggestsseven key factors of success in any pro-ductivity improvement program.

1.

2.

3.

4.

5.

6.

Improving productivity must be acompany-wide goal.

Productivity must be translated intoa personal mission for every employ-ee. Everyone can contribute to its

success.

Productivity is best fosteredthrough a team effort. .

Productivity improvement effortsmr.rs~ have the full support of theC<.mpany. This support includest;-i~. allowed for team meetings,financial backing, and the sponsor-ship of incentives to reward thebest suggestions.

Top management must be directly in-volved with the workers.

The rewards should be relativelysmall. Personal pride and recogni-tion are much more important tomotivators.

7. The flow of information and communi-cation from management to workersand visa versa is crutial for aproductivity improvement program tobe successful.

I would wager that companies in thestar portion of the productivity diagramwe look at a few moments ago are probablyutilizing at least five of these sevenprerequisites.

One final success story involvesRalph’s Grocery Company in California.It was related by Byron Allumbaugh,Ralph’s company chairman at the recentFMI Distribution Conference. His com-pany is testing the Japanese concept ofquality control circles. Quality circlesfor short. Quality circles are perhapsthe fastest growing productivity improve-ment strategy in the United States atthis time. The hour and place and func-tioning in 65 companies, includingGeneral Motors, Ford Motor Company, Rock-well Internations, International Harves-ter, American Airlines, and Ralph’s Gro-cery Company, and many others. Qual i tycircle is a small team of employees, fiveto fifteen persons, doing similar workthat meet regularly to identify, analyzeand solve work related problems. Meet-ing topics run the gambit from exchanging

ideas on cost cutting, quality control,morale and even engineering techniques.There are in the country of Japan currentlymore than six million Japanese workersparticipating in registered, qualitycircles. According to a spokespersonfrom the Japan productivity center, thecircles are credited with a 25 billiondollar contribution to Japan’s nationalproductivity in 1979. The concept isnot just another meeting. But itisaform of participating management in whichemployees can creatively contribute tosolving operational problems. Participa-ting companies are discovering thatquality circles are resulting in a newway of managing people at the bottom ofthe organization, thereby showing improvedproductivity, better labor management re-

February 81/page L< Journal OF Food Distribution Research

lations, more direct communications, andpositive changes in worker’s attitude.

We must remember that quality cir-cles are not an elaborate game or pro-gram, but a way of managing and must beinstalled slowly and evaluated carefully.As Mr. Allumbaugh suggested at the dis-tribution conference, participativemanagement can’t be forced, it takestime, commitment, trust, and patience tochange an organization’s work style. Butat companies 1top ‘ :]nagementfact ~hat usingsignificantlyhumat~ resource

niq:.:e seems to

ke Ralph’s Grocery Company,now is committed to thequality circles pays offn productivity through

This management tech-go a long way toward

bridqing the gap between the classicalmanagement approach to productivity andthf. contemporary trend of employeestoward quality of work life. This maybe a technique you wish to investigate.

Renumbering a thought from Ralph Waldo

Emrwrson, “Nothing astonishes men so

much as common sense and plain deal ing.”

We have taken a broad brush look at

labor productivity in the grocery indus-try,, at productivity approaches in andout of the country. We have taken a lookat some current trends in the labor force+

various industry productivity standards,and we have looked at some possible solu-tions, some winners, companies, and inmany cases individual retailers who aretaking healing actions to improve laborproductivity. Some of the problems re-quire only bandaids while others requiremajor surgery, particularly for longrange cures. I’d like to sum up with apoem by Ella Wilcox, as follows:

One ship sails east, another driveswest along the self same winds that blow,tis the set of the sail and not the gailwhich tells us the way to go. Like thewinds of the sea or the winds of fate aswe voyage along through life, tis theset of the soul that decides its goal andnot the calm or the strife.

We find our ships in the fall of 198oin turbulent seas and in high winds causedby inflation, ever growing government reg-ulations, and energy worries, all of whichaffects our ship. Remember it’s how weset our sails in order to achieve ourgoals that determines our ships direc-tion. Supporting our ships captains andunderstanding the values and attitudesof our crew will provide us with the humanresources necessary to properly steer ourship in the months and years ahead.Smooth sailing and Godspeed.

Journal of Food Distribution Research February 81/paqe 47

APPENDIX TABLE 1

LEADERSHIP

The boss

The boss

The boss

The boss

The boss

The boss

The boss

The boss

The boss

drives his men;

the leader coaches them.

depends upon authority;

the leader on good will.

inspires fear;

the leader inspires enthusiasm.

says, “1”;

the leader says, “we.”

assigns the tasks;

the leader sets the pace.

says, “Get here on time”;

the leader gets there ahead of time.

knows how it is done;

the leader shows how.

February 81/page ~$~

makes work a drudgery;

the eader makes it a game.

says, “Go”;

eader says, “Let’s go.”

The world needs leaders,

the

but nobody wants a boss.

--Dora E. Dodge

Journal of Food Distribution Research

APPENDIX TABLE 2

WHERE TO LO(IK FOR THE EIGHT HIDDEN ENEMIES OF PRODIJCTIVITY

The eight hidden enemies are only hidden if you don’t know where to iook farthem or if you don’t realize their potential harm to your firm. The eight enemiesare:

H

H

DDEN ENEMY = 1: Very sharp people start to “sour” or brili iant peopiestart to “tarnish.”

DDEN ENEMY = 2: Employees’ growth slows and employees begin to resisttraining.

HIDDEN ENEMY = 3: Employees

HIDDEN ENEMY = 4: Employees

HIDDEN ENEMY = 5: Empioyees

begin to “short circuit” your best decisions.

come up with fewer and fewer new ideas.

who were once highiy productive lose their

H

H

enthusiasm, but are unaware of “it.

DDEN ENEMY = 6: “Rotten apple” empioyees begin to infect others andshatter company morale.

DDEN ENEMY = 7: Employees resent and resist others! personai success.

HIDDEN ENEMY = 8: Empthe

oyees who are presentiy productive begin to ioser desire to improve their work.

Journai of Food Distribution ResearchFebruary 8i/page 49