eBusiness Weekly
Innocent Chatikobo
Introduction
In any business venture whether big or small, the ultimate goal is to make a profit. In simple terms, profit is the money business remains with after they deduct the costs of material, consumables, labour and overheads.
Business would want to make as much profit as possible, though this tends to also compromise quality and work output. Some in trying to maximise profits end up hiring unskilled and inexperienced personnel such as bricklayers, plasterers, plumbers, tilers, welders, etc. To ensure productive work days, contractors search ways to boost employee engagement.
Productivity
It’s the degree to which an individual or organisation has achieved their goals. Productivity is the efficiency of production of goods or services for example in agriculture, utilising one acre of land to produce 50 maize plants, the output is not efficient, but utilising one acre to produce 3 000 plants is more efficient and hence more productive.
In engineering and construction, productivity can be measured as the number of housing units built in a given time or items produced in a production workshop in a given time.
If employees are effective, businesses can achieve the same results with same resources and less time. Productivity is measured using different benchmarks for different businesses for example bricklayers can be measured using the number of bricks they can lay, plasterers per square meter.
Factors affecting productivity in the workplace
a) Adequate and properly skilled manpower and their work habits. Difficult welding tasks require a skilled welder not one still learning the ropes.
b) Equipment and machines — proper tools for the job
c) Training and career development opportunities
d) Quality of management and supervision
e) Availability and quality of materials and consumables for example good quality bricks tend to produce good walls in a short time
f) Technology — use of modern technology reduces the time taken to do some tasks e.g. use of electronic or motorised hoists to lift trusses other than use of chain blocks
g) State of mind, remuneration / pay structure and workplace atmosphere / environment
h) Conflict management and team bonding
i) Workplace diversity — giving everyone equal opportunities
j) Availability of adequate power — some operations e.g. welding are easier when there is sufficient and proper phase to power the machines
k) Time management — ensuring that tasks are done within stipulated time frames increases productivity
l) Organisation e.g. keeping business data which helps track where delays are
Profitability
This refers to the degree to which a business or activity yields profit or financial gain. Profitability arises when the aggregate amount of revenue is greater than the aggregate amount of expenses within a given period. Profitability in the construction sector factors in all the expenses including materials; logistics; food; wages and salaries; medical insurance; office and workshop space rentals among others.
A project becomes more profitable if our expenses are minimised and also when a certain job is completed in the shortest possible time.
In construction, the more the days spent in building a house, the higher the overheads, thus less profit.
You can increase your profitability by producing more products while paying less for the resources needed to produce and sell them.
Factors affecting profitability of a construction business
a) Time taken to complete a project which affects overheads
b) Poor scheduling of jobs — carrying out tasks when it’s difficult for example external plastering during rainy periods
c) Maximising cash flow
d) Investing in education, training and development
e) Focusing on specific goals — specialisation
f) Market conditions — supply and demand of materials for example with the current surge in the price of cement, which eats away a contractor’s profit
g) Cost of labour — need for correct recruitment of the proper skills fit for the job. A contractor should avoid overpaying skills.
h) Machinery and equipment — increase the speed of production and also produces high quality work which fetches higher prices
i) Competition in the market — high competition cause reduction in price, hence low profits
j) Government policies and regulations e.g. taxes
k) Stability / instability in the economy (inflation)
l) Financing model — well financed businesses are more profitable since there is bigger investment
m) Unexpected / unforeseen problems or circumstances — these may delay the project and increase costs
n) Health and safety issues — the safer the environment, the more the production and there is reduction in compensation costs.
Relationship between productivity and profitability
As stated earlier before, productivity is the relationship between output and input needed to create a product.
Profitability is determined by how much money is left over after a product or service is sold and all expenses have been paid out. The strong relationship between productivity and profitability determines if a business will thrive.
Naturally, when employees are more productive, profit margins increase. Productivity and profitability complete each other. Productivity lowers expenses and raises profit margins.
Research has shown that the most successful work environments are those that maintain a high level of employee engagement through continuous support, security and making each team member feel valued.
Employees are more likely to feel a vested interest in the success of the business and are inspired to perform at a high rate of productivity. All this positive attitude ensures a company is profitable.
Management should make wise choices in delegating tasks among employees. Delegate someone in an area where their expertise is strongest. Business productivity can also be increased by leveraging the power of technology and other new strategies to become more efficient and more profitable.
Enemies of productivity
These are behaviours that work against productivity within a business
Procrastination — not taking action on what matters most
Having no goals — without a target, there is nothing to aim for. You can be very buisy without being productive
Not planning — without a plan to reach your goals, the actions you take won’t get you where you want to go
Poor time management — tasks have to be timeous for efficiency to be witnessed
Undercommittment — not being committed enough to your goals, dreams and priorities
Too many tasks — overcommitted people end up getting the wrong things done. With limited time, commit to do only the work that matters
Increasing productivity and profitability
Have the right equipment – outdated and malfunctioning machines can slow down production and make simple processes unnecessarily difficult
Take time to trouble shoot — asses where your company could improve. See where things are lagging or need to be fixed and this increases productivity
Manage the use of time thoroughly – prevent time theft e.g. in employees taking extended breaks, moving away from their workstations, spending large amounts of time doing personal tasks instead of working
Cut costs where you can — tighten the budget and cut costs. In a strict budget, you are forced to get rid of some things that you previously thought are essential
Take care of your employees — dissatisfied employees don’t usually put in the same effort that satisfied ones do
Streamline your marketing efforts — spend time, energy and money on marketing strategies that work specifically for your business. Zero in on your target audience and market to them. This leads to higher profits
Set the right example — take your work seriously and efficiently so your employees follow suit and this increases productivity
The role of management
Effective management considerably increases production, market value, growth, and an organisation’s capacity to withstand challenging circumstances
Managers use goals, incentives, development and communication strategies to enhance employee performance and help them increase their productivity
Managers ensure that workers are given clear goals and work toward them. They set SMART goals
They also effectively allocate resources to maximise overall productivity
Periodic reviews of employee job descriptions
Enforces specialisation and delegation of labour e.g. ensuring specialisation in bricklaying, plastering, tiling, welding, painting etc.
Sources and implement new technology
Manages the external environment and help use resources carefully
Growing and nurturing employee skills, competencies and creating bench strength
Innocent Chatikobo is an entrepreneur and engineer by profession with AtroServe Engineering Zimbabwe. He has extensive knowledge and experience in structural engineering and construction. For your comments, views, questions and feedback he can be contacted on the following platforms. Cell: +263 777 950 224; +263 712 376 037; +263 782 502 732; Email: [email protected]; Facebook: AtroServe Engineering Zimbabwe
