Three R's of Productivity

By Marshall Loeb

With the zeal of the sinner reformed, Charles Jackson Grayson Jr. goes around the country preaching that inflation cannot be defeated by price controls. Sad experience has taught the professor: he was Richard Nixon's price commissioner during the cold, post-freeze days of controls from 1971 through early 1973. Now this much-lettered man (Pennsylvania M.B.A., Harvard D.B.A., ex-FBI agent, ex-S.M.U. business school dean) is trying to sharpen what he considers America's most forceful anti-inflation weapon: productivity.

Price rises will slow down if America can get a larger output of goods and services from the same input of labor, capital and energy. Searching for ways to do so, Grayson, 54, a hyperproductive fellow who gets up at 4:30 a.m., started the nonprofit American Productivity Center at Houston. In all, 125 companies have kicked in their support, and every time Grayson gets a check in the mail, he gleefully clangs a bronze bell hanging in his office. At their center, which has few walls and many open doors, he and a small staff try to discover what ails American productivity.

As the philosopher Satchel Paige might have said, the U.S. shouldn't look back: other countries are gaining on its lead in productivity. In the past decade, U.S. output per hour worked in manufacturing has risen only 27%, exactly the same as anemic Britain's, much less than half as much as that of robust France, West Germany and even Italy, and only one-quarter as much as Japan.

Managers are mystified by the slowdown, and they, like Grayson, put the rap on Government regulations and those labor leaders who equate productivity drives with speedup and exploitation. But there is blame aplenty for managers as well, says Grayson. Too many are overly concerned with short-term profits, on which their bonuses and stock options are based. With inflation, regulation and high taxes all biting into today's earnings, managers put off investing in machines that would raise tomorrow's productivity.

Grayson has been startled at how little companies have done to measure their own productivity, let alone improve it. "They have paid much more attention to finance, marketing, mergers and tax manipulation," says he. Few production men have risen to the top in modern business; the accountants reign in the executive aeries. The business schools and their brightly minted M.B.A.s sense the trend and pay scant attention to productivity, Grayson observes. "Hardly any courses are given in production and efficiency."

Grayson disputes the conventional wisdom that productivity has been hurt by social change. The surge of women, nonwhites and the young into the job market has not had much impact, in his view. C. Jackson Grayson Jr. "I've heard all the rhetoric about we-don't-want-to-work-hard-any-more, and I don't believe it. The work ethic has not been lost. What has happened is that autocratic, bureaucratic organizations in business and public service have suppressed the desires and ability of the individual to feel that he or she is contributing. People do not mind contributing to the success of an enterprise, so long as they feel that they have a hand in helping to shape it and are rewarded."

So the way to raise productivity, Grayson argues, is for companies to give everybody the three R's: recognition, responsibility and rewards. Recognition in the form of plaques and photos on the wall, company dinners and other visible backpats for imaginative, high-output workers. Responsibility through allowing individual initiative to ride high, including breaking up long production lines and impersonal offices into teams of workers who choose their own leaders and decide for themselves how to get the job done. Rewards by means of bonuses of cash or time off--or both.

The three R's, singly or in combination, have been shown to lift productivity in large companies such as General Motors, Texas Instruments and IBM, as well as medium-size firms. Little-known Lincoln Electric of Cleveland gives productivity bonuses that come close to equaling regular wages. One result is that productivity has risen so fast that since 1934 prices for Lincoln's products have increased only one-fifth as much as the consumer price index. Professor Grayson sees that as good proof of his thesis that higher productivity can whip inflation.

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