Productivity/ Effectiveness

Productivity is used extensively in economics. It is defined as

“The rate of output per unit input, used especially in measuring capital growth, and in assessing the effective use of labour, materials and equipment” (OED, 2006).

In the private sector productivity is defined as above. The outputs, which can be in the form of goods or services, are expressed as a ratio of inputs used to produce them, such as labour, capital cost and land (Kelly, 1988: 8), (Hope, 1995: 43) (Hatry, 1978). This definition is difficult to apply to the public sector due to the type of outputs produced by such a sector. It is difficult to package goods and services into discrete units and price them like “ a ton of bricks”

(Kelly, 1988: 8) or “a bottle of milk” (Hope, 1995: 43).

There are direct as well as indirect outputs from the public sector. Some productivity analysts have called for measurement output to be limited to direct outputs only to be fair to government employees (Burkhead and Hennigan, 1978, Hatry, 1978) and (Hayward, 1976). They argue that productivity measurement must not include desired consequences as they are difficult to measure, as the following observation illustrates.

arrests they make, but cannot force citizens to report crimes or to be witness in court. Doctors can vaccinate children against diseases but they cannot ensure that children wash their hands before eating, or do not drink contaminated water, or eat junk food …. If public safety and public health (the desired consequences) do not improve, it is not fair, from this administrative efficiency perspective, to label public employees ‘unproductive’” (Kelly, 1988: 9)

The productivity of government employees must be measured against what they can control. However if citizens observe an increase in number of employees as well as resources allocated to them, they are justified in viewing government as being inefficient if the effects of such investments are not noticeable (Kelly, 1988).

The definition which is linked to the public sector is the one given by Hayward(1976) who defines productivity in government as:

… the efficiency with which resources are consumed in the effective delivery of public services. The definition implies not only quantity, but also quality” (Hayward, 1976: 544)

The definition of productivity in the public sector includes both efficiency and effectiveness. Hatry (1978) defines efficiency and effectiveness in the public sector as follows:

“Efficiency is the extent to which the government produces a given output with the least possible use of resources. Effectiveness indicates the amount of end product, the real service to the public,

Figure 2.1 Effect of Increase in Government Productivity. Adapted from (Hayward, 1976: 544)

For this research, effectiveness or performance is a much better term than productivity (see Section 2.2.2). This is because the research is looking at improvement in services provided by civil servants using available information and communications technology. The definition which is found to be appropriate is the one which Van-Reenen and Sadun (2006: 55) call labour productivity. They define it as the amount of output produced per hour worked. There will be lack of productivity if expectation of recipients of the service offered is not met. The role of government is not necessarily to generate revenue, but to provide an environment which is conducive for businesses. This has been argued by Kelly (1988) who wrote:

“Whereas in business productivity is associated with success in the marketplace and, especially profitability; in government, where profitability is absent, productivity becomes harder to identify and measure” (Kelly, 1988: 1)

Hence the economic definition of productivity may not apply in this setting. This view has also been observed by Sugumaran and Arogyaswamy(2003: 79) who

Public Officer

Meet Customer needs Limited Resources Increase In Government Productivity Citizen

More Public Service Less Tax Public Employee Job Security Business Minimal Cost To be Competitive

wrote that the traditional way of looking at performance as a ratio of input to output may not be adequate in information and communications technology environment. Productivity is easy to define for manual tasks. The ability to measure productivity for manual work was first brought by Taylor (1967) in theory of scientific management. Taylor (1967) argued that workers’ productivity can be improved by studying the process of doing work and reducing any redundancies. Today in the developed world manual work is almost 100% automated as observed by Ramirez and Nembhard (2004: 603). A new group of workers called knowledge workers (KWs) dominates the current labour force. As Ramirez and Nembhard (2004) pointed out the current economic drivers depend on knowledge work more than manual work; hence

“… the challenge today is not to increase manual worker’s

productivity but to measure and increase KW’s productivity” (Ramirez and Nembhard, 2004: 602).

Performance or productivity is difficult to measure when applied to the service industry. However they can be indirectly determined by the level of satisfaction of the people receiving the service. However performance of the Singapore Civil Service Computerisation Programme (CSCP) was quantified to be reduction or avoidance of some 5000 posts in government and

“…the government obtained a return of $2.8 dollars for every dollar

spent on IT in the CSCP” (NCB, 1992: 8).

Productivity can best be understood by studying the work of Edward Deming, the world wide management philosopher, well known for his work that built Japan from almost nothing after the Second World War to one of the most productive nations (Deming, 1986: vii). While economists like to measure productivity, unfortunately measures of productivity are

“like statistics on accidents: they tell you all about the number of accidents in the home, on the road, and at the work place, but they do not tell you how to reduce the frequency of accidents” (Deming, 1986: 15).

Productivity measurements only serve as comparison yard sticks. The most important thing is the action taken to address problem surrounding productivity. The impact of information technology on labour productivity has been discussed intensively by Van-Reenen and Sadun (2006). They looked at labour productivity at macro and micro level, comparing USA and Europe. At macro

using and producing sectors respectively. This was a comparison between the period 1990-1995 and 1995 – 2001 for USA. All the other sectors in the USA economy experienced a decline. The USA was found to be ahead of Europe where the same sectors experienced negative growth except for the ICT producing sectors(Van-Reenen and Sadun, 2006: 56).

At micro level, the impact of information technology was found to be difficult to determine as there are other non-IT investments which are difficult to control. Also the difference in firms and industry made evaluation of the impact of information to be problematic (Van-Reenen and Sadun, 2006: 57).

Increase in government productivity regardless of how it is measured benefit four main stakeholders namely, public officials, citizens, government employees and the business community (Hayward, 1976: 544). Figure 2.1 shows what each stakeholder benefits from increase in government productivity.