Case: Productivity Measurement and Enhancement in the Services Sector

The measurement and enhancement of worker productivity is an important challenge facing all managers. Productivity enhancement
is vital given the role of labor as a key input in the production of goods and services and in light of the generally increasing vigor of
domestic and import competition. Of course, before incentives to enhance worker productivity can be introduced, the multiple
dimensions of worker productivity must be made explicit and accurately measured. Management must be able to clearly articulate
the many important dimensions of worker output and communicate this information effectively to workers.
The business and popular press is replete with examples of firms and industries that have foundered because of problems tied to the
inaccurate measurement of blue-collar worker productivity. When worker incentives are carelessly tied to piece-rate production,
mass quantities of low-quality output sometimes result. Similarly, worker incentive pay plans that emphasize high-quality output can
fail to provide necessary incentives for timely delivery. What is often overlooked in the discussion of workers efficiency and labor
productivity is that the definition and measurement of productivity is perhaps even more difficult in the case of managers and other
white-collar workers. Problems encountered in the definition and measurement of white-collar worker productivity can be illustrated
by considering the productivity of college and university professors.
For most 2-year and 4-year college and university professors, teaching is a primary component of their work assignment. Faculty
members have a standard teaching load, defined by the number of class hours per term, number of students taught, or a multiple of
the two, called student contact hours. However, not all student contact hours are alike. For example, it is possible to generate large
numbers of student contact hours per faculty member simply by offering courses in a mass lecture setting with hundreds of students
per class. In other cases, a faculty member might work with a very small number of students in an advanced seminar or laboratory
course, generating relatively few student credit hours. The teaching product in each of these course settings is fundamentally
similar, and few would argue that the number of students taught is an irrelevant basis for comparing the productivity of professors
teaching these different types of classes.
On the other hand, few would suggest defining teaching productivity solely in terms of the sheer quantity of students taught. Student
course evaluations are typically required to provide evidence from student customers concerning the quality of instruction. Many
schools rely on such data as an exclusive measure of teaching quality. At other schools, student course-evaluation data are
supplemented by peer review of teaching methods and materials, interviews of former students, and so on. Measures of both the
quantity and quality of instruction must be employed in the measurement of teaching productivity.
In addition to their important teaching role, faculty members are expected to play an active role in the ongoing administration of their
academic institution. At a minimum, they participate in the peer review of faculty, in student and faculty recruiting, and in curriculum
and program development. Faculty often plays an active role on committees that conduct the everyday management of the
institution. This faculty governance system is an important organizational difference between most academic and nonacademic
institutions. Faculty members are both workers and management. Measuring output as related to these activities, and hence
productivity, is very difficult.
At many schools, faculty members also play an important liaison role with external constituents. Alumni provide important financial
resources to colleges and universities and appreciate programs designed for their benefit. Non-degree short courses are often
offered on topical subjects at nominal charge for the benefit of alumni and the community at large.
Similarly, faculties are asked to give lectures to local groups, interviews for local media, and informal consulting services to local firms
and organizations. Often these services are provided for free or at nominal charge as part of the faculty members service function.
Similarly, faculties are sometimes called on to provide service to external academic and professional organizations.
Participation at national and regional academic conventions, editing academic journals, and helping design and write professional
exams is typical examples of expected but unpaid services.
The preceding duties are supplemented by faculty research requirements at most 4-year colleges and universities and at all graduate
institutions. This requirement is fundamental to the growth and development of colleges and universities but is often misunderstood
by those outside of academia. To be granted the doctoral degree, doctoral candidates must complete a rigorous series of courses and
exams and meet a dissertation requirement. A doctoral dissertation is a book-length independent study that makes an important
contribution to knowledge in a scholarly discipline. In fulfilling this requirement, doctoral students demonstrate their capacity to
participate in the discovery of new knowledge. A key difference between the role of university professors and that of other teachers is
that professors must be intimately involved with the creation and dissemination of new knowledge. Thus, the research component is
a key ingredient of professorial output.
Research output is extremely varied. In the physical sciences, new compounds or other physical products may result. Similarly, such
research may lead to new process techniques. In most academic fields, the primary research product is new knowledge
communicated in the form of research reports or other scholarly publications. As with teaching, measuring the quantity and quality of
research output proves to be most challenging. Judging the value of a research product is often quite subjective, and its worth may
not be recognized for years.
Given the difficulties involved with evaluating highly specialized and detailed research, many institutions consider the dollar amount
of research funds awarded to an individual to be a useful indicator of the quantity and quality of research output. It is anomalous that
a schools best researchers and highest-paid faculty members may be the least expensive in terms of their net costs to the
institution. When established researchers are able to consistently obtain external funding in excess of incremental costs, their net
employment costs can be nil. In such instances, the disadvantages to an institution of losing a star researcher are obvious.
Of course, just as in the case of measuring teaching quality, difficulties are encountered in measuring the quality of published
research output. In most instances, the quality of published articles and books is judged in terms of the reputation of the publisher or
editor, the level of readership enjoyed, and so on. Over time, the number of new research outlets has grown to keep pace with the
growing level of specialization in the various disciplines. In economics, for example, there are as many as 200 possible research
outlets. However, only a relative handful is widely read in any given sub discipline. Competition for scarce journal space in such
outlets is fierce. Acceptance rates at leading journals often average no more than 5% to 10% of those articles submitted. When one
considers that a productive scholar is typically able to complete no more than one or two substantial research projects per year, the
odds are very much against achieving publication of one or two first-rate journal articles per year. Thus, research productivity is
usually measured in terms of both the quantity and quality of published research.
In sum, defining the role of professors at colleges and universities provides an interesting example of the difficulties involved in
measuring worker productivity. Each individual academic institution must define on an ongoing basis the relative importance of the
teaching, research, and service components of faculty output. Once this has been determined, the difficult task of defining and
measuring faculty-member productivity on each dimension must begin.
Based on the preceding information and in light of the focus of your academic institution, answer the following questions:
A. How would you define faculty-member productivity?
B. Do you agree with the view that many elements of professorial output do not easily lend themselves to quantitative
evaluation? How might you measure such productivity?
C. Would productivity clauses for professors contracts make sense economically? What problems do you see in
implementing such clauses in actual practice?

Case: Productivity Measurement and Enhancement in the Services Sector

D. Reconsider your answers to parts C for other service-industry occupations (for example, doctors, lawyers, and
legislators). Are the issues discussed unique to academia?