Measuring Productivity 215“ Well, I don’t know about after the fact, but everyone that I’ve read—and
my own experience for that matter—indicates that timely feedback is essential
and a good motivator. People really need to know, and know as soon as possi-
ble, how they have done. That’s especially true when they’ve done a good job,
because it really builds their self-esteem. And in some cases, it makes them
want to participate more before the fact in the next round.
“Of course, I don’t want to lead you to think that a little participation and
a lot of feedback is all one needs. These are what the psychologists call intrin-
sicmotivators. People need these, but they also need extrinsicmotivators like
better pay for doing a better job.
“And, the other problem that I’ve encountered is that the more you focus
people’s attention on one goal, the more they tend to ignore other goals. It’s
only human nature: Ask salespeople to increase their turnover, and they’ll sell
goods at a loss.
“That’s one of the reasons why I have misgivings about calling in a bunch
of engineers to set standards. It’s much easier to time how long a job should
take and reward people for quantity than to measure and to reward quality. I
really rely upon the innate good sense of my staff to provide quality products.
Too much emphasis on measurement can make my task of maintaining quality
much more difficult.”
Past Data
“Probably, then, an easier way,” Jane said, “to get the data you need for your
business is to go back over your past records to see how much time various jobs
have taken and how much material was used in the past. Some of that will have
to be adjusted for changes in machines, changes in personnel, different kinds of
material, and so on. But you know all that better than I do.”
“Enough!” Tom exclaimed. “Enough for now! I’ll come over tomorrow
night and we can talk some more. We still need to discuss fixed overheads as
you promised.”
FIXED COST BUDGETS
“Fixed costs,” Jane started out the next night after the two had gathered again,
“are both easier and more difficult to control than variable costs. They are eas-
ier because there are no components into which to break them. Their variance
is simply:
Their index is simply:
Actual Fixed Costs
Budgeted Fixed CostsActual Fixed Costs Budgeted Fixed Costs−