The Productivity Paradox

by Rick Shoffstall

Uncertain Times

These are indeed perilous economic times. The list of indicators is staggeringly broad and deep: real estate, stock markets, consumer confidence, federal and state budgets threatening insolvency, volatile commodity pricing, and the latest sovereign debt fears. With our economy driven largely by consumer spending (at nearly 70% of GDP), it is no revelation that restaurant companies are finding it increasingly difficult to grow and finance their businesses. Clearly, a competitive advantage is needed to gain a foothold in this rocky economy.

Zero-Sum Game?

In the eyes of many proprietors, one can either compete on service or cut costs, in a mutually exclusive showdown of sorts. One of my clients memorably labeled this dichotomy, "high touch vs. high efficiency." On the one hand, only impeccable service can maintain the customer’s fickle interest when expectations are sky-high for their exceedingly scarcer dining out occasions. However, if service comes at the expense of profits, one can only wonder if a restaurateur is engaged in a battle that will surely drain the coffers all too quickly. Besides, profit is the lifeblood of all business. Perhaps, an aggressive cost-cutting campaign is in order, as a means of riding out the storm until the consumer fully returns, pockets flush with discretionary cash?

In uncertain times, only productivity can provide the solid ground necessary to consistently reach higher levels of performance. By systematically reducing non-value added resources and activities, you actually can do more with less. Service or profits is no longer a choice – this is the Productivity Paradox.

pro•duc•tiv•i•ty | prō 'dŭk-tĭv ' ĭ-tē, prŏd ' ək- |

noun the effectiveness of productive effort, esp. in industry, as measured in terms of the rate of output per unit of input : workers have boosted productivity by 30 percent.

par•a•dox | păr ' ə-dŏks ' |

noun a seemingly absurd or self-contradictory statement or proposition that when investigated or explained may prove to be well founded or true : in a paradox, he has discovered that stepping back from his job has increased the rewards he gleans from it.