The Australian Productivity Council is the descendant of the Productivity Groups Movement, a voluntary association of business members formed in the middle of the last century to improve efficiency in areas of mutual interest. Members assisted each other by engaging in joint problem-solving activities, sharing their knowledge, experience and improvement ideas to address chosen tasks. The Productivity Groups operated throughout Australia, conducted regular meetings, visited members facilities for study purposes and organised regular educational and training programs for managers, supervisors and operators.
The first Productivity Groups were set up in New South Wales and Victoria in 1957 and subsequently in all other States. By 1973 there were 250 groups with over 5700 members throughout Australia. Productivity Groups were supported by an Advisory Council in each state with general policy and direction set by a Productivity Groups National Committee.
Productivity Groups were based on a British idea developed during the Second World War as a means of increasing industrial output by extending, through plant visiting, personnel interaction and information sharing, the practises of the most efficient firms to the wider manufacturing sector. An urgent wartime need for productivity improvement arose from the belated realisation that the United Kingdom, the founding industrial nation and, for much of the preceding two centuries, the first and foremost practitioner of manufacturing in terms of size, scope, quality and productivity, had, by the 1940s, slipped well behind both Germany and the United States in output and productive efficiency.
Australian Productivity Groups were formed in response to a number of factors. At the time, Anglo-Australian connections were close, with extensive economic, technical, cultural and organisational links. Emulation of a British productivity model was natural then, even though post-war Australian management thinking was increasingly influenced by American practice.
In the 1950s manufacturing was more than three times larger as a share of the Australian economy than it is now, although it depended on protectionist policies to compensate for high labour costs, technical and scale deficiencies and to handicap vigorous competition from triumphant American, recovering European and emergent Japanese firms.
Australian manufacturing at that time was over-extended in consequence of its extraordinary expansion during and after the Second World War. This period had seen the introduction of complex industrial activities not previously attempted in Australia on a large scale, such as aircraft manufacture, the production of ordnance and munitions and the mass production of motor cars. Although the establishment of the wartime industries had been a formidable feat of organisational and technical skill, it had left many productivity issues unaddressed. The resumption of peace time trade revealed the obvious fact that many of the activities needed, and improvised for, during a time of crisis were not economically viable in normal times.
For business and government, improving productivity became an important way of adjusting to changed economic conditions, of sifting and consolidation. This was the environment in which the Productivity Groups operated; mainly in manufacturing and with a strong focus on training, shopfloor motivational activity and industrial engineering methods.
By 1969 the long post war economic boom was coming to an end and, for various reasons, the rate of productivity improvement in industry was in decline. The Chairman of the Productivity Groups National Committee, Myer Kangan, was a pioneering advocate of industry education and training, and, from his position as a first assistant secretary of the Commonwealth Department of Employment and Industrial Relations, sought to establish a new organisation to support and augment the work of the Groups as a contribution to the national productivity improvement effort.
The agency established for this task was the Productivity Promotion Council of Australia (PPCA). It was incorporated in September 1969 as a not-for-profit company to be jointly funded by Commonwealth government grants, corporate membership fees and revenues raised from training and consultancy activities.
Apart from the main business of providing support for the Productivity Groups, the PPCA was intended to take a leading role in productivity research and promotion, engage directly in enterprise improvement and foster all aspects of human factors productivity work. The PPCA had a national structure and tri-partite governing board whose members were drawn from senior levels of government, peak industry associations and the trade union movement.
This structure, as well as the scope of activities, was similar to that of the British Productivity Council (BPC), founded seventeen years earlier as the successor to the Anglo-American Council on Productivity (AACP). (1) The AACP introduced the principle of engaging senior trade union officials in support of the productivity improvement effort . The attempt to foster constructive participation from labour was intended to ameliorate industrial relations conflicts in British industry and to marginalise the influence of communist trade union officials who, with the threat to the Soviet Union from Germany now removed, had changed position from advocating a co-operative approach to productivity improvement to the disruption of it. In the later Australian iteration, trade union representatives were included on the State Advisory Boards and National Governing Board of the PPCA. Inspired by AACP/ BPC precedents, the PPCA was thus an Australian attempt to not only foster a better methodological understanding between public and private sector agents but to jointly engage trade union officials and business managers in fruitful efforts to improve productivity.
The first Chairman of the PPCA was the eminent Australian industrialist, Eric E. Dunshea, then Chairman of Dunlop Australia Ltd.
Over the next sixteen years, the PPCA actively supported the Productivity Groups, undertook promotional activity, co-operated widely with related associations, commissioned research projects, issued awards, produced books and films, published productivity newsletters and convened expert panels to address important industrial issues. The PPCA developed and implemented training programs in conjunction with leading Australian companies and completed numerous industrial engineering projects. This was a period of intense activity and a considerable output of useful work was achieved for a relatively small public investment.
The PPCA was staffed by industry professionals and seconded Commonwealth public servants. The program design and delivery model which emerged from this group sought to combine input from academic sources with the insights of practical business people. This approach was evident in the content of PPCA publications, the nature of its consultancy work and the highly effective training programs that it delivered. The period established a tradition of joining sound theory and common sense methods, an approach which the organisation has sought to preserve into the present time. The strong bias of the PPCA was for practical programs, voluntary engagement and community service.
The era of the PPCA coincided with a period of transformation in the Australian economy. During this time, the age of protectionism that had reached from Federation (and earlier in Victoria) to John Mc Ewan's policy of "protection all round" was steadily dismantled in favour of the liberal framework currently in place. As part of a shift in political and bureaucratic thinking towards free market ideas, the PPCA was advised that the era of public funding would be brought to an end.
To respond to the challenging financial situation this entailed, the governing board recruited a new Executive Director, A J (Bert) Holley, from the private sector to lead the change of the PPCA into a more commercial organisation.
During Bert Holley's tenure, a new management team was recruited, mainly from business, and the seconded public servants returned to their departments. To reflect this new orientation, the name was changed to Australian Productivity Council Limited (APC) in 1985. After a period of transformation and adjustment, the organisation was privatised in 1987.
The timing of this re-orientation was appropriate because during its later years the PPCA had become narrowly focused on the idea that worker disaffection and disengagement was the most important productivity issue. This concentration was justified as a response to the high rates of absenteeism and labour turnover that had become a particular problem for the manufacturing sector. It reflected a widely held view within the human factors wing of the productivity movement that declining productivity was causally linked to the recalibration of employee expectations and aspirations that were a result of the post-war experience of steadily rising living standards. Adherents of this view believed that worker empowerment was the best way to arrest falling productivity and low morale; in effect that only the extension of democratic principles into industrial organisation, as distinct from the hierarchical status-quo, could adequately address the western malaise.
In a sense, this view was part of a continuing reaction to the technocratic and hierarchical industrial methods passed down from the engineers' movement of the nineteenth century, but it was also considered to be a worthwhile end in itself; an idea closely connected with the mood for social and political change that was ascendant at the time.
The constituency within the PPCA that advocated this course took its lead from voices in the trade union movement, the bureaucracy and the academy. Industrial interests, on the other hand, and unsurprisingly, adopted a more sceptical view; business owners and managers were generally uneasy with ideas that advocated an excessive participation by employees in activities they deemed to be their own prerogative.
This divergence of interest, between the respective representatives of labour and capital, had always been, at least in the British and Australian agencies based on the AACP's tri-partite form, a source of some tension.
There was no doubt that the PPCA had considerable experience with labour participatory approaches; they underpinned the Productivity Achievement Programs that had been the mainstay of its training activities since the Productivity Groups. The PPCA had also tried ways of adapting Japanese-style Quality Circles to Australian workplace conditions. This effort had resulted in the concept of Productivity Improvement Teams, a participatory training program developed in conjunction with Arnott's Biscuits that had been widely and effectively deployed throughout Australia from the late 1970s.(2)
The individual and teams-based employee programs developed by the PPCA had been highly effective, but they were training and problem-solving approaches that fell well short of full management participation. After 1985, the new APC leadership group sought to re-balance the PPCA-derived program base; it retreated from calls for industrial democracy and moved to strengthen the range of direct technical consultancy services offered, basing these on the standard industrial and production engineering techniques.
The first fruit of this revised approach was the Enterprise Quality Improvement Program (EQuIP), introduced in Victoria, with state government support, in 1986. This program was completed by more than 190 companies and incorporated organisational analysis, employee productivity and quality awareness training, industrial and production engineering diagnostic consultancy and product design evaluation.
The EQuIP program coincided with an elevated interest in quality management in Australian business.
Quality issues had always been important to the PPCA and were a regular feature of Productivity Group problem solving activities. The PPCA had contributed to the raising of quality awareness in Australian business in a number of ways; it had, in conjunction with the Australian Organisation for Quality Control (AOQC), brought Dr J M Juran to Australia for a series of seminars in 1974, it proselytized and published books on the subject, including, in 1981, the widely distributed Quality Control for Small Business by F C Sandel.
With the launch of the EQuIP program, the quality effort was stepped up and this led, in due course, to the development of the range of quality system design, implementation and management services which became, over the ensuing decades, a major part of the APC's program.
After 1987, with Commonwealth grant funding gone and the APC operating as a private business, most of the community service activities, research work, publishing and even the management support to the Productivity Groups could not be sustained. These activities, while valuable in themselves, and to which APC members were deeply attached by history and conviction, could not easily be made to earn revenues equal to their cost of provision.
Over the quarter century since privatisation, the APC's program focus shifted, of necessity, towards a concentration on fee-for-service training, technical consultancy and the provision of management support services. The most important change in the Australian economy over this period has been the steady decline of manufacturing as a share of GDP. (3) De-industrialisation has led to a gradual re-direction of APC programs towards the service economy as the demand for the traditional offerings in training, industrial, production and product engineering services fell in line with the contraction of manufacturing.
The work of the APC since privatisation has sought, as far as possible, to maintain the sense of altruism and useful purpose of the predecessor organisation, to the establishment of which so many eminent Australians had given of their time and effort. After considerable experimentation, the way in which this purpose was reconciled with commercial necessity was through the development of an innovative service delivery model designed to provide beneficial expertise to businesses at a reasonable cost.
The scope of the services offered has been chosen to address a weakness in Australian industry structure, namely that the generally smaller size of most local firms has made the acquisition of important specialist services difficult to economically justify. Given that specialist knowledge and the technical division of labour is one of the most important non-physical contributors to productivity improvement, this structural weakness places most Australian businesses at a disadvantage. This disadvantage is revealed in a number of ways; in the presentation of product and service designs, in operational and organisational competence and in the professionalism and quality of management systems. It is to these perceived shortcomings that the service delivery model of the Australian Productivity Council has been designed to address.
(1) The AACP was the prototype for most of the national productivity associations that were set up during the second half of the last century. It was established in 1948 as a Marshall Plan project on the initiative of Sir Stafford Cripps, the British Chancellor of the Exchequer in the Attlee Labour government and Paul G. Hoffman, the Director of the Economic Cooperation Administration, the American agency formed to assist with post war reconstruction.
(2) Productivity improvement teams differed in form from Quality Circles in that they were task-based rather than permanent, had membership drawn from across functional areas, as needed, and operated independently from the firms' formal hierarchy during their deliberations.
(3) In 1957, when the first Productivity Groups were formed, manufacturing accounted for 29.5% of Australian GDP, a share midway between that of the UK (about 32%) and the USA (about 27%) in the same year. As a result of the removal of tariffs, the floating of the currency and other reforms, the manufacturing share of Australian GDP has now fallen to 8.5%.