Efficiency: New mantra of business

Efficiency is classically defined as the measure of productivity per unit of time and is therefore traditionally linked to the ‘work attitude’ of the employee, the quality of management that provides for a strong ‘supervision’, and the system of ‘performance evaluation’ that was expected to be free of personal bias or favouritism.

There has been a conceptual advancement in the understanding of these roots of efficiency.

The importance of workplace environment is now recognised in terms of not only the adequacy of physical ‘equipment’ provided to the employee but also the harmony and peace in the atmosphere that would add to the ease of maintaining a ‘work-life’ balance for the individual. This combination helped the employee to work with concentration -- aided by freedom from mental distractions -- and thus added to the output against time.

The concept of supervision has also changed from the perception of a senior breathing down one’s neck to a boss who nurtured the junior and made himself or herself available for providing guidance if sought by the latter.

The modern system of business ensures adequate ‘training on the job’ for the employee on one hand and encourages ‘participative management’ emerging out of the conviction that the entire hierarchy of the enterprise is wedded to the same organisational goals, on the other.

In ‘performance evaluation’ three things become crucially important. One is rooted in the mandate of the ‘age of information’ that one has to be a well-informed person to achieve success in any field. This is because only knowledge-based decision-making showed the right path. In judging one’s performance, the boss should have complete knowledge of the subordinate -- as an employee with a given work attitude, as a human being with emotional content and as a person who has burdens and responsibilities beyond the workplace.

An arid, output-related evaluation as per prescribed paradigms is to be tempered with the correct knowledge of the circumstances of the employee that might have caused an unexplained shortfall.

Secondly, the senior should have an astute ability to make out the difference between ‘brilliance’ and ‘diligence’ and give due importance to both -- some people may look very bright and busy but produce very little at the end of the day. Last but not least, the boss with a reputation of being transparent and fair in evaluating the subordinates, retains his or her image as a leader -- biases and favouritism in making evaluations destroy that image often without the leader even knowing it.

An important task of Human Resource development people in an enterprise today is to work out arrangements for up-skilling those who were not lacking in effort but who had the potential to enhance the output further through special training.

Cost-effectiveness is still not fully built into business operations since a generally prevalent notion is that investment has a direct line to growth and profitability -- this substantially drove expenditure on sales promotion through attractive advertisements to cope up with a highly competitive world.

It is not adequately realised that practising cost-effectiveness – even when funds were available -- is an instrument of profitability since it helps to keep up the given level of productivity with lesser use of resources – man, material or money. If an existing operation can be handled with three persons instead of four deployed at present or if a process is done in seven stages but could as well be completed in five steps, then the resource-saving option must be chosen.

The conceptual understanding involved here is that cost-effectiveness was in fact increasing the efficiency of the employees which is a fundamental reason why productivity would increase as mentioned in the beginning, in terms of ‘time’ taken by the employee.

Time in today’s competitive environment is now considered the new ‘resource’ besides the traditional assets of manpower, material resources and funds. If in practising cost-effectiveness, the investment-output ratio tilted in favour of the latter because of the lesser use of traditional resources, that was an additional gain. All of this shows that the awareness of ‘efficiency’ as the key to growth has acquired a new-found importance.

The advent of Information Technology introducing instant online communications and business transactions, has pushed competitiveness to a global level and provided early bird advantage to those who can press data analytics into use for getting a peep into what lay ahead in terms of both ‘opportunities’ and ‘risks’.

Artificial Intelligence is a new frontier of Information Technology that has opened up a huge requirement of skilled manpower, unfolded for all businesses new areas of growth and thrown up a debate on its adverse impact on employment.

It is however, becoming rapidly clear that AI would create new products and services and this would itself become a new industry and that most companies would have to enlarge their Human Resource base putting fears of retrenchment at rest. If there are layoffs in some companies this would be compensated for by the added requirement of skilled hands in many others. AI-aided data analytics is producing immense prospects of growth in the spheres of medical health, education, entertainment, pharmaceuticals and governance and establishing new benchmarks of ‘efficiency’ in running businesses in terms of productivity per unit of time. Like any technology to which people would have access, AI applications are getting into the hands of potential lawbreakers and producing new kinds of crime -- financial frauds and misuse of ‘deep fakes’ are already in the news.

World powers including India are fortunately working together to check the perils of AI. This does not, however, detract from the promises that Artificial Intelligence is offering for the betterment of human life. The guiding principle in this is to remember that AI applications like any other computer-based activity, are subject to an input-output paradigm and that machine learning should be encouraged within the same thought that it would give the best results when in crucial moments of decision-making it worked in conjunction with human mind.

Artificial Intelligence has in a way pushed the frontiers of the ‘knowledge economy’. Data of the past combined with what is known in the present was never put to such an advantage for the betterment of the future of humanity earlier because only now has analytics surpassed the human capacity for collation and examination.

ChatGPT and its variants in conjunction with the Large Language Model (LLM) are extremely useful for education, particularly Law studies, work requiring content and design generation and research. All this is subject to the generic advice that any material on the internet should not be presumed to be factually correct and wherever absolute accuracy of facts was to be ensured, it is advisable to get confirmation through other sources.

A great demand put on the leadership of businesses and organisations is that they themselves had to learn to wield this powerful instrument of growth and at least had to have the ability to assemble a team of top professionals around them to handle the AI applications to their advantage. Today ‘efficiency’ is the hallmark of any successful business operation involving delivery on a global base and IT and AI make it possible to achieve it to the satisfaction of all stakeholders.

Assessment of moves of the rivals, the study of the market conditions including customer demand and drawing up of a fool-proof business plan are all based on analytics involving a billion data and businesses did not have this advantage earlier. The world should take delight in the advancement that a technology combining ‘knowledge’ and ‘efficiency’ has brought about and continue to explore the marvels that the human mind aided by machines could produce in this regard.

(The writer is a former Director of the Intelligence Bureau. Views are personal)