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close this bookProductivity Management - A Practical Handbook (ILO, 1987, 312 p.)
close this folderPart II - Improving productivity
close this folderChapter 4 - Managing organisation effectiveness
close this folder4.4 Major variations of productivity improvement programmes
View the document(introduction...)
View the documentAction Learning Programmes (ALP)8
View the documentIn-plant action learning
View the documentProductivity Improvement Circles (PIC)
View the documentPerformance Action Team process (PAT)
View the documentThe Inter-Firm Comparison and Business Clinic Approach (IFC/BCA)

Productivity Improvement Circles (PIC)

The concept of Productivity Improvement Circles (PIC) was developed in 1980 by the National Productivity and Development Centre (NPDC) of the Philippines as an adaptation of the Japanese Quality Control Circles (QCC).9 The term “Productivity Improvement Circles” was considered more appropriate than QCC since it covers the whole area of productivity improvement, not only quality.

Since 1980 the NPDC has successful installed PIC programmes in a number of organisations and has been joined by several associations in promoting the programmes within the different sectors. In the same year the Productivity Improvement Circles Association of the Philippines (PICAP) was organised to promote productivity through small group activities.

The results of a survey of PIC activity made by NPDC showed that in more than 50 per cent of cases it was the chief executive officers and company presidents who took the lead in initiating a circles programme; in about 30 per cent of cases the lead came from the quality control department and in 4 per cent of cases it came from the training groups. This means that many of the moves made for improvement still come from the highest levels of organisations.

In about 60 per cent of cases the methodology for PIC activities was acquired through consultancy and training. In installing the programme, 74 per cent of organisations used consultancy services. As to industrial areas of PIC application, almost 57 per cent of the pilot circles of the respondent companies were from manufacturing and maintenance areas, others were from services, finance and commerce.

The main themes of the PIC projects are varied. Human relations, quality improvement, work simplification, methods improvement, working conditions, and preventive maintenance account for about 95 per cent of project themes.

Out of 664 projects surveyed 94 per cent have been implemented and more than 60 per cent have been standardised.

What are productivity improvement circles?

We will now present the basic approach used by the NPDC in the Philippines, as described by Vasquez et al.10

A PIC is a small group of workers from the same workshop who are interested in self- and mutual development and in problem-solving activities. The aim is to enhance enterprise productivity. PICs have seven basic features:

· Voluntary nature: Every member has chosen to participate in PIC activities because they provide opportunities for further growth.

· Small size: A circle has somewhere between three and ten members.

· Homogeneous membership: Members come from the same workshop, perform similar or related functions, and confront similar or related problems.

· Specific task and objectives: PIC projects are usually within the control of the circle and in line with enterprise objectives.

· Systematic and scientific approach: In studying workshop problems the circles follow a step-by-step sequence and use scientific tools and techniques in the process.

· Continuing activity: Circle activities progress from one project or activity to another.

· Universal application: The concept can be applied in diverse sectors, organisations and their units (manufacturing, banking, transport, etc.).

PIC objectives

The general objectives of PICs are:

- to contribute to the productivity, stability and growth of the enterprise;

- to make the workshop a better place to work in;

- to develop human potential to the fullest. The specific objectives of PICs are to:

- increase the competitiveness of the enterprise through product improvement and lower production costs;

- improve leadership, first line supervisors' skills and technical competence through mutual education and practice;

- give the workers opportunities for job enrichment and enlargement, more responsibility, a greater sense of independence and some participation in decision-making;

- develop in both management and workers productivity consciousness, discipline and skills through better communication.

Types of problem for PICs

The general problem areas appropriate for PICs to deal with are:

- reducing waste and costs;
- improving quality;
- improving methods;
- simplifying work;
- improving preventive maintenance;
- morale boosting (manpower turnover, discipline, complaints, etc.).

Benefits from PIC programmes

The benefits from PIC programmes are varied. However, generally, experience shows that they include:

- improved quality;

- increased output;

- reduced costs;

- improved communication, co-operation, worker morale;

- well-defined and clearly understood supervisory roles;

- improved skill of workers in solving problems;

- improved productivity and quality consciousness, improved attitude to job and workshop problems;

- higher morale of PIC members.

Organisational structure of PIC programmes

The PIC programme is an informal group process within a formal organisation. Figure 4.1 shows the recommended PIC structure within the organisation.

At the head of the PIC programme is the productivity improvement committee (PRODICOM) which acts as the policy-making body. The whole programme structure consists of top management, PRODICOM, middle management, circle leaders and members.

Figure 4.2 illustrates the interaction between the elements of the PIC structure.

The main roles in the PIC programme

Top managers:

They play an important role in the PIC programe as initiators and decision-makers, by virtue of their membership in the PRODICOM.


The members of the PRODICOM are from top management with the president (or vice-president) as chairman; they act as policy-makers for the programmes. Particularly they must:

- define the ultimate goals of the PIC programme;
- formulate long-range plans for the programme (the number of circles to be organised, the time period, their distribution over the organisation, strategies and policies for promotion, evaluation, incentives and training, budget, qualifications and functions of the co-ordinator.

As decision-makers, the PRODICOM members have to:

- select the co-ordinator, who automatically becomes a committee member;
- allocate budget resources;
- act on project proposals within two weeks of the presentation.

Figure 4.1. Organisational structure of the PIC within the company

Source: Adapted from R. Vasquez et al., 1983, p. 18.

Figure 4.2. Flow chart for project proposals in the PIC structure

Source: R. Vasquez et al., 1983, p. 19.

As evaluators, the committee members assess the overall status of the PIC programme activities, including:

- training;
- promotional activities;
- evaluation;
- incentive scheme.

Middle managers:

They are asked to prepare a departmental work programme, decide on the number of circles within their department and suggest a strategy for implementation. They must also act within two weeks on projects presented to them, give necessary guidance and technical assistance to the circles under them, attend circle activities and make resources available to the circles.


They serve as the link between top management, PRODICOM, middle management, circle leaders and members. They have to:

- co-ordinate training courses, help in planning and check on participants and schedules;

- solicit support from top management, PRODICOM, middle management, circle leaders and members;

- assist circle leaders in conducting activities;

- make necessary facilities available for circle activities.

As trainers, the co-ordinators' role is to orient top and middle managers and raise their awareness of the benefits of PIC; plan, design and run training courses, and also teach circle leaders the concept, methodology, tools and techniques of PIC.

The co-ordinators also plan the PIC programmes, recommend people as members of different committees, supervise their work and evaluate their performance, and provide guidance and technical assistance to circles.

Programme committees:

Three committees support the co-ordinator. They are the promotion, training and evaluation committees and their activities are self-explanatory.

The circle leader:

Each circle is headed by a leader who is either a supervisor or an experienced worker. Leadership must be rotated so that each member has a chance to be both a group-member and a leader. The leader teaches the members the concepts, methodology and techniques used in problem solving, motivates them to study, analyses and recommends solutions, links up with the co-ordinator on matters of circle activities, and monitors circle meetings and projects. The leader also formulates a programme together with members.

Circle members:

They are workers and supervisors and participate in all circle activities.

Basic PIC activities

Five major steps are involved in planning PIC activities:

- top management orientation;
- middle management workshop;
- training of circle leaders;
- the pilot stage;
- implementation of the programme throughout the company.

Figure 4.3 shows the flow of activities for the implementation of the PIC programme, the people and groups involved, and the output expected from these activities.

This chart should be used only as a guide-line for programme implementation, which will vary according to the type, size and objectives of the organisation and of the PIC.

A strong promotion programme is necessary in order to gain the support and recognition of every company worker and to guarantee the continuity of the programme. This promotion programme could be based on the circle programme's objectives and use activities such as meetings, group discussions, skill-competitions, training and other means of publicity.

PIC activities at the workshop level

At the workshop level the principal scheme of the flow of activities could be as shown in figure 4.4.

It is important to go through the following PIC steps at the shop-floor level:

- orientation for the rank and file;

- study meetings on tools and techniques;

- data gathering;

- problem-solving activities; identifying problems, putting them into priority order and analysing them; formulating solutions;

- project presentation;

- project implementation;

- evaluation;

- standardisation.

In summary, Productivity Improvement Circles can be effective for small groups of workers on condition that top management gives assistance and encouragement. The resulting co-operation in identifying and solving problems makes a valuable contribution to general productivity growth.