Output the answer
Rather than lowering its prices to attract increased monetary benefits from tourism and other services, Barbados needs to do so through increased productivity.
Central Bank of Barbados Governor Dr. DeLisle Worrell offered this remedy at the official launch of this year’s Week of Excellence this morning at the Grand Salle, Tom Adams Financial Centre.
The economist said because the economy was fueled by foreign exchange, meaning that its growth depending on sectors which either earned or save this currency, it was important to focus on productivity in areas including† tourism, international business and financial services and energy.
His advice was that instead of seeking to beat the competition in price, the island should seek to do so in output.
“Foreign exchange markets are highly competitive, and to grow your market share or to grow with the market you have to keep pace with the competition, and find ways to get ahead. The way to outrun the competition in the international market is to improve productivity, broadly defined,” he said.
Worrell said in this regard that it was a myth “that we can grow tourism and international business by lowering our prices”, pointing out that this would end up being a disadvantage.
“Barbados commands a tiny share of Caribbean tourism, less than five per cent, and a miniscule percentage of global tourism to tropical resorts.† So long as our prices are right we can sell to our full capacity; if our prices are too high we’re out of the market altogether; and if our prices are too low we are offering our customers a bargain at our expense, unnecessarily,” he noted.
“If our prices are right, why do we sometimes fall below capacity when global markets contract?† That is because we are maintaining our productivity relative to the competition, but we’re not improving.
“The solution is not to lower your prices – in a depressed market that won’t get you many more customers, and those that you do get will probably be pinching their pennies.† Rather, you want to get ahead by outgunning the competition, through improved productivity.† That way you can grow while others are at a standstill, or regressing,” he advised.
The governor said in order for Barbados to increase its service sector productivity there was a need to cultivate the individual customer; aim to exceed expectations, in every transaction; never leave the customer without the product or service they need, or without assistance towards obtaining what they need; always give excellent value for money.
This, he added, would allow the island to charge what price you must in order to give excellent service, and the discerning customer will gladly pay.
“Deal patiently, courteously and fully with difficult customers and problematic circumstances. Even if the customer cannot be satisfied, they must nevertheless walk away having had a pleasant experience,” he suggested.
“These might not be what we think of when we think productivity, but they are the real sources of productivity, because they produce improved real value for the same input of labour and materials.”
The governor also saw a need to empower and motivate workers, also creating a community of the workplace, “with an emphasis on sharing experiences, teamwork and helping each other to achieve our best performance”.
“The future of our economy is in our hands. We must figure out for ourselves what is the way forward, led by our own wit and resources. Each worker can make a positive contribution to their own future and the future of our country, by becoming engaged, motivating and empowering ourselves and those that work with and for us, and caring enough for the welfare and prospects of fellow workers that everyone helps out when the going gets tough,” he said.
“When that becomes the pervasive culture of organisations and the society, we will have become a formidable international competitor and a byword for excellence in the Americas, Europe and the rest of the world.† That must be our steadfast goal.” (SC)