Key take-outs for Boards, C-Suite
The EY New Zealand Productivity Pulse™
Unleashing an organisation’s productivity potential will require focus from the board down. Most organisations have gone as far as they can with their current cost cutting programmes. There’s precious little more fat to trim or cut without a fundamental re-think of business operating models. The next wave of productivity improvement will come via different initiatives – driven from the top.
As the chart below reveals, the vast majority of workers believe they can be more productive – with the right organisational support. However, this support will not be forthcoming unless boards make productivity improvement a top priority.
For some boards, productivity is way down the agenda. Few have productivity committees; few ask for reports that tell directors whether their organisation is more or less productive than it was a year ago. Until boards start focusing on productivity metrics – rather than straight cost cutting – the remaining productivity potential will go untapped.
Directors could be more proactive about productivity and start asking different questions:
- Does every director of the board have the same detailed understanding of what productivity is and isn’t for their organisation?
- Have our cost cutting programs actually improved productivity – or just cut costs?
- How do we know that?
- What is our productivity potential over the next 2-5 years?
- What levers are we going to use to unlock it?
- How much value could be created if we invested more or less in each one?
- What are our targets over time?
- How will we measure our success?
- How will that be reported to the board?
Productivity improvement requires as much governance attention as capital investment or strategic direction. If we don’t put it higher on the board agenda, it will not get the executive or management focus it deserves.
How much more productive could you be?
The C-suite’s responsibilities start with gaining a clear line of sight on what the organisation’s productivity potential is over the next 2-5 years. This should be well understood, agreed to and owned by the executive leadership team.
Then, the team can identify and put in place the right productivity measures and improvement programs to unlock that potential.
Executive responsibilities to help unlock productivity potential
- Make productivity an organisational priority through regular internal communication and updates
- Identify metrics
- Support measurement and reporting up and down the organisation
- Strategy Director
- Integrate productivity targets and initiatives with the overall strategy of the organisation
- Embed productivity-improving interventions into day-to-day operations
- Improve process efficiency
- Standardise and simplify systems
- Investigate automation options to unlock productivity potential
- Support managers in setting productivity goals for individual workers
- Tie productivity metrics to performance reviews
- Drive people manager behaviours to motivate workers
- Communications Director
- Educate the workforce about the importance of improving productivity
- Publicise best practice and call out ‘productivity heroes’
- Cascade the CEO’s productivity communications to all levels
Managers should have a clear view of what productivity potential exists in their areas of responsibility and how they will achieve it. This is likely to include:
Motivating teams and boosting employee engagement
Managers should focus on creating workplaces that inspire and engage their teams. Engaged employees are more likely to take ownership of business outcomes, ‘go the extra mile’, work towards continual improvement and use their initiative – all of which makes them more productive.
Importantly, employees are most engaged when they can see and measure the outcomes of their performance. Managers should link individual performance metrics to organisational productivity goals, so they can measure meaningful employee performance, hold them accountable and reward productive achievement. Managers also need to actively support any employee development required for them to succeed in their role.
Ensuring the right mix resources
Managers need to deploy the right mix of resources to match the outcomes demanded of their departments, functions, or divisions. This will require them to understand the unit costs of those resources: not just the cost of inputs, but the value of the outputs they are contributing to. Only then, can they make informed resourcing decisions to unlock productivity potential.
Deploying the right technology
Many organisations have repetitive, routine processes that are still handled manually, consuming significant labour resources. These activities are both expensive for the organisation and soul destroying for the individual worker. They result in low employee satisfaction and poor motivation, which in turn leads to lack of care and frequent human error.
Managers should look for more opportunities to deploy business process automation to dramatically reduce both the cost of performing these processes and the error rate. Instead of having an administrator perform the task multiple times every day or week, a process simply needs to be created once and set to repeat – freeing employees to engage in more rewarding and value-adding work.