Path to the summit: unleashing productivity potential
The EY New Zealand Productivity Pulse™
Measuring and communicating about productivity
To unleash their productivity potential, organisations must measure and communicate about productivity. In organisations that measure productivity, the Pulse found 94% of workers strive to increase productivity, 9% more than in organisations that don't.
Also, measuring productivity creates a positive feedback loop, which gains its own momentum.
The Pulse also revealed that workers who are dialled in to the topic of productivity, through organisational measurement or communication, have a greater productivity potential than those who are not (25% vs.20%).
This is an area where New Zealand has room for significant improvement. The Pulse revealed only 39% workers are aware their organisation measures productivity, with 31% of workers unsure.
In addition, 84% of workers said they didn’t receive clear communication about the elements that drive performance.
Also of concern, the Pulse found only 22% of companies actively trying to improve productivity had set organisational goals, and only 13% had aligned productivity goals to individual workers.
Across industry, 60% of finance and insurance workers were aware their employer measured productivity; all other industries were below 50% with only 34% of healthcare and social assistance workers stating that productivity is being measured in the workplace.
More work needed around productivity definition and metrics
In terms of how organisations measure productivity, workers reported more than 30 different types of metrics, including: KPIs, financial information and output analysis. Although productivity measures will clearly differ from sector to sector, companies and industries seem to lack consistent definitions of what is meant by productivity.
As a country, we need greater clarity about what productivity is and isn’t, for example: it isn’t a panacea; and it isn’t just cost cutting. At an industry level, common productivity definitions and measures would enable cross-industry benchmarking. At an individual level, organisations also need to establish a common understanding of productivity, so the Board doesn’t view it differently from the shop floor.
Levers of productivity
The Pulse revealed those New Zealand organisations trying to improve productivity have spent the past year going back to basics, putting most of their efforts into improving process efficiency and standardising and simplifying systems.
Together with cost cutting and redundancies, this is what has delivered most of New Zealand’s productivity gains, with organisations creating incremental improvements by cutting costs, removing process duplication and redundancy and increasing automation. Many have even revisited functions or processes they thought were working well to find more value.
However, you can only squeeze so much additional productivity from such initiatives. In future, these tried and true programmes will only produce diminishing returns. To unleash New Zealand’s remaining productivity potential, big corporations and government agencies need new thinking and game changing interventions around more radical uses of technology and automation – and around the shape of work itself.
Only perform competitive work
It’s time for New Zealand organisations to get better clarity around the work that genuinely needs to be done by full-time employees (i.e. work that confers competitive advantage), and the work that can be done better, cheaper or faster by technology or by other people, through contracting, outsourcing or offshoring.
To this point, some companies in the manufacturing sector, for example, have hung onto uncompetitive practices that are simply not sustainable. In a flat world, New Zealand organisations need to be realistic about where they can, and cannot compete, and adjust their resourcing models, and even their core business, accordingly.
Declare a war on waste
Waste is the one remaining traditional target area where organisations still have a lot of work to do. By tackling waste strategically – taking a serious look at processes and functions through a waste lens – organisations often find another 10% of value sitting waiting to be harvested. Take a look at the minutiae of the work that gets done in your organisation. What value does it deliver? Do you really need that report, regular meeting or even project?
Engage your workforce
The Pulse found that workers overwhelmingly attributed productivity declines to poor staff management and a lack of motivation, reward and recognition in the workplace. This issue needs a serious response, with a sharp edge. If your workers believe they could be 21% more productive, you need to understand how this relates to your organisation and where this potential resides.
You need to make sure employees know: how productivity is measured, what they can do as individuals to improve productivity, and how they are tracking against key measures. You also need to listen to your workforce and improve the work environment so it motivates people to make a discretionary effort that adds value.
Productivity focus areas
When it came to productivity focus areas, workers believed people management and organisational model, design and operation had the greatest potential to impact productivity – rating much higher than technology or innovation. In fact, workers ranked organisation and people levers as nine of the top ten attributes driving productivity.
Quality of work
Around the world, improving quality of work is considered to be increasingly important at a national level, not just to support employee well-being, but also to boost productivity. Using a quality of work framework developed by the United Nations Economic Commission for Europe, the Pulse ranked the dimensions of quality of work most likely to increase productivity in New Zealand.
How can employers boost both quality of work and productivity?
The Pulse indicates that improving quality of work and achieving better financial performance are two sides of the same coin – not conflicting goals. It shows the higher quality of work, the higher the productivity, with super achievers measuring highest on all work quality indicators. According to the Pulse, the quality of work dimensions most likely to boost productivity (indicated by a more than 3 point gap on a 1-10 scale between Lost Souls and Super Achievers) are:
- Job satisfaction
- Management supports workplace effectiveness
- Skills utilisation
- Training to support productivity
- Individual control over how they achieve outcomes
Interestingly, part-time workers scored highest for quality of work than full-time or casual workers.
Government responsibilities to support national productivity
Government at all levels has two roles in supporting productivity:
Improve productivity performance in the public sector
The public sector needs to put its own house in order and improve the productivity of its 43,345 full-time equivalent employees3. To date, such efforts have largely revolved around incremental improvements. In future, government agencies need to be far more ambitious, targeting:
2. Use policy levers to remove productivity hurdles
The top priority on the government’s productivity agenda should be, wherever possible, to remove uncertainty from the economic environment. With multiple offshore factors in constant flux, continual local policy changes seriously undermine productivity. Business needs to have confidence that the tax, industrial relations or foreign investment rules it planned for will remain consistent.
Beyond this, government has the following range of levers to support businesses in unleashing their productivity potential.
3 Human Resource Capability Survey June 2012, http://www.ssc.govt.nz/sites/all/files/hrc-survey-2012-findings-summary.pdf