Reaching our $30.5 billion
productivity potential

The EY New Zealand Productivity Pulse™

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About the Pulse

The Pulse measures New Zealand workers’ sentiments about their and their organisation’s productivity and the value of the work they do. It gauges the voices of more than 750 workers across key industries and from all levels in both the private and public sector.

A year ago, Edition 1, profiled four groups of workers, from “highly productive” to “unproductive”, with each group identifiable through a number of characteristics. Six months ago, Edition 2 revealed how the more productive groups were driving an upturn in productivity.

In Edition 3 we examine New Zealand’s productivity potential – its context, causes and characteristics – and how to unleash it.

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Where to from here?

Have companies reached their highest productivity peak, or will they keep on pushing towards the summit?

Despite corporate New Zealand, and some government departments and agencies, seeing incremental improvements through restructuring and cost cutting, New Zealand is yet to realise $30.5 billion1 in productivity potential.

Like their Australian counterparts, New Zealand workers say they could be 21% more productive every day, if they could change just one or two things at work – representing unrealised productivity of more than $30.5 billion every year. This equates to an average of $14,000 per worker2.

87% of workers could be more productive

Right across the workforce, five in six New Zealand workers (87%) could be more productive in their role. Workers said the main obstacles to increase their level of productivity were: poor staff management and a lack of motivation, reward and recognition in the workplace.

It should be clear that, after decades of stagnation, only deliberate intervention from leaders across the New Zealand public and private sectors will speed up the rate of productivity improvement – if we are not to look back 20 years from now and still be hoping for a miracle.

Personal productivity plateaus; declines in some sectors

While the nation has made good progress in the productivity stakes during the past 18 months, with personal productivity growing steadily, it has plateaued since November 2012 - driven by declines in personal productivity in the healthcare and social assistance, and professional and technical sectors.

Organisations have worked hard to push the productivity levers of process efficiency and standardised systems. However, there remains little more to squeeze out of these initiatives. The back to basics approach of the last year has delivered some good gains, but now its returns are diminishing.

As a result, overall personal productivity has grown year on year, but plateaued since the last wave of The EY New Zealand Productivity Pulse™  (the Pulse) in November 2012.

No room for complacency

New Zealand has already felt the net productivity gains as a result of companies tightening the screws to adapt to changing market conditions. The challenge now lies in un-tapping our productivity potential, so we ensure business is sustainable into the medium-term.

As Edition 3 of the Pulse reveals, companies cannot afford to be complacent that productivity gains will continue. There are worrying signs that the stress of restructuring may be starting to reverse some of the gains made during the last 12 months.

Growing divide between productive and unproductive workers

In addition, a negative shift in worker sentiment, caused by new and growing fears about job security, has created a growing divide between productive and unproductive workers. Specifically, our least productive workers (the ‘Lost Souls’), who tend to be junior employees, are disengaged and wasting far more time at work than their productive colleagues – creating an ever widening gap. Unproductive workers now waste approximately 1 hr 30 mins per day more than productive workers – up from one hour just six months ago.

As Section 3 of this report explains, to sustain existing productivity gains and start unleashing the remaining potential, big organisations in both the private and public sectors need to review the effects of recent productivity actions and put in place new and bold initiatives that address all the levers of productivity improvement. Organisations need to get clarity around what constitutes genuinely competitive work, declare a war on waste and engage their workforces to motivate people to make a discretionary effort.

These efforts will require changes by:

  • Boards
  • C-Suite
  • Managers

At the same time, government needs to take a leadership role in promoting national productivity. As a large employer, government needs to take ambitious steps to boost public sector productivity, including measuring and reporting annually on the performance of agencies at local and national levels. It also needs to keep building certainty to support business confidence and use policy levers to remove productivity hurdles in the rest of the economy.

Backed by proactive government support, companies that start pushing towards their productivity potential heights now, stand to gain significant advantage over those whose inertia keeps them stuck at their current level, or even sliding backwards. Without the new approaches outlined in this report, Australia is in danger of getting stuck far from the summit of our productivity potential.

About The Pulse

  • Section 1: State of play for the New Zealand workforce
  • Section 2: Key take-outs for Boards, C-Suite and Managers
  • Section 3: Path to the summit: unleashing productivity potential

1Based on Statistics New Zealand, Gross Domestic Product December 2012. www.stats.govt.nz
2Based Statistics New Zealand, Household Labour Force Survey December 2012. www.stats.govt.nz