Upturn in Australian productivity

The EY Australian Productivity Pulse™

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Australian workers are more productive and wasting 4% less time at work than 12 months ago, with the average amount of time wasted falling from 18% to 14% since October 2011.

Based on the average work week, Australians are now spending 15 minutes more a day on work that adds real value to their organisations. However, while this trend is positive, an average of 14% of time wasted each day is still costing organisations an estimated $87 billion in wages alone per annum1. It’s a good start, but Australian organisations still have a way to go to reduce waste and improve productivity.

Individual workers are motivated and ready to do their part

As Australia’s economy continues to slow, organisations efforts to drive productivity are paying off and its workers are responding by boosting their own individual productivity. Consistent with current economic data that has seen a slight uplift in labour productivity growth over the past couple of quarters2, our research reveals that in the past six months, personal productivity has improved, with 38% of workers reporting an increase in productivity, compared with 30% at the beginning of the period.

The third six-monthly EY Australian Productivity Pulse™ (the Pulse) found the level of productivity in workplaces had lifted the ‘national productivity average’ from 7.25 to 7.58 in the past six months.

Murmurs of a ‘slack workforce’ are clearly inaccurate. As Wave 3 of the Pulse reveals, the vast majority of Australian workers understand the concept of productivity, feel personally responsible for it and are striving to improve it. People clearly feel they have power over their own productivity levels and overall productivity levels have lifted, which reinforces that productivity is the ‘sum of all its parts’.

While Australia’s economy continues to slow, organisations’ efforts around productivity are starting to pay off and its workers are responding by boosting individual productivity

The study found workers were proactively trying to increase their own productivity through a range of strategies, including: reducing errors (60%), better time planning (58%) and improved multi-tasking (51%). More than 60% believe productivity is the responsibility of individual employees – not the CEO or line managers.

While these strategies have already led to a modest increase in productivity and a corresponding reduction in wasted time and effort, organisations have considerable opportunities to magnify this effect. The Pulse found that, during the past six months, more than four in five workers (83%) have been striving to increase productivity, yet fewer than two in five (38%) actually achieved these improvements.

It appears that these individual efforts to improve productivity are being hampered by organisations that either don’t measure this vital indicator, fail to communicate effectively or are not supporting their people’s efforts.

Organisations need to do their part to communicate productivity goals

Only half the workforce believes their organisations are ’very good’ or ‘quite good’ at communicating about productivity. The Pulse also reveals that improving how the business communicates its productivity goals and enlists its people to strive towards these will yield multiple benefits.

When productivity was communicated well workers were more productive and more satisfied; in fact, 91% of people in organisations where this was done well were trying to increase their own productivity – in contrast to 76% in organisations where productivity communication was poor.

Left to their own devices, workers had a strong view of what organisations should be doing to increase productivity, including in order: simplifying and standardising processes; and educating staff on how to be more productive. Yet, in many cases, respondents reported that their organisations were not delivering on these strategies.

As Wave 3 of the Pulse reveals, management has multiple levers to harness employee enthusiasm for improving productivity. If productivity boosting activities were supported, communicated and measured effectively, Australian business would begin to lead in demonstrating the impact of good organisational level productivity practices on national productivity levels and could improve its current position in the OECD rankings.

About The Pulse

In Wave 3, we look at:

1 Based on the annual wage bill in Australia of approximately $630bn (ABS Labour Employment and ABS Average Weekly Earnings September 2012), total organizational productivity wastage can be valued at $87billion per annum.

2 ABS Australian National Accounts: National Income, Expenditure and Product June 2012 and Westpac-Melbourne Institute Leading Index October 2012