Why you're struggling with business productivity

New research shows that bosses are confused over who should take ownership for measuring productivity.

by Stephen Jones
Last Updated: 15 May 2019

Productivity is a major concern when you run a business, not least because it reflects directly on you. It’s hard to say you’re doing a good job when the collective inputs of the company you lead – capital and labour, time and effort – produce underwhelming returns.

In recent research published by the wireless headphone technology company Jabra, 71 per cent of the 688 CEOs and C-suite executives said productivity was an important issue, yet they were divided about whose responsibility it was.

Just under a third (31 per cent) of CEOs interviewed believed that it was the domain of the board to track and improve productivity, while 52 per cent of c-suite executives said the CEO was ultimately responsible. The report didn’t specify the proportion of respondents from each band.

It’s perhaps unsurprising that we’re so willing to pass the productivity buck, because it’s an awkward metric that depends on exactly what you’re trying to measure (and therefore what you’re trying to achieve), over what time span.

It’s much easier for example to understand the output of a factory line per man hour worked over the course of a week, than it is to assess the  cost vs returns of consultancy services, financial transactions or sales relationships, especially if you’re taking the long, big picture view.

It’s also much simpler just to look at your profit margin, if you want to know how your inputs compare to your outputs. The critical difference (and a big reason why productivity matters) is that productivity gives you an idea of how much better you could do with the same inputs.

It’s important to note here that productivity is not the same as efficiency. It’s inefficient to escape your desk for a 15 minute tea or coffee break, but it can do wonders for productivity if it a) prevents burnout or b) allows innovative ideas to germinate through conversation.  

The UK’s productivity problem

There are many arguments as to why the UK struggles with productivity on a national level, compared to our G7 rivals. Back in December, the RSA’s Matthew Taylor discussed the issue in his column for Management Today, blaming among other things a long tail of unproductive companies and a poor diffusion of innovation between high performing and low performing firms.

At a business level, other talking heads blame a culture of bad management practice, while funnily enough Jabra concludes that heightened levels of technology and distraction in the office significantly contributed to low productivity in some businesses (if only leaders invested more in wireless, noise reducing headphones...)

In truth, there are likely to be numerous factors, which will vary in importance between businesses and sectors.  In no case do they provide an excuse for leaders not to think about productivity as a strategic issue, or to take responsibility for it.

The question of whether it’s for the board or the CEO to improve business productivity on a strategic level is ultimately moot, so long as someone does. If the leadership of all our firms worked as hard as our best ones to create cultures where employees could flourish and ideas flow, then we’d ultimately all get more for less.


Image credits: marchmeena29/gettyimages 

Tags:

Find this article useful?

Get more great articles like this in your inbox every lunchtime