The unpalatable links between high productivity, leadership and wages

The unpalatable links between high productivity, leadership and wages

For hard-working executives in Australia’s leading companies, the suggestion that solving our low productivity rates is their problem is, at the very least, an unpleasant message. For most, it would prompt astonishment.

The long hours and personal sacrifices demanded of executives suggests there is really little more leaders can do to shift the productivity paradigm.

The research finds otherwise, however. The reality is that Australian leaders have the lowest proportion of tertiary education when compared to 16 countries across Europe, south-east Asia, the Americas and Canada, according to a report released yesterday. Recently analysis by LeadingCompany revealed that just one in five (20) of our ASX100 CEOs has an MBA, and 12 of those leaders appear to have no tertiary qualifications (that is, they make no mention of tertiary education in their biographies).

In fact, our leaders do not even rate highly the impact of their own abilities (or inabilities), the report, produced by the McKell Institute, found. “Not all managers regarded good management as an essential ingredient of success, and the evidence in Australia and globally is that many managers overrate their overall calibre and are thus unable to make a realistic assessment of the link between their own performance and the productivity of the enterprise,” the report, Understanding Productivity, Australia’s Choice, says.

In other words, Australian leaders do not know how bad they are.

Ouch!

Reality check

Time-wasting costs Australian businesses collectively $87 billion a year, according to the latest Ernst & Young Australian Productivity Pulse Report.

The good news? (Yes, there is some.) There’s been a  4% uplift in productivity in the past year, with the average amount of time wasted per day falling from 18% to 14%. The other good news from the Productivity Pulse is that most Australians want to be more productive and see it as their own responsibility – not that of management – to become more productive.

Nevertheless, the EY report shows that when managers are better at communicating about productivity, their staff are far more likely to strive to achieve greater productivity. “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.”

The problem is that we don’t know how to do it. As hard as they might try, Australian managers lag behind the global best in every indicator across three key areas of management: operations, performance and people management, as is clearly illustrated in Table 7, page 45 of the report.

Our worst shortfall is in the area of people management, in particular in two key factors: “instilling a talent mindset” and “addressing poor performance”.

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