According to a recent Telstra survey, improving productivity is one of the top three priorities for leaders and managers in large businesses.
Yet according to the same survey, there is a growing deficit between those leaders who rank productivity as important and those who actually measure it and have thus achieved a significant improvement in the past 12 months.
Why this disconnect between what leaders say is important and what they are actually doing?
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My theory is this: no one ‘owns’ productivity in the same way that the finance director, for example, ‘owns’ all matters relating to dollars in and dollars out, or the marketing director ‘owns’ all the communication, pricing, distribution and product issues.
To be sure, many HR directors talk about their role in attracting, retaining and developing talent and trying to boost employee engagement. These are important ways to boost productivity but they only cover the ‘people’ factor. What about the tools that the employees are using? Or the return on investment of technology or the lack of collaboration between departments that results in duplication and waste?
Because no one seems to have a direct and holistic responsibility for productivity, improvements will remain a hit-and-miss affair.
My suggestion is that every medium to large business should appoint a chief productivity leader (CPL). This is a senior person who champions, measures and continually incites the need to improve productivity. Their very first challenge: to actually define what productivity is.
For many managers, it is often ‘code’ for cutting costs, which usually involves people (note the irony: we want our people to do more with less at the same time as leaders retrench them).
They are still stuck in the idea of measuring activity, not outcomes. I have spoken to many leaders who talk about the number of meetings they have as a sign, presumably, of how important they are to the organisation. Yet this is a measure of activity, not outcome. Hours worked is not the key measure anymore; it is what you have achieved in the day.
This emphasis on outcomes rather than activity will require a mindset shift for many leaders who have been brought up with 40-50 hour weeks or 9-10 hour days. This used to be considered a sign of commitment – now it’s perhaps a signal of inefficiency.
So what we mean by productivity? It is not just a function of inputs and outputs. It is a strategic decision. An example of the new thinking required is suggested by Jim Collins in his book, Good to Great – Why some companies make the leap and others don’t (Random House, 2001).
His research suggests that ‘great’ companies try to determine a single answer (or at least a few) to the question: what drives your economic engine? For example, with Gillette, the key metric became profit per customer rather than profit per division, thus reflecting the idea of a customer’s lifetime value.
In fact, the answer to the question: ‘What drives your economic engine?’ should focus on all the productivity efforts of a business as harnessed by the CPL.
In a world of ‘more with less’, productivity improvement is a strategic and creative process that involves the work of the most senior leaders. It can make the difference between success and failure.