Recent calls to spend vast amounts on improving productivity overlook gains that would cost very little.
The recent calls for a productivity summit, and for $7 billion in spending on a proposal by the states for productivity improvements, are missing the point. I believe that many, if not most organisations today, already have enormous capacity to increase productivity and grow.
Get business news first
Sign up to SmartCompany’s daily newsletter
“Lies, damned lies and statistics” is the expression attributed to Mark Twain, but has now become a cliché. Nevertheless, a journey into statistics will at least get people questioning, if not arguing about important data.
For instance, the Australian Bureau of Statistics reports that the gross domestic product per hour of labour worked increased from a factor of 82.4 in 1992-93 to 104.4 in 2000-01, which would indicate a 21% increase of productivity over that period.
This is with the benefit of the technological revolution and the emergence of the “downsizing” phenomenon. For whatever reason (and I am sure that there will be many who would want to qualify this conclusion) the increase, on the face of it, looks pretty significant.
Back in 1928 in a Western Electric factory at Hawthorne in Chicago, an experiment was commenced involving five women who assembled relays for telephones. Some would describe the process as relatively boring and mundane, not one to excite the imagination of the worker.
Over the next 26 months, these women (two of whom were replaced at the behest of the others) achieved an increase in productivity of approximately 30% without any additional aids to those that were available at the beginning of the experiment. The process was largely manual and did not alter over this period of time.
Several theories have been mooted for the productivity improvement, the experimenters (people from Harvard) and a current world authority on these experiments (Professor Sonnenfeld from Yale, who recently visited Australia) attribute much of it to social factors at work during the experiment. In particular, they point to the way the women were treated with respect by the experimenters, compared with the way other women in the factory were treated by supervisors.
Whatever the reason, the increase in output was sensational by any measure and one wonders what their output would have been today had they been in a similar environment but supported by technology.
Yet, here we are today, celebrating our wonderful national productivity increases and reflecting in the glory of our technological genius without recognising the far greater achievements at Hawthorne in the late 1920s.
These so called “Hawthorne” results are not isolated incidents. I have noticed similar increases in a number of small businesses in Australia that have implemented much of what was done at Hawthorne so long ago without any knowledge of the so called “Hawthorne experiments”.
Growth can be achieved in all sorts of ways but sustainable growth from the simple practice of ensuring that the people who come to work in an organisation are the same people as they are when they are outside the organisation. You don’t want to make them turn off their lives when they walk through the door.
You want their energy, their wit, their inventiveness, their enthusiasm and their diversity. It takes a great leap of faith to trust them to make decisions rather than to act in accordance with directions but you can’t turn a blind eye to 30% increase in productivity in 26 months.
For more Growth Doctor blogs, click here.