Workers Have Upped Their Game. It’s Your Move!

Does business make people productive, or is it people that make business productive?  It’s the latter.  Increasingly, in the modern economy, it’s people who keep the engines running, people who bring in revenue, and people who create profits.  And it’s becoming increasingly obvious that people have been neglected to the point that their full potential is not put to full use.

Eric Garton has written a compelling article for Harvard Business Review entitled The Case for Investing More in People.  Garton, from Bain & Company, has created and/or found strong research that makes the case that high-functioning human resources can be the best driver of corporate performance.  I haven’t read his book, but it looks like the article is an overview of his 2017 book Time, Talent, Energy.

Restoring Fairness in Wage Growth and Labour Productivity

There is a variety of metrics that show that labour market productivity (i.e. how much an individual worker puts out) has been growing at a very slow rate in the US relative to other countries and years past.  While labour market productivity is normally a good predictor of wage growth, the link has been broken such that even that meager growth that has been realized has not been passed along to employees.  This failure to re-invest in labour productivity is a problem.

The article cites a book by Zeynep Ton from MIT entitled The Good Jobs Strategy.  Ton notes a variety of businesses that have chosen to pay above-market wages in order to encourage employee engagement, which is increasingly seen as a driver of customer engagement.  The higher wages lead to “…lower levels of employee and customer churn, and correspondingly lower employee hiring and customer acquisition costs.  The compounding and virtuous effects of increasing customer and employee advocacy more than offset the higher cost of wages.” The decision to spend more on wages is not actually an expense so much as an investment.

We Are So Busy That We Are Unproductive

Garton also frets about employers carelessly wasting employees’ time.  Research shows that the over-abundance of interruptions and time-wasting meetings is causing employee burnout.  Particularly amongst managers “…great ideas that drive breakthroughs in productivity come from human beings with time, talent and energy to innovate.”  In my estimation an accidental or deliberate decision to slam managers with workload is a decision to reduce productivity.  Being cavalier about work volume implies a flippant view of workplace productivity, especially when people are working too hard.

The obligation to see every email, show up at countless meetings, and “look busy” is the hallmark of an organization that has chosen to do everything the same way, every day.  This hamster-wheel organization brings little hope to the future of labour productivity growth.  Yet there are opportunities to remedy this problem through productivity efforts such as Agile and Kaizen… if the workplace decides creative time is a desired business goal.  Remember, this is all about making choices.

Emotions Prevail: Employee Engagement is the Jet Fuel of Productivity

Another missing ingredient is employee energy.  In this case employee engagement is the focus.  “An inspired employee is more than twice as productive as a satisfied employee and more than three times as productive as a dissatisfied employee.  Yet, only one in eight employees is inspired.”

Personally, I’m fascinated by these performance metrics of an engaged employee.  If what the author says is true, and an inspired employee is producing 300 units, a satisfied employee is producing 200 units, and a dissatisfied employee is producing 100 units of output.  Can it be the case that turning an employee from dissatisfied to satisfied is proportional to a doubling their productivity?

That sounds about right to me.  People who are still feeling pretty good (i.e. “satisfied”) can probably get inspired and pour it on, increasing their productivity from 200 to 300 units (a decent 50% increase).  This means that for every 10% of the workforce that experiences a jump in employee engagement level, the return for the employer is in the realm of 5-10%.  And that’s mostly based on intangible items such as job design, power sharing, compassion, and open conversations.

That rate of return significantly out-performs most of what can be produced on the capital investment and cost-containment side of the productivity agenda.  I think that’s why we should conclude that the American investor class has completely screwed up their country’s ability to reach its full potential.  Low investment in labour productivity has been driving lower shareholder returns, flat wages, and generalized discontent.

Amongst society’s greatest woes is that people are working harder but not seeing any results in their paycheques, free time, or government services.  The instinct that we’re making sacrifices for the benefit of nobody but the investor class increasingly rings true.  The article notes that in addition to higher wages, investments in health care, training, and education are among the possible additional improvements needed to achieve a better economy.  If only there was some entity in the American economy that had accumulated extra money in the past few decades which might be available to pay for all of this…