4 steps to improving productivity

Australia has some serious challenges to remain competitive in a global market environment

When it comes to improving productivity, one of the biggest challenges for organisations is to think outside the square when it comes to addressing the need to improve the bottom line, and not just freeze salary costs or offshore jobs to low cost economies, according to Ephraim Spehrer-Patrick, principal in Mercer’s talent business.

As a high-cost economy, Australia has some serious challenges to remain competitive in a global market environment, and consequently, he said workforce productivity is front of mind for most Australian organisations.

They are addressing the productivity challenge in a variety of ways, from reviewing employment policies and collective agreements, organisational structures and job designs as well as investing in capability development of their workforce, he said.

“It is also about creating a culture and environment that encourages innovation and increased discretionary efforts aimed at building and increasing revenue opportunities,” he said.

There are different measures and benchmarks for productivity, and many of the more significant ones indicate room for productivity improvement as a nation and on a corporate level.

For example, The Human Capital Report, a study Mercer conducted in partnership with the World Economic Forum in 2013 ranked Australia 96th of the 122 countries in its pay related to productivity score.

4 steps to improving productivity
“The mantra about getting employees to work smarter, not harder, is absolutely true and the power of achieving cannot be underestimated,” said Spehrer-Patrick, who outlined four practical steps that organisations should take when addressing challenges that arise in the goal of improving productivity:

  1. Understand and analyse productivity drivers in the organisation by gaining insight into what workforce inputs and investments drive business performance and creating a plan for a high performing future.
  2. Design an organisation geared for productive growth by examining the business model, processes and technology, and designing an organisation structure that maximises the use of workforce capability.
  3. Develop leaders who drive productivity as the key to transforming and sustaining a culture and environment that obtains the best out of their staff.
  4. Measure and motivate the workforce through effective performance and talent management that rewards, promotes and develops those people that enable productive growth.

If managed well, he said this more holistic approach can create an environment of ownership, innovation and employee engagement.

Future productivity trends
Spehrer-Patrick also said there are a number of trends on the horizon for HR with regards to workforce capacity and productivity – the first of which is stronger demand for more robust, longer-term workforce planning.

“The need to drive workforce productivity outcomes in organisation has spiked the interest and need for robust longer-term workforce planning in Australia and around the world,” he said.

For example, Mercer’s Talent Barometer Survey in collaboration with the WEF, found 77 per cent of organisations had a workforce plan, but only 24 per cent found it effective in helping them to achieve their business goals.

“We’ve found more organisations are embarking on the workforce planning journey to align the organisation’s leadership team around priorities and working through the difficult questions and trade-offs in this process – ie. where do we invest, divest, and rebalance?” he said.

Another key trend is more rigorous use of data analytics in relation to improving productivity in the workforce, and Spehrer-Patrick said there will be continued pressure on the HR function to communicate a convincing and appealing value proposition to their internal stakeholders.

Even more importantly, he pointed to more demand for increased transparency on the use of data to report on metrics and ROI.

Spehrer-Patrick also said it is time for HR to become a data-driven executive coach, and for HR leaders to re-frame the concept of a “strategic partner”.

HR should “become a coach for the business, a coach who’s advice is driven by data and insights into how to effectively use the data to drive the right resources and skills to the right needs”, he said.

Organisations which are successful in responding to these trends will have clear governance processes in place, where workforce planning and productivity challenges are clearly owned by the business, but strongly supported by HR, Spehrer-Patrick observed.

“HR business partners need to be equipped to facilitate strategic discussions with their leadership teams and support these discussions with robust and insightful data analytics.”