Master of disguise: Economic strength masks productivity slump

by Iain Hopkins10 Nov 2011

New research has suggested that Australia’s two-speed economy could be masking a productivity slump rife within small businesses.

The data, released this week from Hay Group, suggested that many companies in Australia and New Zealand are lagging behind the world’s leading organisations in key areas such as effective leadership, embracing innovation and rewarding great performance.

In the annual Focus report, Henriette Rothschild, general manager Hay Group said business leaders are trying to tackle the issue of maximising productivity to drive business growth and attract both local and foreign investment.

However, Rothschild said making the productivity equation work was a major challenge facing Australian and New Zealand businesses.

According to the report, organisations have been misfiring in their efforts to bolster productivity, by seeing improving employee engagement at the key driver behind business growth.

But the Hay Group research, collected from more than 400 companies worldwide, argues the key driver is actually a combination of engagement and employee enablement.

It was found that some 15% of employees are engaged but not enabled, which ultimately leads to frustrations and a slump in output.

Hay Group identified the following nine factors of productivity:

Clarity and direction
Organisations that continue to clearly communicate their goals and direction, and are clear about their expectations of employees, are more likely to have strong engagement and better productivity

Confidence in leaders
The most significant impact on a team member’s ‘discretionary effort’ and their willingness to go the extra mile for the organisation is their view of their direct line manager. A key starting point for organisations wanting to raise productivity is to strengthen the capability and impact of their leaders on the team they manage.

Quality and customer focus
Long-term substantial performance improvements can only come through examining fundamental organisational design change. That means a clear focus on what the customer wants and creating the most sustainable structure to meet customer needs.

Reward only the best – respect and recognition
Organisations must learn to reward the best and manage all employees. That doesn’t mean paying everyone more, it means better differentiating and identifying the best performing staff – and retaining them.

The ROI on reward – compensation and benefits
Organisations that look at pay as an investment and view rewards as a mechanism, can stimulate employee performance for the longer term, in line with the strategy. Pay is one of a company’s strongest communicators of what is valued.

Performance management
ANZ business leaders struggle with managing the link between individual and business performance. Performance management is a key lever in productivity and a great opportunity for local business leaders to drive organisational performance.

Your workforce is critical – empowerment and authority
Employees want empowerment and authority to act in the best interest of the organisation – having the confidence to let team members lead is a great way to unleash potential and performance.

A more diverse workforce, well managed and enabled can unblock performance and strengthen collaboration that helps the organisation achieve innovative breakthroughs in customer focus and process improvements.

Structure, work and process
The biggest impediments to business performance are often internal – systems that are too complicated, too technical and lack transparency. A well designed organisation however recognises and often automates the key systems and processes to add value.


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