Are You Reaping the Benefits of Increased Productivity?
By Chuck Cusumano and Jillian Broaddus
Productivity has been a common theme in our blog for several years now. (Case in point!) As coaches, our clients want to get more things accomplished or they want more ‘margin’ in their schedules. As consultants, our clients expect us to advise them on how to be more efficient, profitable, or get the same results with less input. And as trainers and facilitators, our clients ask us to come in and assist them in speeding up or guiding them in a desired new way of behavior. When you distill all these activities down to their base ingredients, the one ingredient that remains common for all of them is Productivity – it is the driver for innovation, execution, and increased margin in almost all organizations as well as our personal lives.
In the United States, business sector productivity (defined as dollar produced per worker hour) has increased by 299% from 1950-2018. This massive gain in productivity by US workers was a result of increased use and dramatic advancement in technology, increased human capital (better workers), and increased physical capital (better factories, more efficient workplaces). By investing more money, time, and technology, the output far exceeded the inputs and US worker productivity increased at record levels. As workers, we now produce more stuff in less time for less cost. The amount of food produced per acre per farmer was unthinkable just 15 years ago. The advancements in farming technology (think gps seed planting and fertilization), communications (think cell phone, email, word processing), and manufacturing (think computer-aided design and robot-assisted production) have produced more of almost every product and service in our modern economy with less manpower and in less time. Just click on a product and it will be at your doorstep in most cases within 24 hours! We make it faster, cheaper, and more efficient than ever before! So why are we so stressed out, burned out, and not enjoying the extra time and money that increased productivity produces?
For most workers, the extra time gained was reinvested in more work – not family or leisure time. The extra output was reinvested in shareholder returns and executive compensation – not worker wages. From 1950 – 1979, the increase in productivity was in direct correlation with the increase in worker wages. These were the ‘boom’ years for the growing ‘middle class’ in America. However, since the early 1970s, we stopped mirroring wage growth and productivity growth. For example, during this time, productivity increased by 61.8% while hourly pay increased by only 17.5%. The federal minimum wage in 1968 was $1.60 an hour – adjusted for inflation that would be $12.00 per hour today; however, the actual federal minimum wage is currently $7.25 per hour. Further data shows that if we continued to mirror the minimum wage in the US to the productivity gains, as we did from 1950-1973, the minimum wage would currently be $24.00 per hour. (Note: This is not a blog post for increasing the minimum wage! We use this example as a way to illustrate that focusing on productivity as a sole driver of success can have many unintended consequences.)
Before we tackle the unintended consequences, let us give you a quick review of the process we developed for becoming more productive either in your personal life or in a business setting. We use the 4 Ps process for increasing productivity:
Populate, Prioritize, Plan, Produce.
Populate – gather all the data (tasks, systems, activities, steps, etc.) that must be accomplished in order to achieve the outcome.
Prioritize – list in order of importance all the data points
Plan – align the prioritized list with the resources (time, money, manpower, etc.) you have to achieve this outcome.
Produce – get to work on working this plan!
Once you have become more productive by using this process, then the real question is: What do you do with the additional output or savings that the productivity gain gave you? This is the point of this blog!
If you become more productive in your calendar management, do you add additional work appointments to your calendar or do you invest that time by training, motivating, and engaging with your team? The latter choice is what our experience tells us is the best investment. It is the longer-term play, but it yields the greatest benefit overall.
If your organization increases profits, do you take those additional profits and pass them on to the shareholders or do you reinvest them in additional training and worker compensation? Once again, our experience tells us that the longer-term investment of additional training and worker compensation will yield the greatest benefit.
If you become more productive, do you take the additional time and/or money and invest it in your family and your wellbeing, or do you invest it in doing more tasks or work? We hope you can see the pattern here – investing in your relationships will yield a better return in the long run!
The real challenge is that we have conditioned ourselves to value short-term results over long-term outcomes. As a society, we value immediate gratification, even when we know the deferred reward will be better. However, at some point, the cost of immediate must be paid. We pay the price when we do not have enough workers to staff our businesses and now must pay the additional labor costs all at once. We pay the price when we have a bridge collapse and must pay much more to replace it than we would have to maintain it. We pay the price to replace a worker at the new prevailing wage rather than invest a little over time to train and retain through wage increases with the current worker.
So, in 2022, we recommend being more productive, but be intentional on how you invest those increased gains. Invest them on your team, your family, and your personal development!