What is the rate of labor productivity around the globe? The Conference Board 2015 Global Productivity Brief has a few thoughts (and numbers) on this question:
- Global labor productivity was 2.1% in 2014
- 2014’s rate is nearly a quarter percent lower than pre-global crisis (1999-2006) rate of 2.6%
- The labor productivity growth rate in mature economies declined by one-third from 0.8% in 2013 to 0.6% in 2014
- The labor productivity growth rate in emerging and developing economies declined by 7% from 4.7% in 2013 to 4.4% in 2014
These numbers suggest a gloomy outlook for the efficient use of labor and capital across the globe. This outlook threatens future technology and innovation, which rely on the efficiency of the markets for competition and profitability.
Numbers suggest that labor productivity growth, measured as output per person, has not only stagnated but in fact is trending downward, with future growth prospects bleak.
In the U.S. alone, according to The Corporate Board’s report:
- Productivity declined from 1.2% in 2013 to 0.7% in 2014
- The year to year change in productivity (2013-2014) represents a decrease of 71%
Although productivity is down:
- Employment grew on average 1.5% per year between 2012 – 2014
- GDP increased by 9%, from 2.2% in 2013 to 2.4% in 2014
- Average American employees worked increased hours, lowering total factor productivity from 0.6% in 2013 to 0.1% in 2014 (-500%)
The loss in total factor productivity (or TFP, a measurement of total labor and capital inputs impacted by changes in technology) is often attributed to the advent of information technology (IT) in the workplace. According to a working paper published by the International Monetary Fund (IMF), the reduction in TFP is universal across many job sectors and is no more dramatic in IT than in non-IT fields.
How do we improve these numbers to reverse the national and global trend in labor productivity growth? The answer lies in a paradigm shift away from traditional thinking on productivity such as working longer hours, and increasing investment and GDP output per worker, all of which are macro measurements. Drilling down to the micro, organizational level is where the trend in productivity loss may be addressed more effectively.
An article printed in the Harvard Business Review from research conducted by the Ross School of Business Center for Positive Organizational Scholarship found that thriving (as opposed to productive) employees are those who are bought in to the mission of the company and are less likely to experience burnout.
How significant is reducing burnout and obtaining buy-in to the direction of the organization in order to improve productivity rates?
- Organizations with thriving employees had a reported 16% better overall performance
- These organizations self-reported a burnout rate that was 125% lower than peer organizations
- 32% of thriving employees are more committed to the workplace
- 46% of these employees are more satisfied with their jobs
Providing a learning environment instills a sense of opportunity to grow or polish skills. This is especially true in as dynamic a field as information systems and technology. Feeling alive, engaged and excited to come to work by instilling vitality in the workplace is another way in which productivity increases for your organization.
Use this information to start an organizational conversation within your respective IT teams. Show that productivity is more than a simple measure of labor and capital inputs. People and dollars are important, but thriving, engaged employees who are team members are more likely to be innovative, and to advance the technology goals of the organization.