Workforce Productivity and Organization’s Success

Workforce Productivity: What makes it important and complex?

“The productivity of a workforce aligned with strategic goals is the driving force behind the success and growth of an organisation” Richard Branson

Workforce Productivity, to simply describe, helps an organisation measure how well they are utilizing their effort. Without chasing mathematical elegance, it may be put very simply as business output per unit work effort put by an employee. Or should you choose an alternative way, define this as a combination of effort efficiency (bandwidth utilized vs bandwidth you have) and performance efficiency (performance achieved vs. performance expected)

Despite its importance and simple ways to define it, often decision makers struggle to articulate what it may mean for their organizations and reach convergence among them to lay-out a cogent strategy in that direction. Defining productivity, therefore, becomes akin to describing the elephant by the proverbial ten blind men; each stakeholder having their own ways to describe. None of them are wrong, but they are not helpful to decide a commonly agreed cogent strategy for the organisation.

Huselid, Becker and Beatty in their book (The Workforce Scorecard, Harvard Business Review Press) outline three different challenges in workforce measurement and management; Perspective challenge, Measurement challenge and Execution challenge. Briefly, these three challenges capture the essence of the considerations that need to go in designing and implementing a Workforce Productivity initiative in an organization. Framing the right perspective, I believe is the first step in this direction.

Perspective: Your productivity initiatives should be relevant to the Organisation’s north star.

Workforce Productivity is defined differently by different organizations based on their industry and context. However, in attempts to define it, important to align the organization’s strategic goals with the key workforce characteristics. These characteristics include the competencies, behavior and attributes of the workforce needed to achieve the strategic organization goals. Once done, these characteristics then need to link with what productivity goals needs to be measured and for which constituents of the workforce.

To illustrate as an example, a premium airline may have responsive services centric behavioral attributes of their call centres, ground force, front desk, and the cabin crew identified as crucial characteristics needed to achieve the customer success as outlined by their strategy. Whereas, in sharp contrast, a budget airline may have timeliness, turn-around time and efficiency as the north-stars for their workforce. In their attempts to describe productivity therefore for a premium airline, efficiency metrics although important, but should hold lesser strategic relevance than responsiveness metrices in contrast with budget airlines for measuring their workforce.

Measurement: Choose the indicator that matters , focus on the “Key” in the Key Performance Indicator

The phrase KPI is widely used by people, but also often abused and misused. The cardinal mistake is in forgetting the word “Key” in the KPI. The art and science of measuring productivity is finding what would be that Key. In our attempts to chase mathematical elegance we end up prioritizing counting the trees while missing the sight of the forest ; lose the big picture while getting into unnecessary details.

Second key area where we often confuse is mixing up Productivity with Performance. Any performance analysis is a rear-view assessment of what has happened and how successful the actions were to bring the organisation (or team or individual) to the desired goals; productivity is more of a leading indicator and on the contrary, performance is a lagging one.

Instead of laboring over detailed modelling, statistical correlations of drivers of performance of workforce in the organization it makes a case for far leaner and more effective approach by identifying the leading indicators for each role and use them for productivity purpose. As a method therefore, it is recommended to list the different constituents’ roles in the organization, review their JDs and find for each such JD their respective “Key” leading indicators driving their performance.

To substantiate, consider Managers of a team. Your organization strategy may make it imperative for an identified group of Managers to have people development goals as the most strategic performance area – with that in mind something as simple as the effort spent on engaging their team members individually in 1:1 counselling could be the “Key” parameter for measuring their productivity. While all other BAU goals may be important, but people development goal may be the “Key” for their KPIs. This can be different for a different business or functional context, for example if Quality is the key for the operations team, in such cases metrics around Quality circles or the Kaizens driven could be the missing “Key.”

One may argue that there are quite different deliverables and complexities involving each role and narrow definition may not fully capture the essence of what people do in the organisation. There is merit in this argument, however, I recommend to exercise caution as this should not be mixed-up with Performance management. Narrowing measurement of your workforce productivity metrics to Key indices help to refocus to strategic alignment of workforce towards organization goals and individual deliverables and therefore help drive the desired velocity in reaching what is strategically relevant and urgent for the organization.

Execution: Avoid data obsession, developing actionable insights is more important than having lots of data.

Turn over to any conversation in today’s business context data is at the centre-stage. Plethora of new use cases are built upon multiple complex layers of data in an organization. As frontiers of technology expanding, we are resorting to consuming increased data for yet newer methods (Predictive analytics, Artificial Intelligence etc.) for solving our problems. Data has started back-bone of the organisations aspiring to benefit from the power of Digital.

However, in context of the human side of an organisation, it is the power of intuition that is missed. While rolling out a workforce productivity management initiative, it is often tempting to expand the scope to capturing a lot of data, beautifully designed dashboards with charts and templates.

I recently came across a biofeedback-based application powered by Artificial Intelligence for productivity. At first, the application was very impressive with a lot of charts, graphs, and visualizations of how an individual conducted their day, their emotional states, linking pulse rate and heart rates with attention and productivity. However, over a little while of using the application confusion and fatigue starts setting in with respect to its utility. All the data are good, but they do not add upto the purpose of an individual or an organization.

The metrics of productivity captured though not necessarily needs to be as elegant as the example of this biofeedback application, but they need to be more pragmatic in scope, relevant and actionable. Some of the data based objective discoveries of workforce capacity, skill deployment, burnout, workload variability, knowledge retention and knowledge utilisation are truly relevant for strategic planning and decision making.

We may access a lot of organization data, but there is a need to prioritize what data needs to be consumed and what is it which is most pertinent for managing the workforce. The idea here is to not micromanage with too many details but see workforce as a strategic asset to reach for the organization’s north star.