Investing in people to boost productivity

By Victoria Draudins

October 30, 2017

Facing the constraints of a mature economy, Australians are constantly searching for ways to improve productivity. For example, last year Victoria created a Jobs and Investment Panel to find ways to increase the state’s productivity and performance. But more on that in another article.

In the meantime, Harvard Business Review recently published an article by Bain & Company partner and leader of the management consultancy’s organisation practice, Eric Garton, which pinpointed three ways organisations can enhance productivity their workforces.

The same principles are extremely relevant for government as well; “perhaps even more so,” Garton points out,  given that agencies focus more on social goals and have less of a bottom-line accountability. In fact, he told The Mandarin, “It’s absolutely critical that government organisations find ways to make the most of their human capital given that they are growing as a percentage of the total workforce.”

Garton first examined the well-known relationship between productivity reinvestment and human capital — the thinking being that the more productive society is, the more it allows for business and government to invest in human capital. However, as the HBR article notes, this relationship seems to have broken down of late. Wages have been much more sluggish than expected in much of the Western world and indeed in Australia is causing Treasury and Reserve Bank officials to tear their hair out.

Garton poses the question: “Are we suffering from low productivity because we have under-invested in human capital? Or are we unable to invest in human capital because structural factors are permanently reducing productivity?”

He attributes low productivity to the former, which is good news because we can actually do something to address this issue. We can rectify, or at least improve upon this state of affairs, by investing in workers in three ways – through wages, time and energy. This then begs the following question in my mind: how does our public service stack up against these measures?

In fact, you may be surprised to find that not only is public sector employment rising much higher than private sector, public sector wages have been growing more strongly than private for around the last four years. But in any case, regardless of whether we’re speaking of public or private, paying higher wages isn’t a zero-sum activity, IE taking resources away from service provision and reallocating them to employees. In fact, the best organisations structured their approaches so that better experiences for citizens were reinforced by investments in human capital and vice versa.

For example, a study by Zeynep Ton at the MIT Sloan School of Management showed that companies that paid workers above market rates performed better in employee, customer and shareholder satisfaction. So while many agencies have been able to secure wage rises in a stagnant economy, structuring rises correctly is also necessary to create better performance. Although another benefit not discussed in the article is that the very act of raising wages to competitive levels is also beneficial (even required) to attract and retain talent, especially in areas suffering a paucity of supply like data science.

Second, time is often undervalued, forming a “shocking level of under-investment in human capital” according to Garton. From research, he found out that on average, managers have less than seven hours each week of uninterrupted time for deep thinking, with the rest eaten up by meetings, responding to emails, or working in short-burst 20 minute increments before being interrupted. This makes it difficult to focus on driving outcomes and potentially leading to burnout.

“All of the factors that create organisational drag inside of a for-profit entity are quite likely even more pronounced inside of a government institution,” Garton points out. As a solution, he therefore suggests valuing time more by treating hours like dollars and scheduling in time for reflection or instigating new work practices, like agile sprints or innovation labs. While these new ways of working are becoming increasingly common in government, I think I’d still be hard-pressed to find a public servant who didn’t think they had too many emails or attended too many meetings. It would be interesting to see what would happen if an agency decided to follow in the lead of Thierry Breton, CEO of the French IT company Atos Origin, who banned the use of emails in his 70,000 workforce company, to great laudation.

Lastly and possibly most importantly, organisations that create jobs and workplaces that inspire their employees act as a labour productivity multiplier. This is because inspired employees are twice as productive as satisfied employees, and as much as eight times as productive as dissatisfied employees. While the public service can attract a bad reputation for motivated employees, as one start-up founder once mentioned to me, some of the more interesting and impactful projects happen in government and agencies have a competitive advantage in attracting people who are inspired to work at places to help serve society in a meaningful way.

We cannot underestimate the necessity of maintaining investment in human capital, even as we increasingly focus more on technology to solve our problems in a do-more-with-less world. “It is still people that come up with the inspirational ideas and translate them into productivity-driving innovations,” Garton notes.

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