The Ongoing Productivity Debate

In my previous blog, I mentioned that productivity in Australia remains sluggish. There are various ideas as to why, and what we could do to improve performance. There are suggestions that traditional productivity analysis may track the wrong thing(s) – for example, output should not simply be measured against input hours, especially in light of technology advances such as cloud computing, AI, machine learning and AR/VR. There are even suggestions that rather than working a 5-day week (or longer), a four-day working week may actually result in better productivity outcomes – a situation we may be forced to embrace with increased automation.

Image Source: Wikimedia Commons

It’s been a number of years since I worked for a large organisation, but I get the sense that employees are still largely monitored by the number of hours they are “present” – i.e., on site, in the office, or logged in to the network. But I think we worked out some time ago that merely “turning up” is not a reliable measure of individual contribution, output or efficiency.

No doubt, the rhythm of the working day has changed – the “clock on/clock off” pattern is not what it was even when I first joined the workforce, where we still had strict core minimum hours (albeit with flexi-time and overtime).  So although many employees may feel like they are working longer hours (especially in the “always on” environment of e-mail, smart phones and remote working), I’m not sure how many of them would say they are working at optimum capacity or maximum efficiency.

For example, the amount of time employees spend on social media (the new smoko?) should not be ignored as a contributory factor in the lack of productivity gains. Yes, I know there are arguments for saying that giving employees access to Facebook et al can be beneficial in terms of research, training and development, networking, connecting with prospective customers and suppliers, and informally advocating for the companies they work for; plus, personal time spent on social media and the internet (e.g., booking a holiday) while at work may mean taking less actual time out of the office.

But let’s try to put this into perspective. With the amount of workplace technology employees have access to (plus the lowering costs of that technology), why are we still not experiencing corresponding productivity gains?

The first problem is poor deployment of that technology. How many times have you spoken to a call centre, only to be told “the system is slow today”, or worse, “the system won’t let me do that”? The second problem is poor training on the technology – if employees don’t have enough of a core understanding of the software and applications they are expected to use (I don’t even mean we all need to be coders or programmers – although they are core skills everyone will need to have in future), how will they be able to make best use of that technology? The third problem is poor alignment of technology – whether caused by legacy systems, so-called tech debt, or simply systems that do not talk to one another. I recently spent over 2 hours at my local bank trying to open a new term deposit – even though I have been a customer of the bank for more than 15 years, and have multiple products and accounts with this bank, I was told this particular product still runs on a standalone DOS platform, and the back-end is not integrated into the other customer information and account management platforms.

Finally, don’t get me started about the NBN, possibly one of the main hurdles to increased productivity for SMEs, freelancers and remote workers. In my inner-city area of Melbourne, I’ve now been told that I won’t be able to access NBN for at least another 15-18 months – much, much, much later than the original announcements. Meanwhile, since NBN launched, my neighbourhood has experienced higher density dwellings, more people working from home, more streaming and on-demand services, and more tech companies moving into the area. So legacy ADSL is being choked, and there is no improvement to existing infrastructure pending the NBN. It feels like I am in a Catch 22, and that the NBN has been over-sold, based on the feedback I read on social media and elsewhere. I’ve just come back from 2 weeks’ holiday in the South Island of New Zealand, and despite staying in some fairly remote areas, I generally enjoyed much faster internet than I get at home in Melbourne.

Next week: Startup Vic’s Impact Pitch Night






Why don’t we feel well off?

The past month has seen a number of reports on the current state of the Australian economy and global financial systems, 10 years after the GFC. The main thesis appears to be: if another crash is coming, can local markets cope, as an extended period of cheap credit and low inflation inevitably comes to an end. Combined with US-Sino trade wars, a softening housing market, and a sense of economic inertia, there is a feeling that Australians see themselves as worse off, despite some very strong economic data in recent weeks.*

Picture Source: Max Pixel

First, the positive news:

The unemployment rate continues to remain comparatively low, and overall job participation is high. This is reflected in higher tax receipts from both corporate profits and personal income. The RBA has kept interest rates low, and inflation remains relatively benign.

Recent data from Roy Morgan Research suggests that personal assets are growing faster than personal debt. Significantly, “average per capita net wealth, adjusted for inflation, is 30.5% higher than it was before the onset of the global financial crisis”.

So, if more people are in work, credit is still cheap, our assets have grown, and prices are stable, we should feel well off compared to the GFC, when interest rates and unemployment rates initially both went up.

Even higher energy bills (a major bone of contention with consumers) need to be assessed against lower costs of clothing, communications and many grocery items.

Second, the less positive news:

A combination of higher US interest rates, more expensive wholesale credit, and more stringent lending rules means that Australian borrowers are already being squeezed by higher mortgage rates and tougher loan to value thresholds. This could only get worse if there is a full-scale credit crunch.

Wage growth has stagnated, despite lower unemployment and higher participation rates. There is also a sense that we are working longer hours, although this is not as clear cut as there is also evidence we are also working fewer hours.

Regardless, Australian productivity output is considered to be sluggish, adding to the overall downward pressure on wages. (More on the productivity debate next week.)

More significantly, Roy Morgan Research has identified a growing wealth disparity based on asset distribution – but this may be a combination of changing earning, saving, investing and spending patterns. For example, if younger, would-be first-time home buyers feel priced out of the housing market, they may choose to invest in other assets, which may take longer to appreciate in value, but may not require as much upfront borrowing.

Third, preparing for a fall….

If a new market crash or a credit crunch comes along, how resilient is the economy, and how will people cope? Worryingly, fewer people are able to cope with unexpected expenses due to lower saving rates and maxed out credit cards. Over-leveraged companies and individuals will be hard pressed to meet their repayments or refinance their loans if interest rates rise steeply or lending standards tighten further.

Then there is the ageing population transitioning into retirement – baby-boomers who are “asset rich, but cash poor”. If they expected the equity in their homes and/or the balance in their superannuation accounts to fund their old age, they may be in for a shock if the housing bubble bursts and stock markets decline, especially if they are expected to live longer.

Finally, the RBA may have few options left in terms of interest rate settings, and a future government may be less wiling to spend its way out of a crisis (more Pink Batts and LCD TVs, anyone?). And while Australian companies may have strengthened their balance sheets since the GFC, overall levels of debt (here and overseas) could trigger increased rates of default.

*Postscript: if there was any further evidence required of the disconnect between the value of household assets (net worth) and a lack of feeling wealthy, this recently published Credit Suisse Global Wealth Report 2018 makes for some interesting analysis.

Next week: The Ongoing Productivity Debate




Why #collaboration is not simply “working together”

Along with productivity, innovation and employee engagement, collaboration is fast becoming the new mantra for businesses seeking growth and/or competitor advantage. But while collaboration can take many forms, the mere act of “working together” does not of itself lead to sustainable collaborative outcomes.

The theme for last week’s inaugural class of Melbourne’s Slow Business School was “How to collaborate effectively with other businesses”. Hosted by Carolyn Tate and facilitated by Richard Meredith, the class did not arrive at any prescriptive processes or techniques for collaboration. But, as one student wryly observed, our discussions took the form of a dance without choreography, which is perhaps the highest form of collaboration. However, we did identify a few core attributes without which successful collaboration would be unlikely, if not impossible:

  • Shared values among the players
  • Defined roles
  • Common purpose or vision
  • Mutual trust between all participants
  • Voluntary (i.e., parties choose to be here)
  • Equitability (e.g., recognition of each contribution)

I would also add that from my experience, collaboration does not happen unless there are opportunities for the participants to be co-located at least some of the time.

Which leads me to those activities that are NOT collaborations:

  • A routine or regular project (“BAU”)
  • Outsourcing
  • Commissioning
  • Remote teamwork
  • Shared services
  • Trading transactions

For example, if I commission an architect to design a house, even if I am intimately involved in all the detailed decisions about materials, specifications and aesthetic choices, it is not a collaboration – it’s a transaction between client and professional. However, if I was a heating engineer, and I used my knowledge and experience to work with my architect to come up with some new energy-saving solutions (that could be used in future projects) that would be a collaborative outcome.

Collaboration certainly cannot happen if organisations operate within silos, but nor does it come about by happenstance – there has to be a deliberate and conscious decision to collaborate, even if at the outset there is no specific product or solution in mind other than a desire to collaborate (“Let’s see where the dance takes us”).

One aspect of this approach is “co-creation”, where companies embed themselves in their client’s world to identify what problems they can work on to solve together. In this way, collaboration leads to the outcome. Clearly, to be effective, co-creation would be backed by some formal product development or service design techniques, agreed ground rules and even a game plan – whether that is a lean canvas business model methodology, an iterative prototyping process, or a defined supply chain framework.

In any collaboration, one party may try to force the pace, but if this is not reciprocated, the mutuality will be lost – it becomes just another transaction (or a series of mis-timed steps). The best partnerships and joint ventures are founded on the commonalities of purpose, process and participation. Further, a successful venture will know when it has run its course – even if this means having those “difficult conversations”, which the class felt were also a vital feature of the best collaborations.

By strange coincidence, the same day Slow Business School was in session, Deloitte Access Economics published a research report commissioned by Google Australia. It concluded that greater collaboration by Australian companies could be worth $46bn to the local economy, based on increased productivity and reduced costs/wastage. Although the report reads more as an OD approach to collaboration (linked to the productivity, employee engagement and innovation mantras) it nevertheless offers some empirical evidence that companies who get it right will see benefits across a range of KPIs. If nothing else, employees who are given more opportunity to collaborate will display greater job satisfaction (this is part of the philosophy behind etaskr, about which I have written before).

For me, there are a few interesting data points in the Deloitte report:

  1. While technology has been important in enabling increased collaboration, the right workplace culture, management structure and team members are seen as paramount.
  2. Although “shared electronic resources” were seen as the single most important tool for effective collaboration, “common areas for staff to socialise” was not far behind, and “more meeting rooms” scored higher than “open plan office”, while having more technology solutions (collaboration software, video conferencing facilities and social media) all rated lower.
  3. Finally, just over a third of respondents reported that “collaboration helps them work faster” (and nearly a fifth said “their work would be impossible without collaboration”), but nearly a quarter felt that collaboration meant their work took longer.

So, a paradoxical interpretation of the report could be:

  • fewer open plan offices (but more meeting rooms);
  • more technology (but not just productivity tools); and
  • more teamwork (but not at the expense of getting my own work done).

A final thought: If we think that the prerequisite for collaboration is the “willingness to co-operate”, then this can get murky, as participants will only be prepared to operate at the level of trading favours (and only because they’ve been told they have to play nicely) rather than entering into the venture with enthusiasm and without ulterior motives.

Portfolio, Portmanteau or Protean: what shape is your career?

In a previous article, I commented on the non-linear nature of career development in the Information Age, in response to changes brought about by new technology, market dynamics and demographic trends.

Following recent research and policy proposals on workforce flexibility and workplace productivity by the Australian Workforce and Productivity Agency and the Australian Industry Group it is clear that more than ever, employees must take more responsibility for managing their own career, and be willing to embrace life-long learning and skills re-training to navigate non-traditional career paths.

Whether it is the need to address the current shortage of IT skills, or the need to prepare for the post-mining boom, employers will have to re-think traditional approaches to hiring, engaging and performance managing the workforce; and employees will be obliged to re-think the shape of a traditional career trajectory to take advantage of new opportunities, and to remain relevant in the modern workplace.

There are essentially three career models emerging: Portfolio, Portmanteau and Protean.

Portfolio Career: this model is probably quite familiar to more mature workers, who have embarked on a mix of different career activities, either as a planned transition to retirement or as a means to re-enter the workforce; or by default in response to external changes in employment circumstances.

In this scenario, someone might work part-time in a paid job or consulting role, volunteer part-time for a not-for-profit organisation and hold 1 or 2 non-executive board positions. In my own case, for example, I consult to a number of corporate clients on a regular basis, I am a member of an advisory board for a family owned business, I am working on start-up projects, and I have also been known to do some broadcasting on community radio. My significant other, meanwhile, balances a part-time job in accounting with her practice as an artist and art teacher.

This portfolio career model is no longer the exclusive domain of baby-boomers – witness a former and much younger colleague of mine who undertakes a series of HR contract roles, while helping to build a new IT business with her partner. The portfolio career typically appeals to people who enjoy a variety of different activities, have a broader mix of skills and experience, or who wish to create a personal work-life balance.

Portmanteau Career: this is a term I have coined myself, in an attempt to describe a career model that applies to either meaning of “portmanteau” – a) a travelling case, or b) a compound word.

In the former meaning, a portmanteau career is one where an employee’s skills are easily transferable to another role, a different organization, or even a new industry – the skills are literally portable, and can be carried from place to place. In my own case, I once transitioned from law publishing to financial information services, even though at the time I knew little about the latter – it was the core skills around content development, product management and commercial publishing models that were applicable and relevant.

In the latter meaning, a portmanteau career can be a product of new and emerging technologies or sectors. For example, digital media and social networks (in themselves, “portmanteau” industries) are attracting people with a mix of IT and marketing skills, a combination that would have been highly unlikely 10-15 years ago.

Protean Career: the protean career model is not a new concept but has been brought into the spotlight by the current economic environment, a supply/demand mismatch in skills, and the challenge of employees taking responsibility for their own careers. This challenge especially applies to employees coming into the workplace for the first time – even recent graduates who have gravitated towards a specific career path or vocation based on their choice of courses and qualifications  must be cognizant of the fact that they need to maintain and update their skills and knowledge once they enter the workforce.

In my own case, after graduating in law, and following a career as a paralegal, I decided I wanted to make a move into publishing. I retrained as an editor, and then looked for roles where I could combine my academic qualification with my personal interest – resulting in a successful career in law publishing.

I would summarise the protean career model as one where the individual defines, manages and determines his or her own destiny, rather than letting a career “happen” to them. It requires a pro-active approach to career management, combined with continuous skills improvement, supported by formal and informal learning, a willingness to embrace flexibility, an appetite for taking informed risks – and all underpinned by heightened self-awareness gained through experience and enhanced personal development.

The person who understands and pursues a protean career will likely be creating their own work, managing their own work preferences, and making easier and happier work choices.

In each of these career models, employers must also be willing to embrace flexibility, to adopt creative solutions for hiring and engaging their workforce, and to resist traditional “square pegs for square holes” resourcing models. As the productivity and flexibility debate continues to gain traction, the opportunity to re-think traditional approaches to career development and career management should not be lost in the noise.