Wherever you go at this time of year, everyone seems to have just one thing on their mind: productivity metrics. Business leaders are reviewing how much they spent over the last year on investments that didn't pay off or tech that didn’t live up to the hype. Surprisingly, one of the biggest roadblocks to better productivity in the year ahead could be the drive for greater efficiency. Take a closer look into how the two are related and the single most effective tool for helping businesses doing more with less.
The productivity equation
Productivity = output volume/ input volume
That equation useful if you’re in manufacturing, but what does productivity mean for a service organization or an information worker?
Better productivity in the larger sense means completing more projects that generate revenue without using up more resources. Ideally, resource commitments should be trending downward as a percentage of the total revenue. This is not always about better profitability. Productivity improvements can free up time for a better quality of life or free up cognitive resources for a better quality in outputs.
The concept of efficiency is only superficially related to productivity.
The efficiency equation
Efficiency = maximum output price/ minimum input cost
Although outputs and inputs are in both equations, they two have radically different, often irreconcilable goals.
The goal of efficiency is to crank up profits by cutting the expenses to the bone. You can operate the leanest of startups and be a paragons of efficiency, but if you aren’t careful, your business can end up being supremely efficient but not very effective.
In contrast, productivity improvements make more things happen. Inputs are meant to increase, but not as fast as outputs. It’s not about cutting, it’s about amplification. Productivity is an essential precondition of growth.
In other words, you can’t cut your way to productivity.
Yet that is precisely what managers, particularly at large enterprises, have been trying to accomplish for decades. In an economic climate of low to zero growth, cutting costs by reducing headcount is one way to grow profits, but that’s not growing productivity.
As the price of manufactured goods have fallen, consumers have spent a larger portion of their incomes on expensive, labor-intensive options in every industry. A slow, individual pour-over coffee is perceived as having a higher value than coffee brewed in more efficient large batches. Another good example is the split in retail, where cost-conscious consumers seek out warehouse-like environments while boutique retailers can charge much higher premiums for personalized, high-touch shopping experiences.
Timothy Lee at Vox wrote, “Automation treats human labor as a cost to be reduced or eliminated. But this attitude misunderstands the value of the human workers in these industries. The opportunity to interact with other human beings is a big selling point for fancy restaurants, farmers’ markets, and in-person fitness classes.”
How can small companies take advantage of these trends and boost productivity without sending costs through the roof?
According to a recent report, the answer comes from more inspired employees.
The 2.25 worker mulitplier
Bain & Company’s research on workforce productivity and performance found that:
- Inspired employees produce up to 2.25 as much as satisfied employees
- Top companies in each industry are 40% more productive than the rest
- Greater productivity results in profits that are 30%–50% higher than competitors and more reliable growth rates
Businesses lose 20% of their productive capacity to “organizational drag,” which are processes that waste time and prevent workers from doing their jobs more efficiently.
The companies that will pull ahead in 2018 will be the ones that inspire employees to be more productive. Easier said than done, but there is a tool available to all businesses that can help. And it might be the only tool that matters.
The single source of growth
“Changes in technology are the only source of permanent increases in productivity."
That was one of the conclusions from “Productivity Growth in the 1990s,” published by The National Bureau of Economic Research. Other academics had attributed the sudden productivity increases of the era to bad productivity metric design or temporary market conditions, but these researcher found a positive correlation between better tech and more productive workflows.
Advanced technology changes the underlying assumptions of the workplace, replaces aging processes from the ground up and converts the impossible into the inevitable. You can’t reach that level of productivity with more skilled labor or lower supply costs.
The team productivity platform
Spoke Phone was built to do more than just function as a virtual PBX. It connects remote teams with advanced features that simplify problem-solving, deployed on the phones that your workers already know and love.
No IT maintenance, no additional hardware, no complexity.
Your employees will be inspired by the simplicity of the tech and you'll by inspired by paying far less for a more efficient phone system. The future of work is mobile and Spoke helps you get there first.
In a matter of minutes, you could be up and running on a solution built on the next generation of VoIP technology, with features like an AI auto-attendant, local numbers around the world, live-presence based call routing, high quality HD Voice, and call data to help you be more productive on the phone.
See for yourself what a more productive workforce can do for your business by arranging your own personal demo. We believe humans crave simple solutions, so we designed Spoke to simplify productivity.