Productivity metrics were essential 100 years ago, during the manufacturing age. At that time, organizations measured success with metrics like hours worked, revenue per employee, and machine output. But now in the Fourth Industrial Revolution — the next age of technology and innovation — growth drivers are human-centric. To measure productivity, organizations need a new mindset that places a spotlight on employee engagement.
The Problem With Productivity
According to Deloitte, despite technology advances over the past few decades, labor productivity has declined in the U.S., U.K., and Europe. These statistics don’t seem right. Isn’t technology supposed to make us more productive? Yet, the findings are correct. Even in the first quarter of 2023, U.S. work productivity fell 2.1%, the lowest rate since 1871.
What’s the problem? It may be less about workforce behavior and more about metrics themselves. Here’s why:
- Productivity metrics are designed for machines and manufacturing.
- As a primary measure, they can be short-term and narrow, so they miss the bigger picture.
- Increased output doesn’t mean better results.
- These metrics don’t reveal the “why” behind the numbers.
- Emphasizing productivity may undermine output, rather than optimize it.
- Employees may spend too much time on “performative work” that only appears to be productive. The Deloitte study found that 32% of employee time fits into this category.
- Productivity data may exclude contractors, service providers, and other non-employee contributors.
- These metrics overlook employee wellbeing, so they don’t account for burnout or turnover issues.
- Soft skills are ignored. This includes efforts involving creativity, leadership, and adaptability.
- Today’s businesses are judged through a lens of environmental and social impact, diversity, and sustainability.
What’s Wrong With This Measurement Picture?
Although quantitative productivity metrics track activity, they can miss where much of it happens. What if we automate repetitive tasks so humans can solve problems? How can we measure that?
Plus, these measures don’t say anything about whether productivity actions are the right moves, or whether they’ll deliver long-term revenue. For instance, imagine the numbers say we served 300 customers last month. But are they satisfied? Will they return?
Or what if we produced 3,000 units last month? This brings us to an important point about the role of production team leaders. What about quality? Did quality slip because leaders emphasized volume targets above all else? And what about opportunity cost? Did the focus on production output stifle a team leader’s idea for a new product that could have driven higher sales?
Focusing on quality and outcomes that generate income takes engaged, enthusiastic employees. For example, if the same production team leader felt more valued, would she have pushed harder to win approval for her idea instead of merely meeting productivity targets? Questions like this are important to keep in mind. After all, motivated, engaged employees are naturally more innovative and productive.
What To Do?
It’s time to shift from strictly measuring productivity to a more holistic approach. Rather than concentrating on production outputs, we need to focus on human outcomes and measures of success. Employee engagement is a crucial part of this. Outcomes are about value, quality, and results. These can include customer retention figures or growth through innovations. Also, the increasing emphasis on measuring environmental, social, and governance impacts means that productive companies must think differently.
In 2022, Microsoft analyzed surveys from more than 3 million employees at 200 companies. Results revealed that companies with the most engaged employees outperformed the S&P 500. Notably, each additional point of engagement directly correlated with a $46,511 difference in market capitalization per employee.
Engaging Employees for Organizational Sustainability
But what is employee engagement, exactly? It’s the emotional commitment and connection employees have to their work, team, and organization. Engagement is enthusiasm, active contribution, and going above and beyond. It can be characterized by job satisfaction, a sense of purpose, and a desire to achieve company goals.
For frontline employees, in particular, the relationship between engagement and business outcomes is significant. Employees who directly interact with customers, products, and services compose 80% of the global workforce. These frontline employees influence customer satisfaction, retention, product quality, innovation, and reputation. So naturally, improving frontline employee engagement can improve business outcomes and sustain growth. In fact, research says an engaged workforce can increase profitability by as much as 21%.
How to Elevate Engagement
There are many ways to cultivate employee engagement. The most effective approaches usually involve multifaceted strategies and initiatives that speak to diverse workforce interests and needs. Start here:
1. Adopt a human-centered mindset
Engagement doesn’t occur without the right intention and environment. Research says more than 80% of employees want to be seen as a person rather than an employee. However, only 45% believe their company sees them that way. This is where a supportive culture can make a measurable difference. It’s vital to treat employees as humans and empower them to perform successfully.
2. Emphasize internal communication
Clear, two-way communication is part of a human-centered workplace. Its importance can’t be understated. Open communication fosters engagement by creating a sense of belonging, empowerment, and shared business goals. It also tells employees that every voice matters and everyone is heard. Team meetings, feedback sessions, collaborative work processes, and platforms for sharing ideas all can help employees feel valued.
3. Cultivate an environment of community and recognition
Recognition and a sense of community go hand in hand. To build morale, recognition from leaders is essential, but peer recognition can be just as powerful. When colleagues appreciate and acknowledge our hard work and contributions, we become even more motivated to perform well.
4. Invest in skill development and career growth
Most companies already offer employees opportunities to learn new skills and move forward in their careers. However, professional development is even more important in today’s rapidly changing world. When employers invest in continuous upskilling, reskilling and individual growth, it demonstrates a commitment to everyone’s long-term success.
5. Empower leaders to serve as a guiding force
Leadership by example is indispensable in creating a culture of engagement. To achieve measurable organizational success, leaders must communicate, empower, inspire, advise, support, recognize, and follow through with inclusive management methods and processes. This not only requires sufficient capability and capacity, but also a top-down organizational commitment to help leaders make it work.
6. Harness technology to boost human performance
Technology can enhance the work of frontline employees. New technologies can automate repetitive tasks to reduce monotony, release time for human problem-solving, and improve innovation. User-friendly tools and apps can reduce stress. Digital scheduling platforms, employee engagement platforms, mobile apps for on-the-job support, and gamified training — all can make work engaging, enjoyable, efficient, and effective.
Frontline employees aren’t likely to be as fearful about technology replacing their roles if they can take advantage of new tools that help them work better. Plus, technology can help drive a culture of engagement where human outcomes improve.
7. Implement relevant frontline workforce metrics
Although traditional productivity metrics may seem outdated, the concept of metrics remains relevant. However, today’s employers need metrics that better assess frontline workforce engagement by blending both qualitative and quantitative methods. Also, it’s important to distinguish between employee engagement and satisfaction, recognizing that individuals can be satisfied without being fully engaged.
To accurately gauge engagement, it helps to rely on a combination of observational and survey-based metrics. Useful survey-based metrics include employee satisfaction and net promoter scores. For viable observational metrics, consider tracking retention rates, turnover, absenteeism, and instances of peer recognition.
With this comprehensive approach, leaders gain deeper insights into the dynamics of workforce engagement levels, and they can adjust strategies and management methods accordingly.
New Business Success Measures
Productivity remains essential for every industry. However, we can achieve it more effectively by stepping away from activity-counting exercises.
What’s the secret? Build a human-centered environment where employees feel welcomed to engage, equipped to solve problems, and empowered to perform their best. Aim for a multi-faceted strategy based on leadership, communication, and processes that encourage and celebrate participation and innovation. This can inspire the kind of engagement that is measurable both qualitatively and quantitatively.
Ideally, employee engagement should be part of a full suite of performance measures that drive operational success and long-term sustainability. These measures include revenue and profit, targeted KPIs, customer satisfaction, and market share. They should also cover project and product ROI, cash flow and operating costs, productivity, and engagement. In combination, this kind of comprehensive analysis helps leaders make better-informed decisions that improve frontline workforce engagement while also achieving stronger business results.
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