Perspectives on Productivity

8/13/2019 Perspectives on Productivity

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iOpener Institute for People and Performance

The Old Bakehouse 2 South Parade Oxford OX2 7JL UK

T + 44 (0) 1865 511522 F +44 (0) 1865 552918 E [email protected]

iOpener Institute 2013

www.iopenerinstitute.com

Perspectives on Productivity

A study of current employee productivity levels, by sector and country of work

iOpener Institute for People and Performance, June 2013 Analysis of over 30,000 management interviews has revealed wide disparities of productivity

around the world and between sectors

Productivity was measured as time on task, with an all-sectors average of 58.8% A strong correlation in the sector analysis was observed between Happiness at Work, energy and

engagement levels, and productivity (time on task)

Food Services, Retail, Healthcare/Medical, Education and Consulting organizations emerged as themost productive sectors

Least productive sectors were Pharmaceutical/Chemical, Internet companies, Utilities, Real Estateand Biotech

Mexico, South Africa, Colombia, Denmark, and the Netherlands were the top countries forpersonal productivity

Germany, Argentina, Japan, the Czech Republic and Portugal populated the bottom of the personalproductivity table

Geographical differencescomparing each end of the tablemay be greatly affected by economiccircumstances, or local labor regulation

However, the scores in this analysis give productivity improvement initiatives in any given sector orcountry a contextual starting point, to ensure they are neither unambitious nor unrealistic


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Introduction

In times of austerity and sluggish economic trends, all management eyes turn to productivity. The cry goes

up, If we can get our people engaged, energized, happy and most of all productive, then we can do more

with the same. The current markets, which have slowed in West and East alike, certainly focus the mind on

productivity improvement, yet it is a critical subject whether circumstances are difficult or dynamic.

Productivity leads to profitability in organizations large and small.

Governments have also now started to look more seriously at economic productivity measures, with official

statistics regularly published. The UKs Office of National Statistics, for instance, publishes an international

productivity index, covering the G7. Country comparisons aside, perhaps the most interesting output from

this study is the levels of productivity progress it reveals over the last ten years. This comes out at less

than one index point per year across the G7. Given the straightened economic conditions prevailing across

that ten year period, then such economic productivity progress is disappointing and needs to be seriously

addressed by governments alike, if the new world economic order is to be successfully managed into

renewed rates of growth. One essential building block for economic productivity has to be personal

productivity, the subject of this report. While there are many individual instances of productivity

improvement, especially in corporations that have truly enabled staff to do more with less, the motivators

behind personal productivity need to be understood in order to actively encourage its growth.

Broad correlations between Happiness at Work and productivity are attested by numerous sources. Some

governments have even started to compile Happiness indices, in recognition of this correlation. In somevery wide ranging global studies, this has been focused on the connection between improved work-life

balance and productivity at work. However, simply to recognise this link between happiness and

productivity does not provide actionable insights. In other words, a granular method of recognizing the

components of Happiness at Work is required in order to create a strategy, a plan, and a prioritized order of

actions to improve Happiness at Work and thereby enhance an organizations people productivity. People

productivity, if well managed, has been shown in case studies to result in improved business performance

and is critical to organizational and therefore economic health.


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The research

To provide a viable data basis for happiness-productivity analysis and strategy development, the iOpener

Institute has gathered over 30,000 management and employee interviews, tracking those granular

components of Happiness at Work, alongside productivity measures. This study looks specifically at that

key business outputproductivityand relates it to overarching factors such as feelings of happiness,

energy levels and engagement in order to understand the relationship between them in different countries

and business sectors.

The purpose of publishing country and sector productivity scores is to give management a context in which

to develop their people productivity initiatives, so that they are neither unambitious, nor unrealistic.

Looking first at the iOpener Institute analysis sector by sector, a clear relationship emerges between

happiness, energy levels and engagement, and hard personal productivity.

Productivity is measured by peoples time on task at work. This indicator shows the time that business

people are actively producing outputs that are key to their role, or otherwise put, the outputs that make a

tangible contribution to their organization achieving its hard business goals. The international average for

time on task comes in at 58.8%.


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Productivity by sector

To understand the differences between business sectors, the iOpener Institute is publishing statistics on

individual productivity (% time on task) and compares this to expressed feelings of Happiness at Work,

energy levels in ones job, and engagement with ones professional duties.

At the top of the table for productivity were Food Services, Retail, Healthcare/Medical, Education and

Consultancy. In all of these sectors bar Retail, happiness, energy levels and engagement also presented a

score strongly above average, indicating a strong correlation.

A similar picture emerged at the other end of the spectrum, with the bottom five for productivity being

revealed as Pharmaceuticals/Chemicals, Internet businesses, Utilities, Real Estate and Biotech. An equally

strong relationship with happiness, energy levels and engagement was seen in this lowest scoring cohort.

The score tables are shown in Figure 1.

Looking at sectors with high productivity ratings, Food Services surprisingly comes topsurprising in that

the catering industries do not have a reputation for high pay or employee enthusiasm. This study would

tend therefore to reject that received wisdom, given that Food Services firms not only report high

productivity, but also present top rankings for happiness, engagement and energy levels. This would

suggest that the Food Services sector has been quietly implementing effective strategies to boost employee

happiness and productivity, but has been little recognized for it. This would also appear to be true of the

retail sector, also little recognized for its successful employee management strategies.

An interesting contrast appears between Healthcare and Medical firms and the Biotech industry,

respectively in the top and bottom ends of our table. While this contrast pays testimony to the

effectiveness of employee productivity strategies in the health and medical products and services

industries, it also raises concern that Biotech firms are neglecting employee issues. Biotech respondents

score highly for the positive impact on the world of their job and their industry, but also are one of the

segments most likely to want to leave my job. Considering that the Biotechnology segment is growing

very fast,1and the majority of new drugs are biotech in origin, it may be that soaring growth is blinding the

sector to the importance of employee feelings of happiness leading to talent retention for its longer-term

future.

It is also interesting to see Education scoring highlynot just a factor of the imposed organization of an

educational environment, but also giving the lie to any received wisdom about poor personal productivity

amongst teachers. Official sources in the UK,2for instance, note that although productivity did dip in the

education sector in 2007 and 2008, it has since risen steadily from that point.

1Yahoo Finance, Biotech Industry Skyrockets in 2012, 3 Jan 20132ONS, Estimates of Productivity - Education


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Industry SectorTime on

Task

Time

Happy

Time

Engaged

Time

Energized

Food Service 66.2% 51.0% 56.6% 48.5%

Retail 64.3% 42.1% 51.4% 41.9%

Healthcare / Medical 64.1% 46.7% 55.0% 43.9%

Education 63.0% 46.2% 56.4% 44.9%

Consulting 62.4% 49.2% 56.8% 47.5%

Mining 62.1% 49.0% 51.4% 47.2%

Hotels 61.8% 41.2% 51.6% 40.0%

Transportation / Distribution 61.4% 44.3% 52.4% 43.3%

Agriculture / Forestry / Fishing 61.3% 44.0% 53.2% 43.9%

Entertainment / Recreation 61.0% 45.6% 50.4% 42.4%

Marketing / Market Research / PR 60.9% 39.1% 47.1% 36.6%Automotive / Aerospace 60.4% 42.7% 52.8% 41.1%

Accountancy 59.9% 35.7% 45.5% 33.6%

Wholesale 59.7% 39.1% 48.5% 39.4%

Computers (Hardware, Desktop

Software) 59.5% 42.0% 48.9% 40.6%

Legal 59.0% 35.9% 46.0% 34.9%

Telecommunications 58.9% 43.8% 49.3% 41.5%

Media / Publishing 58.2% 38.2% 45.7% 34.4%

Research / Science 58.1% 37.8% 50.3% 35.8%

Civil Engineering / Architecture 57.7% 38.3% 47.3% 36.5%Not -for-Profit 57.6% 42.2% 49.9% 38.5%

Finance / Banking / Insurance 57.3% 37.8% 45.8% 36.3%

Manufacturing 57.1% 38.8% 47.2% 37.6%

Advertising 56.9% 38.2% 45.2% 34.9%

Construction 56.8% 40.5% 47.9% 39.7%

Pharmaceutical / Chemical 56.6% 38.9% 47.8% 37.3%

Internet 55.7% 38.5% 46.0% 37.0%

Utilities 55.3% 37.3% 45.4% 35.3%

Real Estate 54.8% 40.3% 47.5% 36.4%

Biotechnology 53.2% 39.0% 41.8% 32.7%


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Real Estate firms stand out at the bottom end of the table as scoring low on productivity, similar to Biotech.

The financial markets crisis, and its aftermath, hit the commercial property sector extremely hard, with

chartered surveyors encountering levels of employment volatility that had not been seen in decades. Third

party research has shown that factors such as job security are becoming more important than salary

where average reward is, in any case, actually falling.3 In this atmosphere, attention to employee and fee-

earner happiness and satisfaction at work is likely to be fundamental in attracting and keeping talent.

Also surprisingly low for productivity are the Internet industries, darlings of economies and governments

the world over. Low productivity in the Internet industries may again be a factor of rapid growth and

soaring demand. Supply-side firms are able, even in a period of austerity, to call the shots in the face of

higher demand than the market can satisfy. As such, the commercial pressure to squeeze productivity is

less compelling and urgent than in other spheres. This may be exacerbated by the fact that many web-

based corporate projects are presented as spend-to-save implementations, taking the focus off theabsolute project costs (and therefore productivity pressures). Employees are no doubt aware of the value

of their skillsets in a rapidly growing market, and may therefore be less inclined to work more efficiently

and effectively. However, our study shows that scores for happiness, energy levels and engagement are

also very low, implying that Internet firms may be ignoring employee motivation and well-being at their

peril, and possibly storing up commercial sustainability issues for the future in a sector where remote

working and freelance employment are more the norm than elsewhere.

Although not in the bottom five sectors, it is very surprising to see the Advertising industry scoring so low

for productivity, especially given that it is such a popular area of employment and is so highly competitive.

The sector is going through major and rapid change, coping with the inexorable drift from traditional to

digital media consumption. According to official sources, outdoor, press and cinema advertising revenues

will fall in 2013; TV and Radio will grow at above the rate of inflation; and online will grow by almost 10%.4

This major flux in the industry poses real problems of talent attraction and appropriate talent retention. By

definition, digital skills will tend to be most prevalent in the Gen Y digital native cohort, yet they are also

the least likely to be motivated by the traditional attractors of money and position. It is also possible that a

skills imbalance between the existing workforce and the current demand from clients, is affecting current

employees productivity. Moreover, that phenomenon may also be affecting the likelihood of appropriate

top talent to staythe sector has the second highest propensity for staff to quit their job.

3RICS, Rewards and Attitudes Survey, 20124Advertising Association/WARC, Forecast, 16 Jan 2013


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Country Comparisons

Top countries of work for productivity, scoring more than 10% over the average, brings in winners from

Latin America (Mexico, Colombia), South Africa and Northern Europe (Netherlands, Denmark).

Country of WorkProductivity

(Time on Task)

Mexico 73.2%

South Africa 66.2%

Colombia 66.2%

Denmark 65.6%

Netherlands 65.0%

Australia 63.3%

Turkey 60.6%

Norway 60.1%

Italy 59.2%

Sweden 59.1%

Philippines 59.1%

Ireland 58.1%

USA 57.7%

UK 57.6%

Canada 57.6%

Romania 56.8%

Israel 56.6%

South Korea 56.6%UAE 56.5%

Spain 56.4%

Egypt 56.3%

Malaysia 54.9%

China 54.6%

New Zealand 54.4%

Singapore 54.3%

Switzerland 54.2%

India 53.4%

Belgium 52.9%

France 50.8%Poland 50.4%

Russia 49.7%

Austria 48.9%

Germany 46.8%

Argentina 46.3%

Japan 44.7%

Czech Republic 44.5%

Portugal 43.3%


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Mexicos economy has been growing at almost 4% per year for the last two years, despite being closely

linked to the US economy (and having recently had the blip of a low growth quarter) and this economic

buoyancy must certainly be contributing to management motivation. However, it is doubly encouraging to

see that Mexican firms are focusing on employee engagement and happiness to ensure high productivity

levels, and are thereby riding the crest of their current economic wave. A similar positive attitude to

productivity through engagement and happiness seems to be the case in Colombia, too, where 2012 turned

in 4% of GDP growth. South African personal productivity also makes sense in the light of GDP growth

forecasts of around 2.5% this year, rising to well over 3.5% in 2015.

Finally, the small but vibrant Northern European economies of Netherlands and Denmark are known for

their attention to work-life balance and flexible working practices, combined with a highly entrepreneurial

work ethic.

As a footnote, although just outside the top five in our table, Australia has escaped being affected by the

financial markets crisis and global economic slowdown, with 3-4% annual GDP growth rates being the

norm. This country is, however, very much plugged into the Far Eastern growth economies, always with an

eye to developments in its giant neighbor China. The regional economic volatility induced by a booming

China and a stagnant Japan may well have encouraged Australian companies to focus on productivity in the

present, given the uncertainty of the regional future.

At the other end of the scale, we find Germanya surprisingly low score for the most successful exporter

in Europe. Interestingly, people working in Germany also perceive themselves to be considerably less

effective at their job than in other countries. It may well be that strictpossibly restrictivelabor laws

and regulations in Germany are obstructing national productivity, especially given that four of the Five Cs

in Germany (Contribution, Culture, Commitment and Confidence) score above the average, with only

Conviction coming in slightly under-average. iOpener analysis has shown that the 5Cs form an ecosystem

which works together to drive performance. When one starts to fall, the others will become unstable in

turn. But when individuals, teams or organizations have high levels of all the 5Cs, coupled with Trust,

Recognition and Pride, then they will perform at their best whatever happens.

Japan continues to labor under the persistent deflationary and stagnating economic circumstances induced

by its own banking crisis of the 1990s, and any productivity improvement strategies need to take account ofalmost two decades of an economically depressing environment. Argentina is suffering (compared to its

high growth neighbors) from high levels of state participation in business, high taxes and ineffective

regulation. Portugals financial system continues to teeter on the brink of disaster. Russia is polarized

between rich and poor, and has been seen to have a sometimes unreliable legislaturecreating particular

difficulties for people in business. And the Czech Republic has proven to be heavily dependent on its

Western Europe export markets, experiencing a slump since 2009. As with the Germans, the Czechs score

highly for motivation, commitment and happiness at work, implying that it may be regulation and broader

economic circumstance that are hitting productivity levels.


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Documents

Perspectives on Productivity