From perks to productivity. Changing the conversation

 

What is Australia’s outlook for productivity growth? 

 

Over the last decade, focus on Australia’s productivity has faded from the headlines. There is little debate on how Australia improves the decline in real wages, living standards and the productivity of labour.  

 Instead, journalists meet the need to feed willing citizens fashionable and superficial news stories that grab short-term attention and meet the needs of the 24-hour news cycle. 

 

The same can be said for many organisations in Australia, which are focusing and responding to short-term issues.  There is a narrow focus on “perks” which will supposedly keep employees happy rather than a broader strategic focus on what must businesses do to improve workforce productivity.  

There are three reports that have hardly received any media attention that highlight productivity’s significance and impact on both businesses and everyday Australians. 

1. The Productivity Commission 5 yearly Australian report. It demonstrates how Australia’s productivity is progressively declining which will result in a stall or decline in living standards.
2. The IMF’s report showing that Australia’s growth rate this year is predicted to be 1.6% and next year 1.7%. This is far below historical standards.
3. The 2023 International Labor Organisation report states that in 2022, productivity slowed. It increased by only 0.5% which was before the onset of the Covid-19 pandemic. 

 

Why is productivity growth so important? The answer is simple. In the next 20 years Australia must double productivity growth to look after our “existing “population. This includes maintaining social services for the aged, sick, and disabled. 

The debate must rapidly change from perks to productivity. As a part of the productivity debate leaders need to ask different questions, like: 

 

What must we focus on to ensure a productive workforce in the new world of work? 

How do we eliminate the distractions that are reducing our focus? 

 

No single answer fits all, it needs to be dynamic, and specific to the industry and the organisation.  

 

What assumptions need to be challenged? 

1. It’s an employee’s market. 

There is an assumption that it is an employee’s market, and there are ever-increasing demands put on employers as they fear employees will leave for better terms and conditions. 

For example, when and where people work, being paid to come into the office, the expectation of meals, dry-cleaning and ever-increasing demands for variations on flexibility. 

As history tells us, overreliance on benefits can be a race to the bottom and doesn’t solve Australia’s declining productivity growth. 

This assumption, that it’s an employee’s market, must be challenged because: 

• • Real wages have declined for the first time in a century. 
  • The productivity report says we are likely to work longer for less. 
  • It is estimated within seven years 25% of workers will have to reskill for other occupations. 
  • Rapid increase in skilled migration. The Australian Government is increasing skilled migration. 400,000 people will have migrated to Australia by the end of this financial year and another 315,000 people will move here by the end of 2024. 

 

      2. Technology has not taken over jobs in the past and it won’t in the future. 

Irrespective of the Hype Cycle that generally overestimates the impact of new technologies, Chat GPT and similar generative artificial intelligence are game changers. 

McKinsey 2023 CEO Excellence Survey suggests that the impact of new and disruptive digital technologies cannot be underestimated and is a major concern of CEOs today. 

In May 2023, IBM announced they would be stopping or pausing hiring for roles that could be replaced by AI in the coming years. IBM has 260,000 employees and 7,800 are being paused. This would include HR, marking one of the most disruptive responses to rapidly advancing technologies like ChatGPT. 

Organizations are rapidly turning to technology in response to their inability to obtain staff after the Covid-19 Crisis. This is not uncommon as history demonstrates 12 to 24 months after a crisis automation accelerates.  

The difficulty is there is such demand for overseas technology the waiting list for many materials and machines is slowing down the progress that organizations are urgently trying to introduce. Billions of dollars have been spent on technology which will eventually arrive. 

This technological change is happening at warp speed. 

 

 What action can be taken? 

It is important to go back to basics and understand Basic Human Needs, as outlined by Maslow’s Hierarchy of Needs. Basic Human Needs that have evolved over the millennia have not changed with the advent of rapidly changing technologies. They may have adjusted but they have not changed. 

Employees still need to feel safe, connected, and valued. These basic needs must be provided to ensure employee productivity; however, how Basic needs have been traditionally met may need to be reconfigured using Innovating thinking in the new world of work. This is what I call applying B@I Thinking to help improve employee productivity. 

 

Basic Need of Financial Security 

A synopsis of how PayPal, combined B@I Thinking. 

In 2015, PayPal and CEO Dan Schulman assessed the financial security of their entry-level and frontline employees. They found that their own employees were struggling financially, and that was a major reason for poor mental health. 65% of respondents to a survey reported that they ran out of money between paychecks and only had 4 to 6% of their disposable income after all bills were paid. This is happening in Australia. 

According to research reported in the HBR, a cash strapped employee is 5.8 times more likely to miss deadlines and 4.9 times more likely to produce lower quality work. 

Over the next six months, PayPal created a comprehensive program to improve employees’ financial health, which included reducing healthcare costs, granting stock awards to all employees regardless of level or tenure, raising wages where appropriate, and providing access to personal financial education. By understanding basic human needs and not being constrained by conventional pay scales, PayPal has increased employee disposable income by 15 to 34%. Therefore, PayPal has lower employee turnover, higher engagement, and lower training costs. 

Instead of providing generic mental health support, they went to the root cause of the problem to provide a successful B@I solution for both employer and employee.  

 

Basic Need for Human Connection 

 

Research  

Dan Schawbel is a market researcher on workplace intelligence and his pre-covid findings suggested that loneliness and isolation had the same health impact as smoking 15 cigarettes per day. The evidence was so compelling that Apple actively moved people back to the office and built a space that could hold 16,000 employees. 

Post covid, HBR research showed that people were finding new ways to find human connections rather than traditional workplace relationships. They were going to exercise, walking the dog, going to coffee shops etc. In addition, the connections they were forming at work were specific to the teams they were involved with. Consequently, this narrow sense of connection reduced the overall connection to the organization itself. 

Consequently, 1 in 6 employees regarded their employment as a financial transaction that could be sold to the highest bidder. This is a problem that needs to be rethought when there is a war on talent. 

The question is how do organizations create meaningful connections that keep people engaged as they navigate the unknowns of the Post Covid-19 era? 

Adam Grant, a Harvard Psychology Professor, has an Innovative solution while meeting the Basic Need to connect. 

Fundamentally, jobs must be redesigned. It’s not a one size fits all.  We need to stop thinking about how much time people spend in the office, instead we must ask, what jobs need what connectivity with others to maintain engagement. 

For example, Grant uses the example of a gymnast. A gymnast works on her own with a coach supporting and encouraging her. They go to tournaments to connect and compete. 

Dan Schawbel’s research says that when people work on their own it is important to have a good coach relationship with their manager and 6/12 monthly face to face conferences that are engaging and informative. Asking them to come into the office can result in resentment and they may leave the organization to get their specific needs for connection met. 

If your job is a relay runner. You need to run your race to hand to baton to the next team player. You work individually for the good of the team. The design of this job will depend on how and when the team needs to connect to maintain maximum productivity. 

If your job is a football player, you must operate and practice as a team. The job design is about everyone working physically together to get a winning outcome. There is a need to know what other teams in the competition are doing to provide maximum effectiveness. The need to connect with other teams often comes about at sporting events or in the business settings face to face conferences. 

Irrespective of where you work, connectiveness is found through the relationship you form with digital technology. The future of work is phygital (physical and digital) where jobs are designed having a physical person working with digital technology.  

Don’t underestimate how people can connect with their own personal, bot or robot. IBM has already launched Microsoft 360 Copilot which metaphorically works alongside the employee, as it is embedded in the Microsoft 365 apps which are used every day like Word, Excel, PowerPoint, Outlook, Teams and more. 

Its intent is to improve employee productivity through working with your personal technology and perhaps the connectedness that provides. It is anticipated that by 2030 45% of jobs will be human and technology working together. 

In Japan, as the population is aging and young men can’t find suitable female partners, connectedness is being found in other ways. A Basic Need meets an Innovative solution. The robot who becomes my friend, lover, or companion. 

 

 

Basic Need of Self Esteem. 

The need for self-esteem, which includes confidence, achievement, respect of others, 

in the future world of work is about having the skills required to do todays job and learning the skills for tomorrow’s job. 

 

Accenture Case Study. 

Accenture is a professional services company specializing in information technology services and consulting. It has 750,000 employees around the world. Traditionally Accenture 

recruited the best minds from the best universities and did not employ apprentices. After evaluating the data, they realized that 48% of employees don’t need a four-year degree. In 2023, they now employ 2,000 apprentices and ensure their ongoing skills development. 

Employee’ skills are regularly evaluated to identify what skills is required in the future. They use technology to identify the gaps both in the company and in the market and then train and recruit employees appropriately. They spend a billion dollars a year and each employee have an average of 40 hours training per year. 

The types of new technologies to ascertain this information include Work2Vec. This identifies what activities, skills and wages are needed now and the future by industry. It reviews all jobs and resumes posted on the internet and then puts them into job categories or vectors. Its intent is to identify jobs that are needed now and into the future and identify the gaps. Thus, by rethinking status, and looking at the situation differently they applied B@I thinking to everyone’s advantage. 

 

What are the critical questions to engage B@I thinking? 

The types of questions I ask leaders when facilitating strategy workshops for Executive and HR teams are: 

1.How do you as leaders ensure a productive workforce in the new world of work? 

2.How as leaders do you apply B@I thinking when designing solutions? 

 

Navigating the future is about asking probing questions not accepting the latest media grab. As Eugene Jonesco’s famous quote says, “It is not the answer that enlightens but the question”. 

There is much more data, information and examples of B@I Thinking.This article is an overview, however I hope it gives you some insights into the importance of focusing on productivity and how B&I Thinking can add real value. 

If you want to someone to help provide data, facilitate, debate, and who can ask provocative and reflective questions when designing your HR strategy or to facilitate an executive strategy meeting, please don’t hesitate to contact me. In addition, I work with senior executives as an executive coach helping them achieve their objectives and challenge their thinking. For references, please see my website. 

 

Jenny Brice 

 

https://jennybrice.com.au 

0418 550 622.