Why is Workforce Productivity Falling? What Can We Do About?
Businesses are facing many challenges including Automation, Ageing Population, Reduction in Government Spending and Staff Retention. A critical issue facing nearly all organisations in advanced economies is falling productivity of the workforce. It’s been widely reported over recent years that productivity growth has stagnated and that this poses a significant obstacle to business growth and success. In this blog, we will delve into the reasons behind this decline and explore business level strategies that can be adopted to improve productivity.
Understanding the Causes
A recent article by Professor Stephen King on the Conversation titled “Yes, Australian businesses have become less dynamic. But there are bigger reasons for our sliding productivity growth” challenges the current narrative put forward by prominent economists. According to King the evidence for this explanation is ambiguous at best and focussing policy on addressing is unlikely to improve productivity. Instead, King proposes that the reasons for declining productivity are changing demographics, international trade patterns and the continued shift towards service-based economies. King cites the Australian Government’s Productivity Commission’s recent Advancing Prosperity Report as a roadmap for actually boosting productivity with it’s focus on education, technology, regulation at the societal level. But what can business leaders do about productivity at the organisational and team level?
The Power of Leadership
Firstly, Leaders can focus on improving their own leadership styles and skills. Leaders must inspire and empower their teams, encouraging them to dream big and realise their potential. By setting clear goals, providing mentoring, and encouraging creativity and innovation, Leaders can help employees feel engaged and motivated to contribute their best efforts. Leaders must invest in continued development to ensure they keep up to date with the latest developments and enhance our capacity to drive productivity improvements.
Investing in Workforce Development
Organisations must recognise the importance of a skilled and adaptable workforce. Leaders and organisations must prioritise ongoing training and development programs, with a focus on life-long learning. Employees equipped with the right knowledge, skills, and competencies are more likely to embrace change and adapt to evolving business needs. For engineers the development of soft skills in the areas of communication, flexibility and resilience could be critical in maintaining motivation and engagement through difficult projects or life events. Whatever the training focus, investment in workforce development can improve engagement, unlock hidden potential, and boost productivity.
Embracing Technology
Stephen King’s article makes specific mention of low rates of technology adoption by Australian businesses as a potential reason for falling productivity. If organisations are to reverse the productivity trends it is imperative that they embrace new technologies as enablers for efficiency and innovation. Task automation, generative artificial intelligence and data analytics are just a few examples of technologies that can be integrated into engineering organisations to streamline processes, automate low value tasks, and enhance productivity. By embracing technology intelligently and providing the necessary training and support to employees, businesses can unlock new levels of efficiency and output.
While falling workforce productivity poses significant challenges for businesses and society at large, it also presents an opportunity for unique growth and improvement. Businesses that address the causes behind declining productivity by investing in leadership development, prioritizing workforce training, and leveraging technology can-not only improve profitability but position themselves as industry leaders and employers of choice.
Recommendations in practice
What are we doing at TMY Advisory to improve productivity? Currently, our Director is learning the Python Programming language to enable development of business specific programs focussed on automation of low value tasks and improve data analytics.
We are also looking to use generative ai models trained our business data to streamline the creation of letters, reports, proposals and the like. There are privacy considerations to contend with, which must be resolved before moving forward with this initiative.
