How to Fix Declining Global Productivity

While the world's workplace has been going through extraordinary historical change, the practice of management has been stuck in time for more than 30 years.

The practice of management has fallen behind how people work and live and want to experience their lives. We need to adapt.

To better understand this situation, Gallup analysts reviewed everything we could find across almost all leading institutions and management literature -- as well as our own data from more than 30 years of U.S. and global workplace tracking.

Our work has included tens of millions of in-depth interviews with employees and managers across 160 countries.

We've conducted in-depth roundtable interviews with CHROs from 300 of the world's largest organizations.

Our analysis also included interviews with several of the world's pre-eminent economists.

Gallup concludes that the world's most serious, short-term, five- to 10-year problem is declining economic dynamism and declining productivity (GDP per capita).

We also conclude that these can be fixed just as surely as lean management and Six Sigma once fixed U.S. and global production quality.

This time the defects that need to be eliminated aren't failures of processes but rather failures in maximizing human potential.

The world's most serious, short-term, five- to 10-year problem is declining economic dynamism and declining productivity.

Gallup finds declining economic dynamism and productivity can be fixed not by central-government politics and policies but by CEOs and CHROs. They can be fixed by the private sector -- by the people who lead the world's 10,000 largest organizations.

American business should play a big role. According to the U.S. Census Bureau, there are roughly 6 million firms in the U.S. Of the 6 million, 4 million have four or fewer employees. These are mom-and-pop shops.

So that leaves only 2 million small, medium and large businesses in the country. They are made up of 1 million firms with five to nine employees; 600,000 firms with 10 to 19 employees; and 500,000 firms with 20 to 99 employees. There are only 90,000 businesses in America with 100 to 499 employees, and about 18,000 organizations with 500 employees or more.

Those 18,000 companies can, by themselves, fix U.S. outcomes of GDP growth and productivity by changing their cultures to ones of high employee development.

The solution lies within aligning the practice of management with the new will of the world's worker. The great American dream has changed and the great global dream along with it. What the whole world wants is a good job. This is new will of the world.

Everything will change when organizations respond to that will.

The top 18,000 companies can, by themselves, fix U.S. outcomes of GDP growth and productivity by changing their cultures to ones of high employee development.

As with lean management and Six Sigma, when management practices are transformed, people are transformed and organizations save enormous amounts of time and money. Everything gets better. People and teams grow and develop -- and they're far more successful because their work aligns with their will to have a good or even great job.

Failing to maximize the potential of a team member is -- to use a Six Sigma term -- a defect.

Gallup data and analytics conclude that global economic productivity has slowed in the past three decades because of a failure to significantly change how managers lead and develop people and teams.

While Gallup analytics fault the practice of management, Gallup also concludes that this problem is fixable. We define "fixable" as creating an upward trend in global employee engagement because research shows productivity follows.

Currently, just 15% of employees worldwide are engaged at work. If that number were to rise to 50%, workplaces everywhere would change -- so would human development and the whole world.

Global economic productivity has slowed in the past three decades because of a failure to significantly change how managers lead and develop people and teams.

The longtime purpose of business has been to create shareholder return. We like that -- but it isn't enough for the future of work.

Peter Drucker once wrote, "There is only one valid definition of business purpose: to create a customer." We like that, too. But it isn't enough for the new workplace.

The new purpose of business -- and the future of work -- has to include maximizing human potential. It will change everything.

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Jim Clifton is Chairman and CEO of Gallup. He is author of The Coming Jobs War (Gallup Press, 2011) and Born to Build (Gallup Press, 2018).