Improving Productivity Beyond March Madness

Every March finds many US employers wringing their hands over the amount of time employees are distracted by the NCAA basketball tournament, otherwise known as March Madness. This year the tournament is estimated to cost employers $4 billion – yes, that’s billion – in lost productivity, with employees pre-occupied with the games and the local office pool.

But employers shouldn’t just worry about the potential losses during the three-week period from mid-March to early April. In fact, there are many more significant threats to workforce productivity than the basketball tournament (which in addition to its downsides, offers many positive aspects in the way of increasing morale and connections with other co-workers.) More serious and long-term deterrents to productivity stem from ineffective managers, inadequate skills, work that is misaligned with corporate objectives, and employee stress and health problems. Employers should focus on remedying these problems in order to gain the most value from their workforces.

 To identify the most significant trouble spots, productivity should be measured – and managed – throughout the year. Let’s start with the issue of how to measure productivity. Many companies start with some general measures, such as revenue per employee, but to take a deeper look, productivity metrics should be based on a firm’s priorities and its key functions and critical roles. For segments where efficiency really matters, such as call centers, metrics such as transactions per hour or percent of overtime hours will be important. Where quality is the main goal, metrics such as error rate per batch and product recall statistics will be critical. (See figure 1.)

Once the organization has these productivity metrics, broken down by segments like geography, business unit, local office, etc., leaders can zero in on the biggest gaps and determine how to improve productivity where it matters most.

 In our work, we have found the key areas for improving productivity to be:

• Hiring the right talent, and developing this talent with the right skills;
• Enabling great performance by having effective managers who can properly align goals and incentives, reward and recognize talent, and drive to the right results; and
• Fostering a healthy workplace with programs aimed at managing stress and improving overall health and well-being. (See figure 2.)

Striving for excellence in these areas will result in significant productivity gains. But to unlock the full potential of your workforce, you must also have this secret ingredient: an engaged and aligned culture. If that sounds too warm and fuzzy, let me explain.

To meet its business and financial goals, an organization’s culture should be aligned to its business priorities. So, for example, if the main priority is innovation, the organization will want to foster a culture that includes a diversity of thought, support for risk-taking, a bias for action, and a system for recognizing new ideas. If, on the other hand, the primary business priority is quality,  the company culture should focus on empowering employees to improve practices, ensuring disciplined use of performance and quality data, and promoting best-practice exchanges. And regardless of the type of culture, employees must be highly engaged – willing and able to go the extra mile. In these cultures, it’s not just a “day job” to employees; they are committed to the organization’s success and will do whatever it takes to get there. This extra ingredient unlocks the full potential of workforce productivity.

What’s the payoff for this effort? For most companies, it can be substantial. To take a few examples:

• Companies that have best-in-class recruiting and onboarding practices have 30-50% shorter time-to-productivity among new hires, saving $6M-$10M per year for large organizations.
• Companies which have employees in very good health have one-third the number of absences than those with poor health – at a savings of $3M+ for a large organization.
• Companies with aligned and engaged cultures have shown 10x the growth in earnings, profits, and net incomes versus their peers.

With these types of results, it’s easy to see why employers should be concerned about productivity – not just in March, but all year round. If it’s time for your organization to look at how to improve its business results through better workforce productivity, come  join us at UCLA's HR Roundtable Day of Learning  event on April 7.