Why ‘Productivity’ seems to be the hardest word

Without getting political, it’s undeniable that hiring people is both more expensive and riskier than it was 12 months ago. Increases to ENICs and additional employee statutory rights are both having a real-world impact. The antidote is to ensure you are getting the best out of the people you already employ. That’s why productivity should be your biggest focus.

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Productivity – for the UK at least – is a big issue

GDP (Gross Domestic Product) per capita figures are misleading because it’s hard to compare apples with apples - the US for example has less than half the number of days holiday per year than the UK.

GCP per hour worked provides a clearer and more comparable number.

The UK produces ￡46.92 of GDP per hour worked. That compares to ￡58.88 for the US, ￡55.83 for Germany and ￡55.50 for France. For the record, we’re still marginally ahead of Italy (￡45.33) and Canada (￡42.94).

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What are the 5 biggest ‘killers’ of productivity?

We don’t get paid to figure out why this is let alone how to address it, but we can look to our own businesses and make sure we are as productive as we can possibly be.

Often, you’ll get a good steer as to the solution, by understanding what’s at the root of the problem.

Working with businesses over the years, these are the 5 biggest contributors to poor productivity.

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1 Unhelpful culture and the lack of ‘discretionary effort’

I watched a great video the other week of Paul O’Neill, former Chairman & CEO of ALCOA Chemicals.

When he took over in 1987, he championed ‘worker safety’ as his #1 mission. Wall St analysts (not to mention his fellow board members) were somewhere between mystified and strongly critical. They wanted to know about capital ratios and income streams.

He stuck to his guns; ALCOA became a beacon of worker safety and productivity matched it step-for step. By the time he left in 1999 net income had risen from $200m to $1.5bn and market value had was 9x higher at $27bn.

O’Neill that every worker has a level of ‘discretionary effort’ that they can choose to put into their jobs – or not. It depends if they feel valued, important, safe – and happy.

Everyone you employ has this within them. The question you have to ask is whether they are choosing to apply it. And what you can do to persuade them to.

A Challenging thought: if you want your team to be more engaged, you’ll need to think about what you do to engage them. One definition of leadership is to celebrate success, praise endeavour and challenge underperformance. Celebrating success (catching your team doing something right) is an often over-looked and disproportionately powerful step.

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2 ‘Doing Stupid’

If you wanted to balance the books of your personal finances the first obvious step is to analyse how you spent your money in the past. You’d go through some bank statements and see where it all went. A cheeky pie-chart can ram the message home.

You get to grips with time and productivity the same way.

If you analyse anyone’s diary / ‘to do’ list over a period of 1 month or more, you’ll find plenty of examples of them doing things that they really shouldn’t. They’ll be doing tasks that don’t have an impact or could / should be done by someone else. Left unchecked, we all allow stupid things to creep into our monthly diaries.

The antidote?

Start by creating a positional contract for everyone – including yourself. A positional contract shifts the focus from what tasks they will perform to what impact these tasks need to have. The outcomes they will be responsible for delivering.

Get clear on each person’s #1 responsibility – and then most important tasks they perform to make that happen.

Challenge: If ask your team to write this down and then compare what they’ve put with what you think, you will probably be surprised at the differences.

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3 Lack of Automation

The biggest single difference between small businesses (< 10 people) and larger (>100) is systems.

As the old saying goes, you can’t scale chaos. And larger businesses became larger partly through their ability to find systems that make the core functions of their business less chaotic.

A good acronym to remember is that systems stands for Save Your Self Time Energy And Money.

Whatever your stage of development, there will be a system that can save you a tonne of time, hassle and money – right now. Whether it’s in marketing, sales, onboarding, manufacture / delivery, customer service, recruitment or finance – you’ll have one area that is acting as a long-jam for growth.

The right system will free up you, your team and business to grow.

To get started: One thing that has been working well for my clients is to use very detailed prompts to ask eg ChatGPT for advice on things like this. You put in the exact nature of the problem, business background, ideal outcome – and let it give you some solutions to get you started.

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4 Shiny Object Syndrome

When it comes to making businesses run better, there’s a harsh truth that many fail to fully take on board.

It’s that the ‘pay-off’ or reward only comes after implementing the idea.

This is obvious enough – but think about it more closely. In my seat, you’ll quite often see business owners complete a large proportion of the work, only to lose enthusiasm or belief and get seduced by something else that catches their eye. Like the myth (?) of the magpie being compelled to steal brightly coloured trinkets for its nest.

You’ll have put in a stack of time (and quite possibly money) into an idea only to change tack and head off in pursuit of something shiny and different. With nothing to show for it.

But what about bad ideas you might argue? Some things we try will turn out to be bad ideas and, in that situation, a good cut is an early cut.

True.

The solution is to think more critically before committing to an idea, taking time to weigh up the alternative ideas and their pros and cons.

Speak to as many experts as you can and invest time to allow you to make an informed decision. And ask yourself how you will execute this idea better than the average. Because in business you don’t really get rewarded for average.

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5 Lack of Accountability

This is quite possibly the number 1 reason for a lack of productivity.

You can have all of the goals, targets, OKRs, vision and mission statements you like, but if you don’t focus on them relentlessly, they won’t positively impact productivity.

By focus, I don’t mean putting them on your website, screensavers or mouse mats – I mean proper focus.

Setting aside quality time to get everyone involved together and ask the tough questions: Are we on track? What do we need to change?

Regular L.I.O.N. meetings – if you run them properly – are the best tool I’ve found to help you do this.

It stands for:

• Last Week (what actions did we commit to doing?)
• Issues (problems with getting them done and challenges along the way)
• Opportunities (that are connected with the big thing we’ve working on)
• Next Week (what actions need to be taken and by whom)

It’s a simple format but when approached the right way and backed up with numbers, it packs a hell of a punch.

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Conclusion

The economic environment is tough right now. And truth be told, I’m not wildly optimistic that we will come to look back on the Oct 2024 budget as the start of something great – for business owners at least.

But whether I’m right or wrong in that thought is for the birds.

Either way the essence of being a business owner is leverage. Ie Making money by organising people and resources.

Productively.

What if you could get an extra 10%, 20% or more from everyone who works for you?

What impact might that have on your marketing efforts, sales, customer satisfaction, staff turnover? And on your net profits and cashflow?

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All the best,

Tim

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P.S. If you’re ready to take action and you’d like to talk about your approach to systems – or anything else to do with your business - please do get in touch.

• Book in for a zoom coffee
• Ask for a call-back
• Take my business self-assessment test

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