Engagment and productivity: The undeniable link

For months now we have been overwhelmed by news and opinion pieces saying we must lift our productivity in order to be more competitive.

It is also widely reported that Australia’s productivity has been falling for the past decade, regardless of which IR regime has been in place. To add to the talk about decreasing productivity, we have the Fair Work Act review telling us that it’s all about management capability and there’s nothing in the current IR world that is hampering productivity.

All this talk no doubt stimulates discussion between economists and opinion makers, but what does it mean for business?

Australian business is stuck with the current Fair Work Act for the moment and so must accept that that’s the way it is. While the opposition continues to say there will be little change to the act, and union power is somewhat stifling business agility and managers’ ability to weed out poor performers, it is nevertheless time for business to take up the productivity challenge.

In many instances, businesses are afraid to try something new and innovative and continue to do what they’ve always done. Einstein’s definition of insanity is alive and well in Australia. Workers dislike the word productivity and most people think productivity is simply being asked to do more with less, and for less reward.

While productivity is measured in a variety of ways depending on industry type, it is doubtful that productivity will be increased unless the end strategy can be envisioned in a way that is plausible to people at all levels within an organisation.

Boston Consulting calculates that “the market is anticipating no change in the poor performance of Australian CEOs”, and Right Management points out that companies failing to address staff engagement were generally less profitable. Engagement is a management issue and unfortunately it is largely overlooked by Australian businesses. As Janet Westacott, CEO of Business Council Australia, recently pointed out, managers need to create an environment that encourages direct engagement. But how does business translate this into practice?

One of the first things to be cut in hard fiscal times is the training budget, which impacts on the continuous learning required to improve and grow management capability. On-the-job training can work well to raise the performance of managers who in turn will become CEOs, but only if senior management provides middle managers with the tools and support to innovate and challenge ‘business as usual’ thinking. While senior managers stifle innovation and creativity in the ranks below, and our reward structures continue to reward mediocrity, it is easy to blame IR when productivity fails to improve. Will we ever be brave enough to follow management guru Tom Peters and “Reward excellent failures. Punish mediocre successes”?

Organisations are also reluctant to spend on programs which assist in employee engagement. For productivity to improve there is sufficient evidence that engagement is a key element, and engagement is fundamental to tapping into an employee’s latent discretionary effort. Engagement can be achieved if a company’s strategy is presented in a clear, concise and appealing way. Clarity and focus around business priorities and direction drive performance and productivity. All managers need to be involved in this process and it cannot be left entirely to the CEO although it is imperative that it is led by the CEO.

People are passionate about their work and nobody goes to work to do a bad job, but without being engaged by the company and its objectives, an employee will do only what is required and what one can get away with. Unless managers have the capability to tap into the 40% of discretionary effort that lies dormant, nothing will change. Engagement also has fiscal benefits; decreased absenteeism, lower turnover, improved customer service and attraction of high-calibre staff which deliver a distinct competitive advantage.

There are several organisations that have successfully engaged their workforce and are reaping the benefits. Virgin has found the way and taken Richard Branson’s “screw business as usual” to heart. They understand the value of good employee engagement and closely guard their competitive advantage. Packer’s Crown has the means to create and place ads that herald their achievements which in turn, help connect employees to the bigger picture and make them proud to be part of it; they are part of entertainment and tourism industries, rather than simply a dealer in a gaming venue.

In order to encourage involvement and tap into the dormant discretionary effort, companies need to find ways to connect with people both intellectually and emotionally. When people feel they have meaningful jobs, and can see how those jobs fit into the bigger picture or the overall business journey, they will more willingly engage with both managers and the business as a whole.

To engage people both intellectually and emotionally requires new ways of thinking and new ways of communicating the business strategy to all levels within an organisation. Without this level of engagement, it will be impossible to lift our productivity. And this is possible no matter which IR regime is in place. Perhaps we can draw some parallels between Olympic athletes – their level of engagement, the hands-on direction from their coaches, and a total focus on the end game ultimately delivers results. What would happen if athletes weren’t able to see the vision and know clearly what they had to do to achieve a gold medal?

What are we waiting for, or are we happy with bronze?

Margaret Harrison is managing director of Our HR Company and former director of Human Resources at adidas Australia.