Leader’s view: how risk makes us more productive

Leading companies are responding to the tough market conditions quickly and cleverly, as they have in the past. For example, I read that the nation recorded some productivity improvements across sectors hard hit by the high dollar and the mining boom in a report by accounting firm PwC on March 14.

Productivity is a word that will work hard this year (I counted 15 mentions in one newspaper alone today) – and for good reason. A productive company is a profitable one, and Australia has had falling productivity for the past decade,  across all industries.

I am surprised, however, that there is so little discussion of leadership and management in the current productivity debate.

Take the issue of risk, for example. Some leaders tolerate risk-taking and others do not. But there is a strong correlation between a company that takes risks – and therefore accepts mistakes – and a productive company.

Employees who are allowed to take risks with new ideas can be more productive than their cautious counterparts in several ways.

A good idea will improve the company’s systems, processes, products or services, of course.

Even more important is how such ideas are garnered; that is what sets a company apart. In one company, an employee might quickly explain their idea to their immediate boss, get the go-ahead and give it a try.

In another, the employee puts their idea in writing, perhaps after finding the relevant proforma document, emails it to their boss, who discusses it with their boss, who gives the okay.

In another, the written proforma is submitted to a committee that meets monthly. Three months later, there is still no decision.

Chances are, no one would keep submitting ideas under such a system; if they did so, their idea would be unlikely to see the light of day.

There is more risk associated with less bureaucracy, so some parameters are needed – perhaps ideas that affect customers directly need more careful thought and planning.

In the newspapers, discussions about productivity have focused on staff working more flexible hours. That is important, but it’s a long-term debate in the industries affected. Change will be slow.

Some productivity improvements can be made simply by a leader getting up one morning and changing their attitude to taking risks.