15 February 2017

Raise employee productivity to improve profits: Workforce Analytics Institute

With decreased productivity seen across Asia, organisations need to focus on raising employee productivity to improve competitiveness, says a new report from the Workforce Analytics Institute (WAI), a partnership between The Conference Board and Mercer.

§ Rising wage pressure, lack of skills to leverage technology, ineffective leadership and low engagement levels are making it difficult for firms to deliver productivity gains

§ Singapore and South Korea showed the largest drops in productivity per person with 3.12% and 2.34% respectively, compared to India, which had the highest gain at 2.71%, followed by Indonesia at 0.68%

§ Developing more effective leaders; leveraging technology; and enhancing employee engagement will enhance productivity

According to the report, raising employee productivity remains one of the key levers organisations can use to improve their competitiveness. Employing Analytics to Enhance Workplace Productivity states that the 'catchup' phase in which productivity gains were easy to achieve with the introduction of any technology, is gone in the Asia Pacific region and offers other solutions that organisations can use to enhance productivity: developing more effective leaders; leveraging technology in specific ways; and enhancing employee engagement.

Siddarth Mehta, Leader, Workforce Planning & Analytics, Mercer, commented, “Across Asia we are riddled with economies showing weak or slowing growth. Against this backdrop, productivity combined with rising wage pressure poses a serious threat to organisations’ profitability. Additionally, in Asia, where the demand for skilled labour far exceeds supply, companies in the region are encountering substantial difficulties: they are realising that the link between productivity and business performance is one of an organisation’s key resources and if effectively managed can lead to significant payoffs. Gone are the days when productivity could spike simply with the introduction of technology. Going forward, companies need to be more innovative.”

The Conference Board’s research shows that the global decline in productivity growth is a serious threat to competiveness and profitability – from 2007 to 2014 productivity growth dropped about a quarter of what it was from 1999 to 2006 and is expected to make little recovery before 2025. In Asia, most markets have seen a slump in labour productivity with nearly all markets, with the exception of India, Indonesia and Philippines, showing decreasing productivity between 2008 and 2016 when compared to 1999 and 2007.

The Conference Board’s research illustrates that higher productivity growth can be associated with larger real net operation surplus (NOS) growth.

Source: The Workforce Analytics Institute. Total factor productivity growth can drive profits. There is a positive relationship between average real net operation surplus (NOS) growth and average total factor productivity.

With insights from interviews and surveys with over 50 HR professionals in Asia, three main themes emerged:

Developing leadership to drive productivity
Where significant changes to the work environment are planned, as is the case for most productivity interventions, communication, preparation and transparency are key.

Enhancing employee engagement
Designing incentive schemes to motivate employees, or creating physical and virtual workplaces that promote teamwork, collaboration and engagement are ways to provide a healthy environment for high performance.

Leveraging technology to raise productivity
Technology is best utilised for communications, equipment upgrades, self-service systems and training.

According to Dr Caitlin Pan, Senior Researcher, Asia Region of The Conference Board and an author of the report, “To foster a culture in which consistent productivity growth is possible; organisations need to develop a systematic approach toward tracking and analysing the quality of their productivity interventions. We often see companies start a number of initiatives and continue to pursue them without a clear understanding of which, if any, has a positive impact on organisational outcomes including profitability. Feedback is useful, but measuring and qualifying the quality of the interventions will lead to enhanced productivity. Before designing and implementing an intervention, it is imperative to determine the current productivity levels so as to effectively evaluate the changes in productivity.”


Read Employing Analytics to Enhance Workplace Productivity