Planning An Efficiency Drive? Beware the ‘Productivity Rabbit Hole’!

Delusion 1: It’s About Activity

The solution is to drive up activity to make people more productive. That is a primary illusion regarding productivity and efficiency drives, and this presents two challenges:

• It drives up activity which compounds the problem of the effectiveness of productivity. People are already very busy, but that doesn’t mean they’re busy doing the right work or working in the right way.

• The growth of productivity tracking software by employees and mouse giggling by staff¹. Whatever your review on the use of ‘spyware’ it often ends up measuring the wrong thing.

Simply doing more work is not the answer. Organizations don’t need more busyness; effectiveness is required instead. This is only possible when people are doing the right work – value-adding work. Yet, our data shows that:

• Executives spend up to half their time doing low-value or non-value-adding work.

• Up to 50% of executives are concerned that they need to be fully confident that they are doing the right work, pointing to the time spent on low-value or non-value-adding work.
  
• Up to 37% of executives are not entirely confident that there is clarity regarding the right results (for their team)

What is productivity or efficiency for a knowledge worker, a white-collar employee, or, more importantly, what is it for a senior executive? It is not just the activity level – this is where productivity tracking software gets it wrong.

Being productive and being busy are two very different things, and looking busy is something else entirely. To assume a link between mouse movements on a pc, or the number of emails or IMs and efficiency or effectiveness is very dangerous. At a minimum, productivity tracking risks incentivizing the wrong behaviour. To see this in action, look at the trend called ‘productivity theater’. 

A de facto efficiency drive is underway in most organizations, with executives being expected to do more with less. That is a challenge because, in many cases, they were already trying to do too much and struggling to get everything done. It also has a significant impact on the level of well-being and engagement.

The reality is that many organizations struggle with priorities and making trade-offs. A more disciplined approach to prioritization is essential, enabling a focus with new intensity on those priorities and initiatives most closely linked to success. Focus and prioritization are vital to ensuring a link between efficiency and effectiveness or activity and results.

Traditional productivity and efficiency drives tend to see people as the problem rather than the solution, and this is a fundamental flaw and a key point of failure. This happens in many ways:

• There is typically a negative tone to the debates about productivity and efficiency.  It is also accusatory in tone – with the inference being that people and suggesting that they are not good enough or trying hard enough.
• The debate is very much ‘them’ and ‘us’ – setting leaders against their people, whereas the opportunities and challenges being faced are shared ones.
• Much of the debate about performance or productivity is founded in the outdated ‘Theory X’ worldview where (at least some) people are seen as inherently lazy and unmotivated².
• Leaders tend to cast off their warm and fuzzy side, with the economist or accountant within them coming to the fore. They often revert back to seeing people as cogs in the wheel – to a time when the height of management sophistication was a stopwatch and clipboard.

When talking about efficiency, leaders need to stop playing the blame game. If there is a productivity problem, the leader must accept their share of the responsibility.

Efficiency is an ongoing challenge within large organizations – that is a natural law. The miracle of the modern corporate structure is its ability to manage the ‘unmanageable’ – tens of thousands of employees and customers worldwide. It does this in a way as to maximize management visibility, predictability and control. But no large organization is perfect. The uniformity and control that the structure of a large organization provides inevitably come at a cost in terms of speed, agility and even efficiency.

As structure and bureaucracy grow, getting the work done can become more complex. It generates a lot of additional work (internal meetings, processes, reporting, etc.) on top of the work itself. Before you know it, this ‘work about the work‘ can take up almost two-thirds of the week k³. This is what is draining productivity within most work environments, yet it gets little attention. Meanwhile, sideshows like the battle to get people back in to the office and the crisis of disengagement get all the attention.

In reality the majority of executives are about as efficient and productive as their processes, systems and structures allow them to be. More focus is required on the efficiency of processes, systems and structures.

People need and want to feel like they are making progress to invaluable work which leverages their skill and talent. This is a key source of motivation denied to those in environments that are unproductive bureaucratic and inefficient.

While the focus is generally on the cost to the organization, people also pay a cost for inefficiency in terms of waste of time and effort, unnecessary pressure and stress a sense of helplessness and frustration.

It is not enough to say that people are lazy. Leaders must first check that people are in the right roles, doing the right work, with the right rewards, resources, etc.

Individual work now accounts for less than one-third (30%) of all work; the rest (70%) is taken up by teamwork and collaboration. Where to focus if you are looking to boost performance or efficiency?  Would you focus on the 70% (team) or the 30% (individual)? 

Based on the numbers above, most leaders would focus on the 70% – as it accounts for the majority of work, it can deliver the majority of improvements. Yet, most organizations are still focused on productivity or performance at an individual level.

Traditionally the issue of performance has focused on the individual, rather than the team. That includes the annual review, the performance improvement plan and the mixture of carrot and stick incentives. All have been designed to manage individual performance. For example:

• Within many organizations, people are rewarded and promoted based on individual performance, with little consideration of their contribution to the performance of a group or team.
• The primary focus is hiring and developing individual high performers or high potentials. But, these so-called ‘A Players’, can face particular challenges when collaborating effectively with others.

With up to 70% of work now being collaborative, looking at productivity or performance on an individual basis doesn’t make sense. Individual and team performance go hand in hand. Indeed, the impact of teams on personal performance is difficult to underestimate:

• Teams shape our thinking, behaviour & work experience more than anything else! So, while our boss may have formal power, our teams have an informal power that cannot be underestimated.²
• Our primary experience of the organization is through our teams. For most people, what happens in their teams shapes their daily work experience more than decisions taken by the board, the corporate strategy or the latest restructuring³.

Teams are increasingly seen as crucial to the organization also. The modern organization’s success depends less on the heroic solo run of individuals and more on the collaborative effort of networks of individuals and teams.That is because today’s new products, technologies and business models are brought to life not by individuals working in isolation, but by high-performing teams that cut across functions and silos.

The Way We Work (as a team) must be optimized if individuals are to be more productive and efficient and enjoy high levels of engagement, job satisfaction and lower levels of pressure or stress.

When it comes to productivity and effectiveness, engagement (or, more precisely, disengagement) is often held to be at the core of the problem. This misdiagnosis isn’t very helpful for several reasons:

• People could be engaged and still not very productive. Although they may be willing, this can only go so far if people are not in the right roles doing the right work, working together in the right way, etc. Thus, ways of working are essential – they can account for the hidden 50% of success.
• Many factors that drain productivity have little or nothing to do with engagement. These include low-value work competing projects and priorities, stakeholder misalignment, cumbersome processes and procedures, etc. These are part and parcel of working in a large organization.
• Engagement is often misunderstood. It is as much (if not more) about the work environment and its leadership as it is about its people.
• Typically, efficiency is driven by a spreadsheet, but this has little to do with engagement. It does not provide meaning, purpose, or a sense of belonging.
• Engagement is the solution, not the problem. A drive for productivity and efficiency should be an opportunity to empower and engage. Yet, for many the process is top-down, uncompromisingly rigid and bureaucratic.  
• A productivity or efficiency drive should not be something that you do to people but rather with them. It should generate energy and engagement rather than squash it.

There has been so much talk about engagement, particularly disengagement, recently. There are suggestions that half the workforce may suffer from a condition unheard of just one year ago. Revealed to the world in a Tiktok video, it is ‘Quiet Quitting’.

There is no question that engagement matters. After all, today’s work is heavily dependent on discretionary effort. It is knowledge work that requires creativity, innovation and perhaps even imagination. These are things that are difficult to command.

People cannot be persuaded or compelled to perform at the top of their game – it may result in a short-term uplift that can be difficult to sustain. Tapping into human motivation is essential, and pressure and coercion are the least effective ways of doing this.

The good news is that people want and need to be engaged – they need to feel that they are making progress in doing work that matters and learning, developing and growing. This essential intrinsic motivation isn’t just a requirement for Gen Z but for all workers.

There is a tendency to oversimplify the issue of engagement. However, it is a complex leadership challenge. For example, when it comes to engagement, the real problem is not ‘how?’, but ‘why?’  That means helping people to answer the ‘Why? Why does the work matter to me, the organization, our customers, and the broader society? It is about connecting with purpose, meaning and passion. Engagement will become a powerful ally of productivity when the debate about efficiency embraces these issues. However, as they are focused on delivering short-term results, few efficiency drives will go there.

Beware illusory savings and hidden costs– those are vital messages for leaders as they pursue a strategy of efficiency. These can arise because:

• Many efficiency drives are a knee-jerk reaction. A ‘smash and grab’ approach puts short-term expediency above long-term strategy or performance. For example, cutting resources allocated to initiatives that are strategically important but won’t deliver results in the short term.
• The pressure is to assuage shareholders and investors – an efficiency drive signals that management is in control and is prepared to make difficult decisions. The rewards can be instantaneous with the rebounding of share prices after an announcement of cuts (as happened to META).
• The process frequently overlooks inefficiencies such as multiple competing priorities and projects, many of internal meetings, lack of alignment among internal stakeholders, etc. These are part of the daily reality of working in a large organization and can be the source of 5-25% efficiency. Unless these factors that drain productivity are addressed, people cannot be expected to do more with less.
• Driven by short term expediency, longer-term costs often overshadow the immediate gains in terms of the health of the organization, levels of trust or engagement and so on. Indeed, the more zealously leaders pursue efficiency, the greater the risk that their efforts may have significant longer-term indirect costs.
• Those making the decisions may be far removed from the daily reality of the work. As a result, cuts made may lack surgical precision, feeling more like a ‘hatchet job’ instead. All too often, rushed decisions come back to bite the organization.
• Driving costs and efficiencies can be challenging, but are the tough decisions really being made? Sometimes budgets are cut without addressing critical strategic choices. When this happens, cuts are made ‘across the board’, and they fail to distinguish what is essential and what is not. A more disciplined approach to prioritization is key, but it is not easy.

Traditional budget allocation can be a relatively crude process, often centered on last year plus or minus 5 or 10%. A top-down bureaucratic (often highly political) approach driven by finance can struggle to align resources with strategy. These traditional resource allocation and alignment challenges are multiplied in the face of short-term pressure on numbers.

Typically, it starts with a number. We need to save x or y. But where exactly will these savings or efficiencies be achieved?

• What level of science, sophistication or even strategy will be applied?
• What percentage savings or efficiencies will be required, and how did that number arrive?
• Will cuts be demanded across the board – with every department, project or initiative being given a target number?
• What tradeoffs (if any) will be required in order to deliver on the efficiencies?
• What are the assumptions underlying the efficiency calculations and how robust are they?
• Who is making the decisions and how close are they to the reality of the work or the requirements of the strategy?
• What is the level of consultation or dialogue with those affected?
• How to identify those areas of greatest inefficiency or waste?
• How to ensure those areas of greatest importance are protected?
• What is the review process to ensure that the efficiency goals are achieved most strategically and intelligently as possible, redress any mistakes, oversights, etc.?

The pressure is on to ‘over-egg’ the savings, but what about the longer-term cost? For example, how do you calculate the cost of the lost trust or safety or the damage to the fabric of the organization and its culture.⁴

An efficiency driven often results in a short term uplift in performance, but can it be sustained?  Moreover, what about the longer term cost?

There is one hidden cost that is often overlooked. Traditional productivity and efficiency drives generate much noise and interference, making it difficult for people to keep their heads in the game. The disruption to the everyday running of the business can be significant, especially for efficiency drives that roll out slowly, involve a lot of politics and fail to generate dialogue or engagement.

We need a bigger picture view of efficiency, one that looks beyond short-term savings, looking at the hidden and indirect costs, as well as the longer-term implications

Behind most efficiency drives, there is a short-term financial imperative, so it is not surprising that leaders turn to quick-fix solutions. They are looking for a magic bullet, such as:

•Productivity Tracking

•Performance Management

•Get everybody back into the office

The problem is that most quick fixes are imaginary, and they address the symptoms but fail to address the root of the problem.

The result is that leaders end of applying 2019 solutions to the challenges of 2023 and 2024. At odds with the new reality of work, the workforce and the workplace, they have the potential to further aggravate the crisis of trust & engagement.⁵