Huge amounts of money are lost as a result of dipping productivity, a study shows, but in Australia it’s more about the quality than the quantity of work.

Each year a staggering $109 billion l wages is wasted as a result of falling productivity. That means nearly one -sixth of the nation’s $606 billion wage bill is not achieving its desired result.

The findings are from a recent study by Ernst & Young, which points the finger of blame at poor management.

The first inaugural Ernst & Young Productivity Pulse study surveyed 2500 workers and their employers spanning even sectors from all levels in the private and public sectors.

The report shows people management issues have the biggest impact on productivity (54 per cent) followed by organisational processes (23 per cent) innovation, (15 per cent) and technology (8 per cent).

Ernst & Young advisory leader, Neil Plumridge, says the real issue is not about the quantity of work as Australia is ranked among the hardest working in the developed world, notching up an average 44-hour week, but rather that the quality of work has fallen.

Productivity is an output measure and the data supports that Australians are working harder and they are motivated, with 71 per cent of the respondents saying they do their jobs to the best of their ability.

Workers aged 45 and above have the highest motivation, with 74 per cent keen to do their job to their best of their ability, versus 66 per cent of younger workers, under 45.

The biggest issue, says Plumridge, is the lack of focus on people management at a higher level.
Employers no longer focus on helping staff to develop their careers, so they can perform at their best.

“This hasn’t happened overnight,” he says, “This is a build-up of management practices over many years. Companies have too many agenda items.
The focus on people has become just another initiative or another activity as opposed to being the most important one.”

He adds that organisations have become overly complex, resulting in structures and processes that have become very inefficient.

Plumridge recalls a client telling him a tale of corporate bureacracy stifling productivity. “This client told me that over the past five years, the approval process to get a capital item approved had gone from weeks to months,” he says.  It now requires a dozen signatures internally to approve the expenditure, where as once it only need three or four people for the approval.”

He says that’s a result of organisations becoming increasingly risk averse, which produces more internal layers of red tape through to an increase of external governance and regulatory processes.

Second, technology – once hailed as a great aid to productivity – has become so complex, it is now slowing productivity. “While it’s true that technology has enhanced some of our work, it has also hindered some of the productivity,” he tells BRW.

“Each time new technology is introduced into the workplace, it’s not always fully integrated.”

Plumridge gives the following examples of technology waste. “Look at call centres: often the centre has all the latest applications but you’ll find the employees are toggling between two and three different systems, which is inefficient,” he says.

“Likewise where you have an accounts payable clerk who is still using paperwork and shuffling this manual processor with some new technology. The automation hasn’t kicked in, resulting in productivity waste.”

The report also found that only 40 per cent of survey respondents felt they had adequate training. “What about the other 60 per cent?” asks Plumridge.

He says organisations can increase productivity by removing non-value, bureaucratic work and by using effective structures to help employees move into new technology. BRW.

3 WAYS THAT TIME GETS WASTED AT THE OFFICE

1. Pointless activities
Products, services and activities that few people ever or rarely use, such as unnecessary reports or analysis, meetings, or forums.
This includes quality products and services that are performed then rejected.

2. Waiting around
Delay in waiting for action. This can be from a higher authority to review a decision or waiting for input from other parties. This includes waiting for IT, machine breakdowns and help desks.

3. Redoing work and doing work manually
Doing something manually or reworking an activity when it all can be done automatically. Work that is required to be done because the step before was inadequate, wrong, or defective. This includes work that is duplicated.

This Blog post is adapted and Based on a BRW Report by Emily Chantiri
All In a Day’s Work – BRW 16-10-2011