Increasing Employee Productivity: The Strategic Role That HR Essentially Ignores
Increasing productivity is one of the most critical goals in business. Unfortunately, it's an activity seldom accepted by HR professionals as a legitimate mandate. While most HR professionals acknowledge that their jobs entail establishing policy, procedures, and programs governing people management, few attempt to connect such elements to increasing employee output (volume, speed, and quality) per each dollar spent on labor costs (or as an easier to measure alternative, revenue per employee).
Bonus programs are typically enacted that keep total compensation in line with market trends, regardless of the value of work warranting incentive comp. Training tools are often secured via the lowest-cost provider method with minimal consideration given to which provider would be most effective. Recruiting practices too are more often managed with the primary goal of minimizing cost, not enabling business capability/capacity. Regardless of the function you look at, in the typical organization, HR is more concerned with executing transactions instead of delivering productivity solutions.
If you believe, as most should, that the combined efforts of the human resource function should positively influence the performance capability of the workforce instead of hindering it, you should understand the factors that influence performance.
22 Factors That Influence Individual/Team Performance
Based on more than 30 years of observational research into what drives high-performance organizations, I've identified the following 22 factors, broken into six categories that significantly influence (positive/negative) individual/team productivity.
Foundations of Productivity
- High-performing and innovative employees are the foundation of productivity - by far the most impactful factor in workforce and team productivity is hiring and retaining employees with exceptional capabilities and self-motivation. Working together, managers and HR can attract, hire, develop, and retain individual employees who are agile, high-performing, continuous learners and innovators. Unfortunately, even the best employees cannot perform without great managers, proper direction, support, tools, and resources.
- Effective managers and leaders set direction and execute - a great manager/leader is the second-most important productivity factor. Leaders and managers play a critical role in defining the direction, purpose, priorities, goals, and roles of the workforce. The capability of the manager (with the support of HR) to develop plans, hire effectively, coach, motivate, and develop employees is crucial to success. Unfortunately, many managers are the weak link in the productivity chain, so HR must accept the role of developing great leaders/managers and identifying/removing the ineffective ones.
Direction and Guidance Factors
- A corporate strategy and plan that builds commitment - a competitive business strategy and strategic plan increases the chances that an organization will be successful and success builds commitment. In addition, if the plan and the strategy are clear and well communicated, not only will your employees be more motivated, but knowing the strategic direction will help them remain focused. Corporate values that are measured and rewarded can also align behavior and build commitment.
- A defined purpose for teams make roles clear - every business unit and team needs to understand its role. Managers and leaders need to develop a clear and communicated purpose that is both compelling and that makes members feel important. Understand that employees are more likely to be committed to the purpose of the unit or team if they are involved in creating it. An unclear mission will result in a lack of focus and a low level of "engagement" and commitment toward achieving it.
- Team and individual goals - having clear operational goals lets everyone know what is expected. If these goals are communicated and measurable, employees will understand precisely what is important and what is not. If stretch but reachable goals are set, employees are less likely to become complacent.
- Prioritization for impactful resource allocation - setting clear priorities helps to ensure that time and resources are allocated to the most important and impactful tasks. Employees must be made aware of both high- and low-priority goals, tasks, processes, and customers. Processes must be developed to ensure that resources are allocated disproportionately to high priority tasks.
- Performance metrics for continuous improvement - having effective metrics and reporting processes reinforces both team and individual goals. Because whatever is measured and reported gets done; metrics provide focus, feedback and result in continuous improvement.
- Effective rewards drive performance - when monetary rewards are tied directly to performance and the metrics for each goal, you doubly reinforce the message about what is important. Individual and team monetary rewards, coupled with nonmonetary excitement factors, can play a major role in ensuring focus and consistent performance.
- Team member support increases individual performance - few tasks in this modern age can be completed by an individual employee working without support. Unless your employees are provided with complementary teammates, as well as the support of managers and employees outside the team, productivity is bound to suffer.
- Best-practice sharing and collaboration improve productivity - learning by trial and error slows progress and leads to mass duplication of effort and higher error rates. Productivity improves dramatically when others who are outside the team freely collaborate and proactively share best practices and ideas. It is HR's role to develop formal methods to increase cross-function collaboration and sharing.
- Support for innovation can dramatically increase productivity - in most industries, the yearly increase in the level of productivity that is required to maintain a dominant position in the industry has increased dramatically. The new reality is that productivity increases of between 10% and 25% are now required each year. What is needed is a continuous level of innovation both in products and in business processes. Increased efficiency for continuous improvement processes are not sufficient to provide that level of double-digit gain, so HR must develop processes, training, measures, and incentives that result in continuous innovation workforce-wide.
- Control and authority can enhance or hinder decision-making - a lack of control and excessive freedom can result in waste, duplication, and a lack of focus. In direct contrast, micromanagement and excessive rules can slow decision-making and employee development. Productivity is maximized when there is enough balance so that employees have enough control, authority, and permissions to make most operational decisions.
- Non-monetary factors can also excite employees - in addition to formal rewards, managers, leaders, and teammates can provide nonmonetary factors that increase employee excitement, energy, motivation, and loyalty. These factors can include praise, recognition, exposure, challenge, feedback, and learning opportunities. It is HR's role to ensure that managers know how to effectively use these nonmonetary factors.
- Not having the appropriate inputs can hinder productivity - in most cases, team and employee work is dependent on the inputs provided from other processes. It is the manager's role to ensure that these inputs are provided on time and of the right quality. Make sure that the team's output meets the standards set by the team responsible for the next step in the production process.
- Barriers to productivity can limit success - often, even when every one of the positive productivity factors are present, productivity can be slowed or stopped by real or imagined barriers. These roadblocks can include individuals resistant to change, corporate politics, personal jealousies, corporate rivalries, as well as powerful people. In addition, there may be perceived or imaginative barriers that keep employees from even attempting any effort aimed at increasing productivity or innovation. In both cases, HR needs to work with managers in order to develop processes for identifying and eliminating any real or imagined barriers to productivity.
Skills, Communications, and Information Factors
- Employee skills and knowledge must be continually updated to maintain productivity - global competition has created a rapid pace of change which means that current skill sets must be continually updated. It is the manager's job to identify employees with less than optimal skills. HR's role is to develop processes to continually increase employee learning, knowledge, and skill development, while minimizing the amount of time that employees are away from their work.
- Effective communication and feedback reduce errors and frustration - a lack of communication can frustrate employees and make them feel unimportant. Failing to provide effective feedback can lead to wasted efforts, increased error rates, and lower productivity. Communication and feedback mechanisms need to be developed in conjunction with employees to ensure that they fit both the needs of the manager and the employees.
- Providing the right information improves decision-making - managers and employees need access to all relevant information and data in order to be productive and to make effective decisions.
- Insufficient budget resources can hamper productivity - even a great team with a great manager will produce lower levels of productivity when provided with insufficient budget to complete the job.
- Technology, tools, and equipment can limit or bolster productivity - even highly trained, motivated, and engaged employees can't be very productive when they are provided with insufficient tools and equipment to do their jobs. In an era where technology dominates almost every function, a failure to provide the technology, updates, or sufficient training can dramatically slow productivity.
- Integration can increase productivity - when business processes operate independently and not in unison, it can inhibit work flow and increase delays and error rates. Part of any productivity effort should include integrating interdependent processes, breaking down the silos and barriers, and making interconnected processes appear "seamless" to those involved.
- Outside-the-workplace factors - although most factors that impact productivity are internal to the organization, on occasion, employee productivity is negatively impacted by things that happen outside of the firm. These factors could include changes in employees' personal lives and external economic, social, political, and even weather-related factors. Excellent productivity processes need to be flexible so that they can adjust when these external factors begin to impact individual or team productivity.
Managing workforce productivity involves accepting responsibility for optimizing the ROI (return on investment) for labor expense, just as other functions do for their activities. While some in HR would argue that it's the manager's role to increase productivity, it's safe to assume that managers are not experts, nor are they knowledgeable about how to do so.
If you work in HR or talent management and you are looking for an opportunity to have a major strategic impact, consider setting up an internal productivity consultant team that provides the same kind of high-quality expert advice that a McKinsey or BCG might provide (only with better knowledge of the company problems, opportunities, and culture).
No one in any organization has complete control over these 22 factors, but the HR function can use its well-known relationship-building and persuasive skills to "influence" those outside their direct span of control. Since no one in the organization currently "owns" productivity improvement, you won't have a lot of competition for the role, at least until you start to make progress!