Jo Woodfield, Principal, Wrays
Australia is in grip of a productivity crisis. Our focus deflected during the commodity boom (and quite spectacularly so) from what has been and still is, glaring lack-lustre performance.
Fast becoming uncompetitive in global markets, Australia’s high labour costs continue to debilitate many of our sectors. GM Holden is case in point, faced with manufacturing vehicle costs in Australia some four times higher than that of Asia and twice that of Europe. Commodity price cycles continue and declining terms of trade squarely puts pressure right on us to perform as a nation, to reposition in order to become more competitive as ‘high cost’ economy on global scale. Equates to each one of us individually doing our bit to improve performance at grassroots too especially if Australia is to remain viable and avoid becoming a ‘productivity backwater’.
Deconstructing productivity…
If productivity is such key determinant of population wealth and standard of living then it appears we have some worrying times ahead. For the past decade, Australia’s productivity has been worsening and didn’t we see it coming?! Grattan Institute’s report Australia’s Productivity Challenge 2011 informed us back then that Australia was experiencing pronounced deterioration of our multi-factor productivity over other OECD nations. Ernst & Young more recently estimated over $300B in productivity gains still remain untapped in Australia’s economy, averaging out at a staggering $26,000 per employee in unrealised productivity.
Whilst some Australian businesses, on the face of it, appear to be doing more to address productivity to many including us it’s probably symptomatic of far deeper issue, starting with this – just how many employers really understand what they’re dealing with in terms of productivity? What is it? Could many even define it? Companies wanting to find productivity gain are looking in same old places, employing typical management levers in often vain (and expensive!) attempt to improve performance (via process re-engineering, systems integration, automation, new business models and/or strategy, even bit supportive of enhancing innovation etc). In doing so, they either choose to ignore (or simply miss) the very answer sitting right under their noses – human capital.
It is labour that represents largest input cost by far for many enterprises and businesses; why then aren’t more company leaders respecting its importance, latent potential and the value it derives? Statistics and research highlight an unfortunate predicament in terms of Australia’s leadership and management capability, skills base; lagging well behind that of similar advanced economies, specifically well behind in our attitude and willingness to engage our workforces, comparable to the foresight currently shown and engagement activities employed by more progressive countries. Whether that be strategic repositioning of a business, branding, culture, leadership development or organisational change.
Our problem is exacerbated because we lack the right focus, that of a “talent mindset”. Australia has some world class leaders but it also has very long list poorly performing, ill-equipped managers too (…. ask yourself, do you honestly see this improving anytime soon?)
What to do? Start small and simple. Firstly listen and relate to your people and different segments, their perceptions, evaluate their needs, motivations, values and barriers, this is critical to developing sound strategies to counter disengagement and harness untapped labour productivity. Secondly, get ready to adopt some transformative management practices. Improve manager education, engage an array of your workforce talent (for their knowledge, input and creativity), expand out participatory workplace methods, and most importantly address leader skills formation, utilisation and communication (because its those managers you need to successfully guide business often through harrowing and tough times ahead). In essence, the timing has never been better to ensure companies more effectively arm their talent with the skills and ability to improve their mindset, interactions with others, planning and potential.