Don't Ain to Cut Costs

 Many people (even quite a lot of managers and directors) think that productivity improvement involves cutting costs.  It can - and certainly cutting costs should improve productivity.  However this should not form the basis of a productivity improvement strategy.

Concentrating on cutting costs tends to lead to, at best, sub-optimal changes in the organisation and, at worst, a disastrous s loss of vital skills and expertise.

Productivity improvement should not form part of an organisation's strategy - it should BE the strategy.  The aim should be to make revolutionary and/or incremental changes to what the organisation does - and how it does it - in pursuit of improved quality, resilience and overall excellence.

Such changes should then drive improvements in revenue and lowering of costs (pro rata to output).  So cost-cutting is the result of an effective productivity improvement strategy, not the basis of it. 

Diagnosis is not the prfoblem

  read a lot of papers and articles about productivity - or more usually, about the lack of productivity.  Most Western nations have had little productivity growth over the last few years.

Many of these articles will make some kind of diagnosis - what has gone wrong or what needs putting right.   Occasionally I think that some of these diagnoses are correct - or is that just because the views coincide with my own.

However, the people making these diagnoses are generally academics, economists or consultants.  They are not people with the responsibility to take action to solve the problem - they make the diagnosis but have no responsibility for carrying out the cure.

Those who do have that responsibility perhaps get overwhelmed and confused by the number of, and variety of, the various diagnoses.  They tend to fall back on ‘standard’ cause and effect scenarios - so we get no innovative treatments or courses of action.

Now if those responsible were to ask me …….

Moving back to the Office

There has been much debate over the relative productivity effects of working from home (WFH) versus office-based versus hybrid working.    Companies who sought to reduce property expensesbyn switcghing to WFH have genersally been disappointed by the resulting productivity delivered and quite a few have tried to encourage or even insist upon return to  office-based working (RTO).   Employees, perhaps not surprisingly, have proved difficult to entice back - they like the convenience and flexibility of WFH.

2026 is likely to see this battle of wills continue.  Some think employers have the upper hand but it seems that many employees are willing to lose their job rather than RTO.

Unions also are willing to take the side of the work-from-homers, … especially public service unions.

So it is perhaps more even a battle than it at first seems. 

Unfortunately, this looks like continuing the productivity stagnation of the last few years. 

I hope you have a credible strategy for your organisation - and I hope you can make it work

Its not better HRM you need.

 A recent article on the Gartner website suggested that with other approaches not producing effective results, what the business world needs is better human resource management to improve labour productivity.

I couldn't agree less.

I've said before that whoever coined the phrase 'human resource management' should have been shot - at least twice.  Referring to employees as if they are simply numbers in a spreadsheet just like other resources demeans the people involved and suggests people, their needs ,their support, their performance can be treated collectively in groups or batches.

I am not suggesting that we do not bother to address these issues.  They are important but I know that labour productivity is rarely a core issue that can be addressed alone. Most productivity failures are due to errors or deficits in strategy, infrastructure , and in system and process design,  

Of course …get those right and you do have to address training and development needs of employees to make sure they have the right knowledge and skills to realise the potential productivity of those underlying success factors.  But addressing the training  and development needs of groups and individuals is not likely to be successful if those underlying success factors are not addressed first.

It's like the issues of computerisation and automation.  If you apply these to your present inefficient systems and processes, you get faster mistakes, errors snd defects.   Applying skilled, competent snd proficient employees to  poor systems snd processes can not make up for those inherent, existing inefficiencies.

Improving roads has more effect on the speed and comfort of car travel than building better cars.

So don't, by implication, blame your employees. Use them to help you improve those underlying systems, processes snd working methods.

Bring Your People Together

 We know that innovation often arises from an odd or unexpected coming together of people with disparate skills, different attitudes, different knowledge sets and perhaps different attitudes.  There are even innovation approaches and techniques that aim to simulate (or stimulate) these 'comings together' amongst individuals.

Yet over the last few years many firms have allowed workers to choose to work from home where such comings together are impossible. 

The water cooler, the kettle, the snack machine are places where people gather (informally, yes and for a short time) but brief interchanges of information, progress reports, ideas, even complaints can get others thinking.

When would you not encourage (or even insist on) people coming back to the office to make these interchanges possible once more.   It may not give you immediate revolutionary innovation but it almost certainly does no harm - and it does help employees engage with their colleagues and with the organisation.

You might even take the time to think of new ways of creating interaction and idea-generation and use this as an attraction to entice your people back to the office.

Doomed to be Disappointed

  I was reading some research recently which suggested that managers and employees have quite different assessments of how much time might be saved by the introduction of AI to an organisation, with managers expecting significantly larger productivity gains.

This may not be surprising but it is important.  It means that employees are more wary about AI and managers are much more likely to be disappointed by those gains if they fall short of their expectations.

Of course it is difficult to make the assessment in the first place since the largest source of information is the publicity and 'information' put about by the companies selling AI models and services.

It seems as though owners and manager like you need to question this information more thoroughly.  You should ask for information (and results) that are set in your particular situation and context.

This has always been true - and the lack of such research and questioning is why so many 'snake oil salesmen' and consultants make a lot of money whilst often disappointing their clients.

Pleqse talk

 Do you spend a lot of trime reading- and writing - emails? Are you an avid user of Slack or What's App?   Many people do / are.

Well, perhaps you need to rethink your approach to communications.

Why not talk to people.

Generally, face-to-face, or at least synchronous, communication is better for complex and important matters.  It is easier to read body language and other signs so you can recognise your message has been understood  It allows the recipient to ask questions and seek clarifications .It allows further expansion on a topic and genrally is more efficient.

Email is still very useful - especially for circulating information to a group - but tends to lead to information overload as people send copies to people who do not need the communication.

So, in 2026, plan your communication media/methods for maximum effect. Make sure everyone in your organisation has guidelines so they, too, improve.

Happy New Year!