“In an era where the only lasting competitive advantage is people, you can’t afford to let productivity slack by missing opportunities to engage your workforce.”
Growth markets have enjoyed significant gains in economic performance in the past 20 years by attracting
investment and improving infrastructure, particularly in China and India. Localized trade, such as that occurring within Asia and Latin America, has also helped boost performance. Speeding these growth economies along on their journeys are improved political stability and vastly enhanced access to technology and education. However, these markets face a major challenge in the form of falling productivity, which threatens to undermine their impressive growth stories.
Why is Productivity Failing?
Although the majority of major economies have weathered a decline in labor productivity since the Global Financial Crisis of 2008/09, the slowdown has been more dramatic in emerging and growth markets, For example, in Singapore, labor productivity growth plunged from 3.89% (1999–2007) to just 0.77% (2008–2016), according to The Conference Board Total Economy Database. Over the same period, economic powerhouse China has seen its labor productivity fall from 7.74% to 5.82%.
Many growth markets experienced strong productivity gains through the introduction of technology that helped them catch up with more developed economies. But the impact of technology on productivity levels has faded, while rising wage pressure, ineffectual leadership and low engagement levels are making gains harder to sustain. Innovation and new technologies can no longer simply be borrowed from more developed countries. Instead, growth markets must invest capital themselves while equipping their workforces with new skills and competencies.
Engagement Holds the Key
Organizations recognize the importance of employee engagement and its impact on productivity levels. If one group of employees produces less than another possessing equal education and skill, then the logical cause must be inadequate leadership and engagement.
In 2011, a group of economists from Stanford University conducted a study of how individual managers impact the productivity of teams. They accessed more than 5.5 million transactions from a data processing company to analyze how supervisors of more than 23,000 employees influenced group performance.
From these data, they found that having a great boss was equivalent to adding an extra person to a nine-person team. The way that great bosses did this was by teaching employees more efficient and productive ways of working, and/or by motivating them to be more focused, according to the economists. This simple but sophisticated study helped distill something that management science has known for a long time: Your performance as a leader is more about your ability to grow and motivate others than your own technical prowess or productivity.
In the past five years, Mercer | Sirota has asked around 5 million people from all over the world how motivated they are at work. Across this group, 18% have said they do not find work a motivating place to be.
For companies with bigger morale challenges, the number can be as high as 35%. This represents a huge waste of talent and time. Ask yourself: Would your company tolerate waste of one-third of any other resource?
There are other ways, besides engagement, to boost employee productivity, such as investing in factories and equipment or hiring more employees. But these require substantial capital investment. Cultivating an engaged workforce is far less costly and better positions a company for lasting competitiveness. It also makes better use of an existing resource.
For organizations in growth markets, it’s critical to address employee engagement issues quickly. In markets that offer an abundance of growth opportunities, disengaged employees with low levels of productivity can easily result in loss of market share lost, a damaged brand and an opportunity for competitors to seize.
Four Ways Growth Markets Organizations Can Engage Employees
Here are four recommendations to better engage employees and subsequently boost their productivity:
1. Promote the right people
Managers are the critical link between employee talent and group performance. Therefore, a manager should be judged based on his or her ability to transform a group of talented people into a high-performing team — not their technical skills, nor senior leadership’s “gut instinct” or personal opinion about the person. Yet many organizations in growth markets still promote managers based on these criteria, which have no link to effective people management.
A better approach is to use well-validated and robust tools to gather data on management’s potential from current employees and new hires. This will allow a company to identify and advance its most talented leaders and, by proxy, drive stronger levels of employee engagement. Using data in this way will also improve transparency and perceived fairness, further enhancing engagement levels.
2. Focus on core employee needs
There are many passing fads about what people want from work. However, more than 40 years of research from psychologists at Sirota have shown that people basically want three core things. First, they want to contribute to something meaningful and to be rewarded for their achievements. Second, they want to feel like they belong to part of something bigger than themselves, which they pursue in partnership with their teammates. Third, they want to be treated fairly and valued for what they do. If companies can teach leaders about these needs, people are more likely to show engagement and commitment to their work.
3. Stop putting people in the wrong jobs
In the growth markets region, most jobs are still assigned based on technical skills rather than personality and behavioral tendencies. Defining both the behavioral and technical aspects of any job can vastly improve the fit between an employee and the work he or she does. The bottom line is that people are best at work they enjoy. So be sensitive to the skills and interests of your employees as you assign them to jobs.
4. Get better feedback
Although many companies continue to run a fairly regular (annual) employee survey, very few collect any useful data. This leads to poorly conceived action plans and a complete lack of leadership attention. But employee feedback is vital for an organization to discover where it stands and what it can do to improve efficiency, innovation and customer experience. If it’s done well, regular feedback can form a key part of an organization’s management information system, driving intelligent decision-making and enhancing managerial effectiveness.
The biggest barrier to using employee feedback data is often leadership. If leaders don’t take the views of employees seriously, then nothing will happen. In the vast majority of situations, perception is reality. So if employees see nothing being done with the data or any subsequent improvements based on the survey results, they naturally think their company isn’t doing anything to engage with them.