August 30, 2010
By Patrick McGee, Copyright 2010
So, do organizations – particularly knowledge work orgs – have a productivity problem? Well, a study that will be released in September (it has been leaked and reprinted here) is reported to conclude that:
“In the UK private sector, staff are productive on average 44 per cent of the time. While this is pretty low compared to better performing countries or the best UK businesses, it is still much higher than the 32 per cent we observed in local government.” Paul Weekes, Principal Consultant, Knox D’Arcy Management Consultants.
Obviously not all organizations, according to Mr. Weekes, are laggards on the productivity front. However, enough are that they produce these stunningly low averages. Think about your organization. Do you know the level of productivity of your staff?
Exploring the problem a bit more, we need to understand where the time goes. The Knox D’Arcy report explains that:
“‘Lost time’ breaks down into obvious lost time (such as waiting for work, information or instruction, arriving late, leaving early, social chatting, taking informal breaks) and also time spent on activity which is ineffective, such as work which is done incorrectly and has to be reworked.”
Well, wouldn’t you just like to quantify that to get another perspective on how costly it is? I can do that, thanks to another study by the IDC research and advisory firm. In 2001 analysts Susan Feldman and Chris Sherman authored an IDC White Paper titled “The High Cost of Not Finding Information.” In the paper, they developed scenarios to try to help with understanding of the problem. I want to focus on “Scenario 2: Cost of Reworking Information,” because to me it has a mis-communications genesis and it clearly reflects some of the “lost time” aspects of low productivity identified in the Knox D’Arcy comments.
From the IDC White Paper:
Scenario 2: Cost of Reworking Information
A 1999 IDC study found that Fortune 500 companies would lose $12 billion as a result of intellectual rework, substandard performance, and inability to find knowledge resources. IDC call this the “knowledge deficit” (see European Management Fact Book, IDC#21511, January 2000):
“The knowledge deficit is a metric that captures the costs and inefficiencies that result primarily from intellectual rework, substandard performance, and inability to find knowledge resources (both information and experts). IDC’s extensive study of European firms and end-user return on investment (ROI) analysis has enabled us to estimate the average cost of ineffective knowledge management (KM) within organizations. The knowledge deficit translated into an average cost of US$5,000 per worker per year in 1999, growing to US$5,850 in 2003.
“A study by Kit Sims Taylor found that knowledge workers spend more time unwittingly recreating existing knowledge than in creating new knowledge. This study was presented at the International Conference on the Social Impact of Information Technologies in St. Louis, Missouri, October 12-14, 1998. According to Professor Sims Taylor, roughly one-third of productive time is spent in knowledge reworking. The other nearly two-thirds is spent in knowledge finding and communication, with only about 10 per cent of time spent in actual creation of new knowledge. For instance, Whirlpool expects to increase productivity of its engineers by 30 per cent by giving them access to existing designs for products. The following scenario uses an extremely conservative estimate of time spent in knowledge reworking.
- Knowledge worker salary = $80,000 annual salary plus benefits
- 1,000 knowledge workers x $5,000 per year (knowledge deficit)
- Calculation of cost: 1,000 knowledge workers x $5,000 per year
- Conclusion: An enterprise employing 1,000 knowledge workers wastes $5 million per year because employees spend too much time duplicating information that already exists within the enterprise. If we apply this finding to Fortune 1000, we see that in aggregate, enterprises are wasting $5 billion annually. And this is a conservative estimate, since many corporations employ more than 1,000 knowledge workers. The productivity cost is staggering.”
I find Prof. Sims Taylor’s comment about 10 per cent of time devoted to creating new knowledge interesting as I think back to my early work years and time spent on a factory floor running a machine. If that $100,000 piece of equipment had only produced at 10 per cent capacity, a lot of heads – belonging to me, my foreman, our shift supervisor and the section manager – would have rolled. The company would have immediately known there was a problem and action would have been swift to get productivity up to acceptable levels. This is the problem in many knowledge work organizations – private or public. Peter Drucker’s comment “What gets measured gets managed” tells us productivity in this work environment can be so low because it is generally unmeasured.
In organizations where output is measured – whether on the factory floor, hospital emergency unit, office, or service desk – my assumption is that for the most part productivity is much higher than where it is not measured. So, create a measurement system for your knowledge work and work environment. I will say that counting key strokes seems to be a bit draconian, but defining the output and measuring and monitoring that output is reasonable. Unfortunately, many organizations default to measuring activity, not output, because it’s easier.
Improve communications. How do we end up with unproductive work that is ineffective or has to be redone? I think we can all relate to situations where we have been told that our work output is not acceptable and has to be reworked. That can be done, but how to prevent it happening again? That takes a root cause analysis.
On the factory floor and in other environments, this happens automatically and very often continuously (quality assurance/control). In knowledge work environments, not so much. In fact, Knox D’Arcy found that supervisors were often unproductive in terms of supervising because they were doing or re-doing their staff’s work.
The wonderful element of factory floor work that I remember is the clarity of the communication. I was taught how to use the machine. Supervised closely to ensure quality. Supervision loosened somewhat as I built up speed and attempted to reach the consistent output expected per shift. I never made it. Even with more coaching I could not make the numbers. I was replaced on the machine by someone else and given a forthright and fair explanation. I was then moved to another position where I met expectations and survived the summer work term.
This happens in good organizations and sometimes under the supervision of a good manager in a bad organization. But I don’t see it as often as required to fix those productivity numbers that IDC and Knox D’Arcy have found. I conclude that the root cause in most of these situations is poor communications and by that I mean unclear, ambiguous direction (e.g. “you get the idea” or “figure it out”); lack of priorization of work assignments (e.g. “I know that’s a lot of things I’ve given you, but I do need them all at the same time”); inadequate training or instruction or supervision; lack of/no access to appropriate information; duplicated work assignments (e.g. three people given the same assignment unbeknownst to each other).
The fix is simple but it is not easy: clean up the communications and productivity will improve.
So, how can you clean up communications in the workplace?
There are technology solutions. I want to mention one, because when I began my research on the question “how much does mis-communication in the workplace cost business?” I started at an iSixSigma Discussions forum on the cost of rework that took me to IDC’s work for Cognisco and then back to the original IDC White Paper. Cognisco has an online product to measure employees’ understanding of their job.
There can be systemic solutions, where processes are put in place that everyone follows. For some simple examples, I looked in my filing cabinet for work forms and pulled out a sample from a car rental agency, from a roofer, from a local car repair firm and one from a contractor who worked on our house. Each one provided clarity of communication about the assignment to be completed. And we all know that if there was a dispute about the work later, we’d find ourselves back at the work form, discussing what was agreed to be covered and what was not. Interestingly, all of the forms had my signature or initials on them. There’s a formal commitment there that would be absent if the agreement was verbal. So, yes, we could use these kinds of tools to improve communications in knowledge work. And while the resistance might be high at first (“it’s too bureaucratic, it takes too much time, we’re above that”), once the benefits are seen to outweigh the perceived negatives, then we might find these solutions to be very acceptable.
So, what can you do, short of filling out a multi-copy work order form, to get the benefits of clarity and measurement? Two things: structure and training.
Structure: A work order form is just a structure of communication. In using structure, we get clarity, comprehensiveness (everything we need to know and agree to between us should be on that car rental form, for instance, including the vehicle, price, timing, contingencies/insurance, range, etc.). We use structure for priorizing work in many environments, usually on a chronological basis. Staffers might relieve a lot of stress if they could say to their boss: “That assignment is number 8 on the list and I am currently working on number 3.” Some do say something like this. Most don’t. And bosses don’t like resistance. So we hear stories of bosses saying things like: “I don’t care, just get it done.” The communication is poor on a number of levels, not the least of which is around the priority of each assignment given the limited resources, like time. The root cause here is not an unproductive staffer perhaps, but an unstructured boss. And that may be because his or her training and/or the system of that organization does not encourage such a disciplined structure. Well, if productivity is important, add structure. It works wonders on the factory floor.
Individually, anyone can improve their own productivity and that of the people around them by adding structure. In my communications training practice, I am still surprised when very successful managers tell me they’ve had no training in communications. Many have had zero training in supervising or managing as well. They learned it on the job. All the successful people I’ve worked with want to get better. They may have resistance to get over regarding a new idea or way of communicating, but if the idea or structure has strength, they embrace it.
So, we all could improve by using more structure in our communications. Putting it in writing works in services industries and other businesses. Why not in knowledge work environments? Handing a staffer a written assignment allows for discussion to surface missing information or different approaches to resources allocation. Many work environments use this structure as an assignment contract and the parties do what I did with the roofing contractor: we each sign it. At minimum, if a manager writes down the assignment and ensures all the needed bits are in it – its priority, or who else it has been assigned to, for example – and then uses that written information to give verbal instruction, my educated guess is that productivity is going to rise as rework or ineffective work is eliminated.
We started this discussion with the call out: How Communications Can Boost Productivity at Work. There are two choices, just as there are in that old saying: How do you eat an elephant? All at once or one bite at a time.