Measuring and developing staff productivity
The definition of staff productivity was inspired by the age-old debate on the importance of staff for the performance of the company. It has been discussed through different frameworks and attempts have been made to prove the contribution of people and human labour to the performance of the firm. At worst, the importance of people has been demonstrated through low or declining sickness absence rates - as if everyone's time at work is equally productive and productive.
After a few years of reflection, we defined employee productivity as a personal characteristic consisting of motivation, competence and work ability (Aura, Ahonen & Hussi 2015 ossiaura.com/publications.html).Motivation includes job enthusiasm and commitment to the employer, competence includes professionalism and the ability to influence one's own work, and work ability is perceived work ability relative to lifelong best.
The status of the different areas of staff productivity is mapped by five questions and a key indicator of staff productivity (the Staff Productivity Index, HTI) is calculated based on the scores of the answers to these questions. Based on the formula, the HTI can be represented by the cube below - the better the HR productivity, the higher the cube.
In the final calculation, the staff productivity index is expressed on a scale of 0-100. The average of the individual responses is used to calculate a corresponding company-specific index.
Good management and leadership increase staff productivity
The results of the 2015 baseline survey and subsequent surveys and company-specific analyses are consistent: perceived good leadership increases staff productivity. The best leadership raises HTI by a third, while the worst leadership halves HTI - so the impact of leadership is really big.
We also know from research that good leadership supports managers' resources, skills and motivation. Good management develops leadership, which develops staff productivity. This chain of leadership is pretty solid - there are no silver bullets to develop staff productivity.
The biggest impact of leadership is through motivation and influence at work. A good manager gets people fired up - a bad micromanager extinguishes enthusiasm and destroys job control. Everyone can test this phenomenon with their own leadership experiences - even if you haven't experienced the extremes, the difference between the best and the worst leader is huge!
"The biggest impact of leadership is through motivation and influence at work. A good manager gets people fired up - a bad micromanager extinguishes enthusiasm and destroys job control."
Developing staff productivity is a continuous management process
Leading with knowledge is essential to improving staff productivity. You need to know the current situation and the priorities for improvement that it requires. The same approach does not apply to all managers and the same development path cannot be built for all teams. According to my analysis, only 30-40% of organisations have a clear picture, they are either good or bad in both areas - staff productivity and leadership. Some have good staff productivity and poor leadership - not a very stable state. Others have poor staff productivity but good leadership, so the solution may lie in the areas of competence.
The core of leadership is to set clear objectives and action roles, without which development is just a hobby. Monitoring objectives, on the other hand, requires constant information on changes, so that the manager can react and change direction if necessary.
The bonus of staff productivity is increased profitability!
Improving staff productivity is not an end in itself - it has a significant impact on increasing the profitability of a company. We proved this in the 2015 construction survey and confirmed it in the 2018 Arjessa company monitoring survey in the social services sector ossiaura.com/publications.html.
In terms of staff productivity, the difference between the profitability of a good and a bad company is up to 6 percentage points. A good firm is 3 percentage points better than the industry average, while a poor firm is 3 percentage points below its competitors. That 6 percentage points is a lot of money - so is 3 percentage points. It's all worth taking from the market through good management and staff productivity.
The whole of management can be described by the Chain of Management
Staff productivity meets the new Wall Street requirement
This is the new Wall Street paradigm of business - not just profit. In a well-run company, staff are well, profitability is good and customers are well served.
The author, Ossi Aura, PhD, is a researcher and developer of human resource productivity. In 2006, Aura received his PhD in philosophy from the Hanken Institute of Management and has since focused on strategic well-being management and the link between HR productivity and organisational performance. ossiaura.com