The Missing Link In Productivity
A critical yet rarely measured factor—directly influences productivity far more significantly than many traditional factors like technology investment alone.
Productivity is much talked about – a big conversation, a hot topic, with much wrangling about what needs to be done. And, yet not much seems to be changing.
The numbers are well known – Canadian productivity is about $8,000 per person lower than that for the United States, having declined further since the pandemic. And for small and medium sized businesses, the gap is double - $16,000 per employee.
And the causes of our growing productivity gap have been well defined – we do not invest in innovation, especially technology, as we need to, and we do not provide the training and development for our people as we should (about half that in the United States). You may have guessed; Atlantic Canada trails the rest of the country in both areas. This is not promising with the revolution of AI upon us.
What if we are missing something in the equation?
In all the discussions, has one key factor of productivity been overlooked?
Yes, to both questions. There has been a lot said about labour shortages, but little mentioned about the return on work for those employees already in the workforce.
Return on work?
It is a critical part of the productivity formula, but rarely included in the prevalent measures. Return on work is the value that employees gain from their effort put into their contribution. If people do not feel they are getting a fair return on the work they are doing, are they going to be as productive as possible?
Unlikely. If the culture is toxic, will employees feel energized to contribute their best. Not for long. And what if expectations are unrealistic with only one-sided communication about workload as to what is needed, will teams be high performing? No. While we focus our explanations of productivity on output – what we gain per hour of labour – it seems that employees are simply a cog in the spinning wheel.
People are treated as a variable in the equation. Wow are we missing something big. We need to rethink and reframe our understanding of productivity. Return on work is a result of various aspects of the employee experience from their perspectives. It does include compensation, but it also measures meaning, belonging, recognition, psychological safety, and other critical aspects of a culture that values people’s talents and potential, supporting their performance.
How much does return on work matter to productivity?
I have been measuring this metric for several years and the number runs around 32%. That sounds encouraging. Not so much. Returns on work of 55% or higher are deemed strong, exceptional if over 75%. For Atlantic Canada, employees fall into the “concerning” category (return on work of 20% to 34%). This translates to an equation of employees realizing significant stress, lower engagement, and unclear expectations. Their sense of belonging and meaning is compromised, and compensation satisfaction is relatively low.
Turnover intention begins to rise, suggesting potential negative impacts on morale and productivity unless quickly addressed. The positive – improving the employee return on work does not require significant financial investment rather attention and changing behaviors from leaders. We cannot solve our productivity gap if we do not account for employees – they are the people doing the work.
If the return on that work is not there for them, how can we expect more from them. Remember this impactful linkage – employee experience is responsible for 69% of customer experience and customer experience is 72% responsible for business performance.
We've spent years focusing on outputs and efficiency, but the missing link—the experience and perceived value employees gain from their efforts—is actually where real productivity breakthroughs lie.
Find out about measuring the return on work for your employees by touching base with me at michael@workinsights.io.