Companies are facing growing complexity, declining productivity and a slump in employee satisfaction.
Despite all the technological innovation around us in every industry there is a constant slowdown in productivity. The decline is so dramatic that we at BCG have been looking for the ‘hole’ which has been draining companies’ productivity. Before unravelling the mystery of vanishing productivity, I want to look at a related phenomenon which is equally pressing: the relentless slide in workplace satisfaction. We spend half of our lives at work so it is important that we are happy.
The bad news is that we don’t feel good about work at all. In Europe, only 11%-23% of us feel ‘engaged’ at work (depending on industry). This is despite all the efforts to motivate people and train managers.The productivity crisis and the work crisis have a common root cause. If you tackle it, you simultaneously improve performance and satisfaction at work. And when people are more satisfied they are more productive; when they are more productive, they are more satisfied.
Dealing with complexity
So what is the common root cause of these twin crises? It’s the way companies have been organising themselves. CEOs are doing what is taught in business schools: strategic alignment. They start by deciding on a strategy and then align structures accordingly. It looks reasonable but there is a trap. This approach worked when the world was simple. The choice for companies was to decide whether to compete on cost or on quality. But in the mid-1980s, companies lost the ability to choose between cost and quality because their customers were demanding both. This added considerable complexity as companies need to do two things at once.
Of course, that was nothing compared to new layers of complexity that have been added in recent years. Today, there are competing pressures to deliver customisation and standardisation; to be innovative and efficient; to be locally responsive and to operate on a global scale. We have tried to solve the new complexity by developing organisations with increasingly complicated structures. But it doesn’t work.
Managers are spending 40% of their time writing reports on KPIs. They spend another 30% in meetings because they have to coordinate with more and more functions. This leave, at best, 30% of time for managing teams – so it can be no surprise when we find that teams are poorly managed. Employees waste between 60% and 80% of their time but feel that they are working harder and longer.
This is what is killing productivity. Inside this labyrinth, people lose purpose, direction, and meaning – and they disengage.
It may be tempting to think that ‘staying small’ is the solution. However, there is really no correlation between size and complexity. It is possible to be big and beautiful – or small and ugly. What matters is not the size but how we manage the size. One of the critical ways that managers add value to a company is by promoting cooperation. Cooperation is the key to getting more from teams.
Take the analogy of a 400 metre relay race. Add up the individual 100 metre times of the top four US female sprinters and you’ll find that they should finish six metres ahead of the four best French athletes combined. Yet the French team won at the world championship final. Why? Because their superior cooperation made the whole more than the sum of its parts. This is not poetry or philosophy – it’s maths. Equally, cooperation multiplies intelligence and energy at work.
In addition, improved productivity and workplace satisfaction may even reduce the risk of industrial accidents – avoiding catastrophic oil spills or expensive product recalls. In the medtech sector, where patient safety is everything, minimising ‘accidents’ is fundamental. So we need to think ‘smart simplicity’. Amongst other things, this means understanding what people really do in our organisations, and rewarding cooperation. We need to inspire and incentivise individuals to use their intelligence and initiative to work as a team rather than to protect their own patch.
The results will be better for organisations, for companies and individuals.