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Beware of the Productivity Measurement Fallacy

Can money and productivity be measured on the same spectrum? Unfortunately, money saved does not always equate to greater productivity from employees. In an article for CIO.com, Eric Bloom explores his own experience with this fallacy.

Pitfall Ahead

In the business he was employed at, there was a company-wide productivity initiative. The program was explicit in its intentions, and there were even prizes to be awarded to the team that generated the greatest company savings. One of the issues that arose was the perceived savings were to be calculated by the individual teams, leaving a lot of room for errors. The teams wanted to win, so they embellished their savings so greatly that the total savings across the board were greater than the annual revenue. The program eventually lost its credibility and was cancelled.

Freeing up an employee’s day does not necessarily save the company money, especially if that employee is salaried. This is still creating added value on the behalf of the employee, but it is because of the time saved, not money. This saved time can help the employee achieve a better work/life balance, perform work more meaningfully, or even spend more time with clients improving the relationship.

There are a few instances, however, where an increase in employee productivity can illustrate money savings. If the work can be done with one less salaried employee, the company will be saving a paycheck. If the work can be done by hourly workers in less time, this too indicates savings. When work can be completed by a lower-paid employee and still meet the quality standards set by a higher-paid employee, that is a win. Additionally, if the money saved creates a competitive advantage, that is another win for the company.

Productivity needs to be measured carefully, or else the entire premise will be undermined. You can read the original article here: http://www.cio.com/article/3033155/leadership-management/beware-of-the-productivity-measurement-fallacy.html

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