One Reason U.S. Productivity Growth Has Slowed, and What to Do About It

By in ,
One Reason U.S. Productivity Growth Has Slowed, and What to Do About It

Economists have struggled over the last decade to attribute and explain the dramatic slowing of U.S. productivity growth. Since 2005, U.S. labor productivity growth (growth of measured output minus the growth of labor input) has been effectively sawed in half. As one of the few real indicators of economic vitality, understanding this phenomena is anything but an academic exercise.

Most economic models take into account the pure arithmetic cost of the labor component without factoring in the actual effort being expended. In other words, even at identical rates of pay, there is a huge delta between what people can contribute when they really want to versus the bare minimum effort required to keep one’s job. Or, as former Continental Airlines CEO, Gordon Bethune once described his pre-CEO days as an aircraft mechanic, “Do you know how much faster I can fix that plane when I want to than when I don’t?”

Employee engagement surveys performed over the last decade suggest an abysmally low (less than 33%) rate of workers who approach their jobs at full throttle. The remainder are “disengaged” to varying degrees, including about 18% who are “actively disengaged”, meaning that they are deliberately throwing sand into the gears of commerce. The cost of this disengagement has been estimated at $550 billion, or about 3% of our $18 trillion economy.

At a minimum, wise leaders are doing the following things:

  1. Asking workers daily what things impede their ability (and willingness) to do their very best work. They listen intently and once told, they act. They find and and fix the broken policies, methods, equipment, et. al.
  2. They are absolute zealots about using leadership skills as one of the must have credentials for anyone entering a management job, and are equally committed to strengthening the leadership bench via coaching, leadership performance metrics, and developmental assignments.
  3. They exercise the courage to differentiate pay based on performance, and on the premise that A-players don’t like to work with turkeys, they actively de-select those whose best effort is either not apparent or not good enough.
book richard or bill to speak for your meeting
Leave a reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.