Tuesday, 9 June 2015

Productivity ain't what it's cracked up to be.

One of the most interesting articles I read in the Sunday press was 'Fussing parents rear a generation of no-copers' http://www.theaustralian.com.au/news/world/fussing-parents-rear-generation-of-no-copers/story-fnb64oi6-1227386987994. (this may be subscription site depending on your settings - also available from the original in the subscription Sunday Times)

This highlights a generalised problem where the next generation of workers have had their expectations of celebrated individuality and of lauded success, arising from a cosseted youth, lead to a generation that are really not very good at working for anyone else. They are taught to challenge, great if productive but much more likely to be disruptive, they are taught that their individuality is celebrated (get over it, it really isn't) and they are taught that they can expect the world if they do well in education (well they have been told that a degree education leads to a wonderful job). Is this output really prepared for the corporate world? Or, more importantly, do they really want it as perhaps their are newer alternatives? Perhaps the rise of the freelancer and self employed or the growth in small businesses reflects this move, as the dream of self-determination is much more achievable with the rise of facilitating technology.

The path to employment efficiency reminds me of that time management analogy of golf balls in a pint glass, with marbles, sand then water added. The small business outsourcing and freelance component of employment being the sand and water between the pebbles of permanent employees. Rather than decrying a tendency for individuals to move from employment within the quasi-slavery of modern corporate behemoths, with their top heavy biases of self-aggrandisement, the move should be welcomed.

Yet if this is a more efficient way of allocating labour resources why is productivity falling? Poor productivity is regularly cited as a canary in the coal mine when labour data is published but is that a problem or a natural consequence of the lifestyles and employment terms the populace prefer?

Individualism, free thought, and self determinism is drummed into our young by social mores, the media and reflected success seeking parents, yet the big world of employment rarely celebrates individualism as individualism is not the easiest fit within an institution that, by dint of it’s very existence, is reliant upon others to pursue its corporate management goals of rewarding the shareholder and the cascade of management beneath. When it comes to coping with individualism a compromise is achieved,  but be sure that the compromise is normally biased towards money buying off individualism. This extends to the payoff for other employee needs, but no matter how hard a corporate may stress their care for their employees, it only extends to reaching the maximum payoff along the curve of the employee's output vs their benefit received.

And we all have a payoff curve. That of job satisfaction plotted against income; where income represents delayed benefits, whether that is free time enjoyments or is stored as savings to buy time that you don’t have to work, such as an earlier retirement. Think of something you would really hate to do and put a price on how much you would have to be paid to do it. Now think of something you would love to do and put a price on how much you would accept to do that as a career. Those are the two ends of your curve. Completing examples in the middle will result in your job satisfaction versus income curve and I would wager it would look something like this

As this is basically a y=1/x graph it doesn’t matter which axis is labeled as which but let's assume the x axis is job satisfaction and the y axis is income.

As an individual when you are negotiating for a job you want to pitch your curve for maximum income for level of satisfaction whilst as an employer you want to pay the lowest. So you want to be employed as the green line but you want to employ the blue line.

If an employer is to increase job satisfaction they will only do so a) at the efficient points in the curve that produce the maximum fall in wage demand and b) the facilitating of which doesn’t cost more to implement than the savings in reduced income demand. There are long tails on the graph where job satisfaction goes up yet the earnings required never hits zero (we need to pay for the basics in life) and where there are some tasks that no amount of money will compensate. One aspect job satisfaction, other than having a warm office and free coffee, is not actually having to work yourself to death and to take it relatively easy. To be able to pop out for a long lunch,  do a bit of internet shopping or even have 10 weeks holiday a year or at least not work 15 hour days. But this is the part of the curve that a company doesn't want to pay out on because it is actually reducing productivity.

The demand from economists and employers is that we need higher productivity from our labour forces and that lower productivity is bad news. Is it? It may represent less income for those that demand higher productivity from others but the individual expected to produce that extra productivity may be more than happy to forego it. I have just had a most enjoyable non-productive weekend. In fact some of my happiest times are when I am least productive. I may be less competitive but I am a darn sight happier.

Are our cries for greater productivity doomed to failure because the population doesn't actually want to be more productive? The work/life balance is changing and though big corporates demand greater efficiencies, there is a quiet revolution as the hive of small business and working individuals expands. This may be less efficient with regards to productivity but it may be a damn sight more enjoyable.

Call's for increases in productivity are similar to those from champagne socialists. Someone else can provide it, not me.

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