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Productivity: no longer the metric that matters most

February 19, 2024

For decades, productivity has been a valuable tool for assessing performance, but lately, productivity growth data shows an undesirable scenario: productivity is not only stagnant but declining. According to a recent Deloitte report, in the first quarter of 2023, productivity for the US nonfarm business sector dropped 2.1%, a historically low productivity growth rate.

Many studies reveal that productivity as a metric has limitations and potential pitfalls that may contribute to its failure as a comprehensive metric. “As the drivers of innovation are becoming more human-centric and values-based, organizations that continue to rely on the ‘do more with less’ productivity metrics invented a hundred years ago as their primary measure of organizational performance could be missing the bigger picture,” Steve Hatfield, principal at Global Future of Work Leader, wrote for Deloitte Insights. He adds:

  • Productivity tracking can lead to productivity paranoia and performative work;
  • Productivity metrics may exclude important contributors to workforce ecosystems;
  • Productivity metrics may not account for knowledge and “invisible” work.

Hatfield argues it’s time for a new mindset and metrics for a new way of working built around human performance and outcomes.

Then what?

Human outcomes should be part of the equation: the goals and objectives that help an organization’s people thrive physically, emotionally, financially, and professionally. 

Another Deloitte study revealed that while 79% of leaders agree that their organization has a responsibility to create this kind of value for workers as human beings, only 27% of workers strongly agree that their employer is making progress in this area, indicating that measuring human outcomes is still a largely untapped opportunity.

“Consider worker happiness as an example. In addition to the individual benefits of being happier at work, such as improved wellness and performance, worker happiness could also improve teamwork and social encounters at the group level. It has been linked to improved engagement, productivity, and culture, and reduced attrition risks at the enterprise level,” the author suggests.

Source: Deloitte Insights