Taking the ‘high road’ to improve productivity

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Australia’s productivity has declined over the last decade, according to the Understanding Productivity: Australia’s Choice report, published by the McKell Institute.  While productivity in New Zealand hasn’t shrunk in this period, its rate of increase is low in comparison to international standards, according to the New Zealand Productivity Commission.

The report’s authors,  Professor Roy Green, Dr Phillip Toner, and Dr. Renu Agarwall, identify two routes to higher productivity: the low road of cost-cutting or the high road of a knowledge-based, high wage economy. Unsurprisingly, they champion the latter.

To achieve this superior economy, they make three recommendations – two of which are particularly relevant to HR managers and employers.

  • Firstly, they suggest adopting ‘transformative management practices’;  and
  • Secondly, expanding ‘participatory work practices’.

The authors emphasise the need for better managers.  “Superior management performance is positively linked to expanded sales, market valuation, employment growth and productivity,” they write. 

As a consequence of this, the report recommends improving management education, and the development of leaders – which was also a focus of the recent NZAGE summit. “Continuous workplace training and skills formation and initiatives to engage the talent and creativity of Australia’s workforce” are what’s needed, the report stated.

Finally, the authors note that a significant proportion of Australian employers consider their employees to be over-qualified and over-skilled.  The consequence of this is an ‘under-utilisation’ of employees’ skills and knowledge, which erodes productivity.  “International research and experience has demonstrated that the most effective way to address this problem is through the promotion of innovative and participatory work organisation,” they conclude.

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