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Prioritizing Outcomes: Is Productivity No Longer the Key Metric?

Traditional productivity metrics are becoming outdated as they fail to capture the true value of human efforts in a technology-driven workforce. Organizations should shift focus from productivity outputs to business and human outcomes, which better align with innovation, quality, and employee well-being, ultimately driving more meaningful organizational success.

This article was written by Sue Cantrell & Corrie Commisso and published in Deloitte Insights Magazine.

Hours worked. Time on task. Product produced. Revenue per employee.

For more than a century, organizations have relied on productivity metrics like these since they emerged during the Industrial Revolution as leading practices to improve and measure organizational productivity. It was a good system for the working culture of the era, when mass production and automation made work a commodity and drove the creation of standardized processes.

But the workplace has evolved. We’re entering what the World Economic Forum calls the Fourth Industrial Revolution (4IR): a period of technological innovation that increasingly relies on systems of smart, interconnected technologies to augment (and even replace) human decision-making. Hardly a day goes by without reports of technological breakthroughs in any number of industries, fueled by augmented and virtual reality, quantum computing, advances in biotechnology. Historically, new technologies have led to greater productivity—so why are some of our current technological transformations failing to deliver on the promise of improved productivity? In fact, productivity growth data shows the opposite is happening: Productivity is not only stagnant; it’s declining. In the first quarter of 2023, productivity for the US nonfarm business sector dropped 2.1%, a historically low productivity growth rate.

The situation doesn’t appear to make much sense on the surface, and economists have ventured numerous theories. But underscoring these theories, one important insight may highlight a path toward understanding why organizations are seemingly less productive today, despite the explosion of technologies that promised to deliver marked improvements.

It mattered when global economic engines centered primarily on the making of goods. It can be useful for measuring the impact and output of machines. But 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.

It’s time for a fundamental rethinking of our approach to productivity: a new mindset and new metrics for a new way of working built around human performance and outcomes.

How traditional productivity metrics are falling short

With high inflation, shrinking profit margins, and the looming threat of economic recession, it’s no surprise that corporate leaders are feeling a renewed push to double down on efficiency and productivity. According to a new global survey on the state of work conducted by Slack, a majority of leaders (71%) say they’re under increasing pressure to squeeze more out of their teams, reduce waste, and boost productivity. Layoffs and cost-cutting measures seem to be the go-to tactics: Mark Zuckerberg, founder of Meta, for example, declared 2023 a “year of efficiency” for his company, paving the way for substantial workforce reductions.

The result is often a standoff between leaders and workers as they clash over what it means to be productive in today’s work environment. Traditional productivity math tends to focus on reducing input and increasing output, but more output may not necessarily translate to better (or more efficient) results. Instead, organizations may find that relying on an input/output equation to measure organizational performance is falling short in a number of ways.

Productivity tracking can lead to productivity paranoia and performative work

In their drive to improve efficiency and productivity by tracking the activities of their workforce, organizations may actually be undermining the very productivity they are seeking to optimize. Between the beginning of the COVID-19 pandemic and late 2022, approximately one-third of medium and large companies surveyed adopted new worker-monitoring tools that analyze key strokes, mouse activity, and more to determine how much a person is working and on what. In the Slack survey, 60% of executives say they track everything from hours worked to number of emails sent as a measure for how productive their employees are—but only 15% of employees agree that this kind of tracking aids their efficiency on the job. In fact, employees are spending, on average, 32% of their time on performative work that gives the appearance of productivity.

Read the full article here: Outcomes over outputs: Why productivity is no longer the metric that matters most