Why You Should Give Away Your Productivity Gains

Increasing productivity is hard: balancing costs and benefits, sorting through tools, and developing incentives takes a tremendous amount of time…and effort and we still often get it wrong.

Thou shalt not muzzle the ox that treadeth out the corn. 1 Timothy 5:18
Yet another reason for giving your employees the benefit of their productivity. Photo by treewoman8.

I was on a call recently where a consultant was reviewing a case study of the ROI of a particular software tool thus: The product reduced the time required for a certain operation by 15 seconds. Now, each employee performed this operation an average of four times a day so the software saved one minute per day and there are 1000 employees with an average salary of $25 per hour, so this software saved the client about $105,000 in the first year alone…

I stopped listening after that, because I’ve never seen an office in which employees were scheduled to the minute, much less in 15 second increments. (I’ve never even seen an employee spend less than 15 seconds deciding what flavor of coffee to drink.)

The truth is, knowledge workers are self-governing in the use of their time (and according to Peter Drucker it can’t be otherwise); if they are pressed for time they will take a short bathroom break, if they have time to spare they will take a magazine with them. And this is why so many productivity programs fail: give a knowledge worker an extra 15 seconds and he will use it as he sees fit.

The best way to improve productivity is to give some of that productivity to your employees.

In last week’s post, I floated the suggestion that employees be given as much of their productivity improvements as possible. This could be through allowing employees to go home at a certain time of the day if the work is finished, giving some other form of flex time, or just treating them like adults as described by this business owner.

Of course you must say this is insane because:

“I don’t have excess capacity—my employees hit the office early and stay late to get their work done.”
If that is really the case, you may have some real problems like:

  • You have unmotivated, unlearning employees who are not interested in improvement. When you hired an employee to do a full-time job, you may expect them to spend 40 or more hours on it, but shouldn’t they be better at it after a few months?
  • You don’t have any margin. How are you going to handle rush orders, unexpected workload, or inevitable chaos?
  • You are creating inefficiency by treating all your workers the same. The industrial model makes all workers identical cogs, but in the knowledge model every job (and every worker) is different; there is no way every person needs exactly eight hours to do their very different jobs.

“This will cost me money.”
No, it won’t. You are not paying anything additional, only giving workers some of the value they generate—no improvement by them means no additional benefits for them.

“If I have excess capacity, I should lay people off and keep the money.”
Yes, your job as a business owner is to make a profit and a product, not to provide jobs, but:

“Since this doesn’t benefit me directly, why should I do it?”
Done wisely this could benefit you directly. When employees become more productive, that productivity will spill into all areas of their work—meetings, email, and processes will all improve. As employees work to improve their processes and productivity, innovation will be increased. While the employees keep the time they save, your business keeps the fruits of their innovation and smarter processes, and in a knowledge economy this is the value that counts.

Now, giving your employees their productivity gains is scary, and it’s a dangerous idea if not done carefully. You wouldn’t want your employees to see this as a perk or entitlement, and it shouldn’t be; you and your employees need to see such a program as:

  • An incentive to boost productivity
  • A systematic method for improving innovation
  • A natural consequence of their efforts

Such a scheme needs thorough benchmarking, soul-searching, consequences, and 100% buy-in from management and employees. It may be hard, and it may be an idea whose time has not yet come…but maybe it has.

Now, here’s a question for you: Do you thing giving away your company’s productivity gains makes sense? Why or why not? Share your thoughts in the comment section below.

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