Senior executives at publicly traded companies feel under pressure. The companies they run are larger than ever, which means they must bring in ever more revenue just for growth rates to stand still, and many are increasingly competing against non-public firms with alternative funding models – especially in the tech industry – that don’t have the irksome requirement of hitting cost targets each quarter.
There is now a sizeable gap between the promises US managers make to Wall Street and the reality of what their workforces are producing. World Bank data show that US GDP grew at an average of 2.2% annually between 2010 and 2014, yet 2015 saw publicly traded companies make growth promises to Wall Street of 5-6%.
The Productivity Gap
The difference between what companies promise and what the economy can deliver is the productivity gap and, in most cases, it occurs when the growth goals of shareholders do not align with employee performance measures. The fundamentally impossible calculations in today’s productivity gap heap more demands on senior executives who then push that down to their managers and employees.
For a lot of these employees, this can mean more time at the office, more meetings, and more business travel in the push to sell customers products and services, and so produce enough revenue to meet the promises made to shareholders. Unfortunately, the weight of that burden in a traditional top-down management structure and culture, will crush some workforces, leading to falling employee engagement and the loss of good employees – often to competitors.
The vast majority of firms – if not all – cannot just slim down the promises they make. They would be savaged by the markets and it would make it much harder to raise funds in the future. Senior managers would also lose out, given how so many have individual goals tied to performance in the public markets.
Two Ways to Close the Productivity Gap
Instead, companies facing these problems should seek to do more with the same resources. They should aim to shrink the productivity gap – even if they can’t close it. And, to do this, they should design the work they ask of employees, and the culture they create to do it in, that increases productivity but does not cause pain. Firms should encourage peers to support one another, and give employees a sense of control over how, where, and when they do their work.
As companies continue to ask more of individuals, good support networks and flexible working practices can be the difference between success and failure to meet growth goals.
Create a peer-centric culture: Modern employees spend much more time with their peers than their manager. A good “peer-centric” culture will encourage employees to communicate frequently and productively, and provide support and coaching to one another where needed. Unlike a top-down management approach that essentially asks employees to work only on a specific set of tasks, a peer-centric culture ensures all employees are aware of the overarching goals for their team, function or business unit, and even company, and work collaboratively to achieve them.
When peers are connected through their daily work in this way, they are well positioned to rally around a goal instead of being crushed under it. Companies that understand this way of working can use a peer-centric culture to improve productivity, rather than senior managers cracking the whip from the top down. This feels far more natural to employees, as they spend most of their time working with their peers, rather than listening to their boss tell them what to do.
Give employees a sense of autonomy: As employees are expected to dedicate more time to work, either at the office or on the road, enlightened mangers are beginning to realize that letting employees do the work when they want helps with all-important work-life balance. Although expensive measures such as onsite gym and spa facilities, dry cleaning services and food delivery, can save some time, those offerings are not as helpful as giving employees a feeling of control over their day.
If companies give employees the option to attend a child’s school function, take a fitness class at the studio of their choice, or work from home after a visit to the dentist, the goodwill created is greater than any service that takes place on the “corporate campus.” And, often, the perception of flexibility can sometimes be more important than the flexibility itself. Many employees do not need to work less to feel better. They just need to feel like they could if they needed to. By creating a sense of autonomy, companies can improve how employees feel about their work-life balance.