A first look at improving productivity and culture
Employee Engagement New research enables measuring how employee engagement actually increases productivity and profits bringing some hard numbers to a soft science says Juha Huttunen, CEO of VibeCatch.
Did you know your employee’s productivity and culture fit could mean the difference in your company’s bottom line by as much as 25%?
It’s true, and it’s critical to understand how it can probably be measured and improved. Internationally recognized research, done by professor Marko Kesti, has developed a quantifiable model to measure not just employee engagement but also the resulting productivity called the Quality of Working Life, QWL for short. Professor Kesti’s research has shown that companies properly utilise on average only 59% of their employees' working time while the rest is wasted due to lack of motivation, poor management, communication and more.
So how do we make improvements, and where do we begin?
What is human capital productivity?
First, we need to look at human capital productivity, which refers to how effectively our working time is actually utilized, and how much value we produce each hour we work which varies for example based on employee motivation, team spirit, leadership or processes. An employee might work for eight hours in any given day, but out of that eight hours, how many hours were actually used effectively and what was the passion put into each effective hour? This basic understanding of how each employee produces a monetary value needs to be recognised before any improvement can be made.
"We properly utilise only 59% of employees' working time, while the rest is wasted due to lack of motivation, poor management, communication and more."
Juha Huttunen, CEO of VibeCatch says, “The model developed by our advisor Professor Kesti identifies five key areas that affect productivity: leadership, line management, culture, skills and processes. Each area has three productivity drivers: personal motivation, company culture and job satisfaction that affect productivity in different ways.” In most traditional engagement surveys, the scores are just averages of things that are irrelevant and have totally different effects. Thus, the result is often an engagement index that doesn’t necessarily tell what and how to improve and what impact the improvement would likely have.
"Personal motivation affects productivity in a very different way compared to, for example, company culture."
Professor Kesti says, “Personal motivation affects productivity in a very different way compared to, for example, company culture. Likewise, things like leadership, company culture and processes, have certain causalities that we’ve identified in our years long research. We’ve seen companies improve their profitability with this method by even 25% which is huge.”
How can technology help?
“Most companies use effective communication technologies like email, Slack, Yammer and other tools that can be used to collect quick feedback, making the process easier for the employees and close to real-time for the managers.” says Huttunen. By combining communication technologies with easy-to-use analysis software like VibeCatch, companies can easily keep track of performance throughout the year, pinpoint areas of improvement in real-time, and make faster and more informed decisions. It helps in sharing the results as well, as no more time is spent on creating slides for managers. Time should be spent taking action to improve things, not to produce documents.
Importance of transparency and frequency
Huttunen says, “The best results are usually achieved by asking for feedback often, even on a weekly basis, and by sharing the results openly. This gives the management a bit of new data each week, and on the other hand creates positive pressure for everyone in the organisation to take action based on the feedback.” No software can do the actual improvements for you of course. Frequent collection of feedback and sharing of the results also means that teams can take action also themselves all the time and this should be encouraged.
“The best results are achieved by asking for feedback often, and by sharing the results openly."
As modern technology allows for data collection through short polls to be fast and convenient for the employees, there is really no reason not to run simple weekly polls. In most companies, people offer only constructive improvement ideas so there is no reason to not be very transparent with all the feedback collected. Honesty definitely is the best policy!
Role of management
“Management is the most crucial element in improving the QWL index. If they have a focus on improving the QWL index and are open about the feedback and try to involve their teams in this process miracles can happen. On the other hand no matter how much the truth stares you in the eyes it doesn’t matter if you don’t take action,” says Huttunen. Like any other initiative, top management commitment is needed to produce long term results. Luckily the QWL method is something line managers are quick to understand as it is about being lean and continuously improving things in a measurable way.
Now it is finally possible to start looking deeper into the science behind creating better culture, how to translate the data through technology for better decision making, and how this affects the bottom line.