Are your productivity metrics outdated?

Revenue per employee. Hours worked. Sales closure rates. These are only a few of the traditional metrics used to measure employee productivity. But despite attempts to capture the real score on performance, such indicators miss one crucial fact: business leaders are measuring the performance of human workers, not machines.

Experts from Deloitte Insights ask a fundamental question in the 2024 Global Human Capital Trends report: “As human performance takes centre stage, are traditional productivity metrics enough?”

Three in every four survey respondents agree (74%) that finding better ways to measure workers’ performance and value – beyond traditional productivity – is very important, if not critically important, for success. Yet fewer than one in five leaders believe (17%) that their organisation is very effective, or extremely effective, at measuring the value contributed by individual team members. To this day, organisations are still focused on activities or outputs to measure workers’ contribution, report findings suggest.

If we believe work is becoming more human, then the metrics for the value of human work should change, too.

Happy workers are productive workers: The example of Hitachi

In the case of Hitachi, as cited in the report, instead of zeroing in on increasing workers’ output per hour, the company focused on measuring and improving worker happiness to lift productivity. Participants in the program were guided on how to increase their happiness throughout the workday.

Hitachi did so by enhancing the following:

• Workers’ psychological capital (self-confidence and motivation)
• Psychological safety in the workplace
• Alignment between the workers and management on their objectives

When staff members’ motivation and self-confidence rose by 33%, so did sales (34% in call centres; 15% in retail) and profits (10%). The results showed: “Increased psychological capital results in increased worker engagement, greater job satisfaction, and lower turnover intention and burnout”.

Measuring and improving human work in the age of AI

Modern work is enriched by what experts see as a “complex network of collaborations” alongside the growing demand for sophisticated skills. And these aren’t always captured by traditional productivity metrics, Deloitte said.

Even in labour-intensive sectors such as manufacturing, agriculture, and logistics, there is a need to understand the creative value of human labour with metrics that get to the heart of human motivations and behaviours.

With the advent of artificial intelligence, machines such as autonomous drones can take over manual tasks in agriculture – from planting seeds and watering produce to checking for crop damage and soil quality. This enables farm workers to learn new skills for operating AI-powered tools that help improve their overall productivity.

The shift to augmented human work ideally enables employees to become more creative and effective at solving complex business problems such as innovation, profitability, and sustainability. But without a new gauge of human performance, business leaders will aim in the dark.

Improving human performance requires developing durable human skills.

An important part of understanding human performance is knowing exactly what businesses need from their employees, and how to empower employees to deliver on these requirements. The challenge is to measure how sophisticated and durable human skills – such as creativity, critical thinking, problem-solving, communication, empathy and teamwork – are demonstrated, measured, improved and rewarded in the workplace.

Only after we know how to measure the practical value of durable human skills can we begin recalibrating our understanding of human performance. For one, measuring and improving these competencies can provide more than a quick boost to short-term ROI. They form the foundation of capability building.

Business and talent leaders must see beyond the horizon of immediate profit when bolstering performance.

“The heavy focus on short-term ROI and the delivery of narrow skill sets oft-evangelized in Learning & Development circles may well be the very source of the ‘skills shortage’ industries face today,” writes Matthew J. Daniel, senior principal, talent strategy and mobility, at Guild Education. “This approach has created managers who know how to navigate a performance management platform or follow employment law, but ultimately lack the empathy to keep employees engaged and productive.”

Deloitte Insights proposes a new equation for human performance, which entails human sustainability.

“The new math involves a balance of business and human sustainability – creating shared, mutually reinforcing outcomes for both the organisation and the worker,” experts advise. “Business outcomes define the quality, value, or result of work, and how it creates value for the organisation. Human sustainability defines the degree to which an organisation creates value for people as human beings, leaving them with greater health and well-being; stronger skills and employability; good jobs with sustainable wages; opportunities for advancement; and greater belonging, equity, and purpose.”

Human sustainability is about creating value for people as human beings.

As organisations continue to invest in talent development and emerging tech to augment their work, outdated KPIs will fail to do justice to the enriching quality of modern work today. Business and talent leaders don’t just need a new scorecard for gauging talent – they need an entire paradigm shift to see talent in a new light.

Are you looking for more insights into how to nurture a workforce that remains not only relevant but capable of driving value creation? Join us this July at People Matters TechHR Singapore 2024, where the conversation will dive into talent and leadership models capable of meeting the challenges of today's business environment.