More and more, technical executives and managers are challenged to measure and improve the ROI on projects and infrastructure investments.
Yet, rarely does anyone think about improving the ROI on one of the biggest line items in the budget – the people. But, you probably should.
Most of us don’t think about the salaries and associated costs of people as investments. There’re just treated as pure expense. And recently, with the drive to accomplish more while holding expenses down, the fashionable thing to do has been not to improve the efficiency of people, but to go overseas and find less expensive people. This may help temporarily, but it may not. The jury’s still out. When combined with the additional expenses and opportunity costs of remote teams, the economics are fuzzy. Additionally, over time, salaries overseas will rise with demand.
So the answer for improving ROI on investments in people is not just to drive down the investment, but to boost the return. Too often, we just assume that 1 FTE (full time equivalent employee) is a constant figure. If we want to get more done, we’ve just got to hire more people. There’s nothing that can be done about improving the productivity of people.
According to management guru Peter Drucker:
“The most important contribution that management needs to make in the 21st century is … to increase the productivity of knowledge work and knowledge workers.”
In a recent article, Drucker notes that management as a discipline has been remarkably effective over the past 100 years in improving the productivity of physical labor. During the 20thcentury, the output per hour of physical labor input increased over 50 times – a remarkable achievement.
Unfortunately, we are unlikely to see the same level of improvement in the 21stcentury. If we want to continue to grow our businesses and make them more competitive, productivity boosts will come, not from improving the efficiency of physical labor, but of boosting the productivity of knowledge workers.
In this series of articles, I will introduce a process for improving the organization. There are five phases to the improvement process.
Stage 1: Clarify.
This is the most important phase. In the clarification phase, you examine the organization for strengths, weaknesses, opportunities and threats that effect productivity. At the end of the phase, you will be able to articulate clearly, the dimensions of the organization that are to be improved and how that improvement will be measured.
Of course, this is not a simple thing to do. There are so many things that contribute to human productivity that figuring out what changes will help your group can be quite confusing. And for those of us trained as engineers to deal with concrete problems, it’s especially uncomfortable, since the issues can seem amorphous, ill-defined, and irresolvable.
Here are 10 distinct areas to examine when trying to clarify productivity improvement goals in technical groups. Each effects how individuals, teams and entire organizations perform.
1. Organizational Structure – How people are organized to work together can enhance or detract from their ability to be productive. The organizational structure must be compatible with the work to be done, the people who are doing it and the overall organizational culture.
2. Culture – Organizational culture is a subtle subject, but it is best thought of as the set of unarticulated assumptions that guide behavior and day-to-day decisions. Collectively, these assumptions have a significant effect on productivity. For example, if people feel afraid to share their ideas because they may be ridiculed, your group will lack creativity.
3. Leadership – How people are led clearly effects how motivated and productive they are. It also has an effect on whether they choose to do the right work. Poorly led teams may be productive, but their efforts can be directed toward inefficient uses of their time.
4. Individual Development – Each individual works as both a contributor of tasks and a participant in process. The skills and attitudes of each individual in a group can affect their own productivity and that of their colleagues.
5. Communication – Clearly the quality and quantity of communication affects the productivity of knowledge workers. If the knowledge doesn’t flow productivity suffers.
6. Problem Solving – Technical work is essentially problem identification and solving. If a group is inefficient or ineffective at problem solving, they will not be effective technicians.
7. Group Function – Collections of individuals come together to work, but how well they function together is a measure of their coordination. Groups vary widely in their ability to organize themselves and to maintain that coordination as projects progress.
8. Teamwork – Quite different from coordination and group function, teamwork is focused on collaboration. Groups that have good teamwork are able to effectively harness the creativity and energy of all the members to create the best outcomes.
9. Processes and Methodology – Most technical organizations either overdo process or they ignore it completely. The best groups work to adjust the detail and rigor of their process to the nature of a project and team to get the best results.
10. Skill Deficits and Distribution – The most commonly examined area of performance is skills. Unfortunately, many managers confuse skills with productivity. While both technical and soft skills are important, they are not the only thing effecting performance.
Once you have examined these 10 areas of organization performance and clarified precisely what you want to address, you are ready to move on to the planning phase.
Next time: Planning interventions once you are clear on precisely what you want to improve.
Paul Glen is an IT management consultant and the author of the award-
winning book “Leading Geeks: How to Manage and Lead People Who Deliver
Technology” (Jossey-Bass Pfeiffer,2003). He regularly speaks for
corporations and national associations across North America. For more
information go to: http://www.paulglen.com. He can be reached at
info@paulglen.com.
