Sunday, January 08, 2006

Productivity discussions all one sided

I was installing something on a client's computer (the .Net Framework 1.0 service pack 3 from Microsoft, if you must know) the other day. Her web browser popped up with MSN. The feature article was on employee productivity, or more importantly employees stealing productivity. Since I had to wait for the download, and there was nothing else I could do at the moment, I looked over the article for a minute. *grin*

The article was pretty much the standard rant employees stealing productivity from employers due to extra-long breaks, gabbing with co-workers, e-mailing friends, surfing the web, etc. They quote a huge number, as all such articles do, saying that employers in the United States lose something like $178 billion a year due to lost productivity. I can't quote the number; sucks and it's hard to find past articles. But it was something like $178 billion.

The number is reminiscent of those quoted about software piracy, where they multiply the number of stolen copies by their retail price to come up with a huge value; forget the fact that a good chunk of software is stolen because the thief couldn't afford it. Same with this number: it assumes that every minute someone goofs off could be filled by doing more work, which isn't the case.

The article includes the usual "employers are cracking down" threats, and warnings about "web surfing is being monitored". It gives tips on how to not slack off at work (don't be tempted to spend those 15 minutes surfing in the morning, for instance) and how to do your "off time" stuff at home. I wonder what percentage of site visitors read the article from work...

A few things hit me about the article. It assumes that all goofing off is unproductive. Spending five minutes finding out about your co-worker's family is bad. Forget the fact that bonding with co-workers makes for a more efficient team. It also assumes that every human being has the same energy level as everyone else. This is flat-out wrong. Some people can be almost manic in the mornings but drop off considerably in the afternoons. So they goof off at 4:30, big deal; they made up for it earlier that morning. If you're worrying away at a problem at work, taking your mind off it can be more productive. Going for a longer lunch or a short walk can be more productive in the long run.

The article doesn't suggest that you not do work at home, I noticed. They mention nothing about the amount of "relaxation" stolen by employers.

If someone is goofing off, why is their manager not noticing? Shouldn't their productivity show up in annual performance reviews? Well, that's not the point of the article. A good worker could goof off occasionally and still out perform other workers. Since they are as productive as other workers, there slacking doesn't show up. The article wants the worker to live up to their potential. It doesn't mention that seniority often has more to do with compensation than productivity. It doesn't mention that a productive worker might start goofing off when his compensation doesn't reflect that productivity. The article does mention that slackers often miss out on raises, promotions, and choice assignments. There's no scientific analysis accompanying this comment. How many people lost these plums from slacking versus, oh, nepotism, favouritism, and seniority requirements?

This article makes a good point about lost productivity. We could all work more productively. What it fails to mention is that U.S. productivity has been increasing recently at a greater rate than in the last 25 years. Between 1995 and 2000, hourly output in the U.S. grew by 2.5%, about 1% greater than the 20 years before that. However, the numbers for 2001 to 2004 show productivity increasing by 4.1%!

What's even more interesting, and more germain to this post, is that compensation has not kept pace with increases in productivity. Compensation has increased only 37% as much as productivity in the last four years.

Wages are not keeping up with inflation. Compensation (wages plus benefits) has gone up, but largely because employers have to pay more for healt benefits. Companies pay more on behalf of the employee, but the employee has seen the same or fewer benefits. Companies point out they are paying more in compensation, but wages aren't going up to match inflation.

Yet we hear on the television all the time (with absolutely no analysis) that the economy is strong. If it's going strong, why aren't workers seeing the benefits? Where is all the money in this growing economy going? Simple answer: corporate profits.

In the previous 7 business cycles, 23% of corporate sector income was from profit and interest, while total employee compensation accounted for 77% of corporate sector income. In the last four years the split has been 69.7% for profit and interest, and 30.3% for compensation.

You haven't been imagining things. Big corporations are making record profits while you're doing about the same, or a little worse, than last year. I know that's the case for us.

Americans are more productive than folk in other countries. I noticed that moving down here. I worked a 35 hour work week in Toronto, with three weeks holiday per year when I first started working there being pretty common for someone with my level of experience. Even new employees would get two weeks to begin with and three weeks after five years. In Monroe I'm working a 40 hour work week, get two weeks holiday and I don't go up to three weeks for 10 years. This is similar to what I had at Kodak Canada, which followed U.S. rather than Canadian compensation standards: 40 hour week (with only 30 minutes for lunch), two weeks holiday to begin with, and three weeks after seven years (though that, at least, changed to five years).

Workers get much more vacation in Europe than they do in North America. Six weeks a year is pretty close to standard. While I'd love six weeks, I don't know what I'd do with it. It was all I could do to squeeze in almost all of my vacation time last year (and as it is, I carried over a couple of days into this year).

I wonder why doesn't run articles about how American employers could be doing a better job of compensating their employees? I wonder if it has anything to do with Microsoft being one of those corporations making big profits. Gee, a news site run by a big corporation — which stands to benefit from increased productivity — wouldn't be biased, would it?

Where did I get the numbers? The Economic Policy Institute's web site.

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