Productivity Rises...But So Does Unemployment

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  1

  Bouchart

  11/06/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Since productivity is so high, there is no need to hire new workers!

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  2

  davd_s

  11/07/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  As outsourcing becomes more popular, current measures of productivity should be questioned. By replacing an equal number of employees with contractors, productivity numbers are artificially inflated. A better method of calculating productivity would be to use the numbers of workers (internal or external) instead of just employees.

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  3

  jhazard

  11/09/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Also from a BusinessWeek, Michael Mandell calls the GDP an outdated measure of the economic performance and argues that it relies on factors, like auto sales and construction, that have little to do with a knowledge-based economy.
  
  "In effect, government statisticians are trying to track a 21st century bust with 20th century tools. Not only is that distorting the critical data that investors, policymakers, and corporate executives use to evaluate the economy, but it might also be creating a false sense of relief as Americans battle a brutal recession."
  - Why GDP is a 20th Century Measure of a 21st Century Economy
  

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  4

  DerekIrvine

  11/09/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  This is a continuation of the trend seen in the second quarter in which:
  
  But look at these productivity numbers in the second quarter:
  
  ? Productivity rose 6.4% (the biggest gains since 2003)
  ? Hours worked dropped 7.6%
  ? Unit labor costs fell 5.8%
  ? Unemployment was at 8.6%
  
  It?s easy to see what those numbers mean. Employers are getting a lot more work per hour out of many fewer employees and are paying those remaining employees less for it.
  
  Of course people are being burned out. Survey after survey speaks to the plans of employees (usually the top performers) to find a new job as soon as the economy opens up.
  
  Deloitte reports 65% of internationally distributed senior executives polled in May are highly or very highly concerned that high-potential talent and leadership plan to leave when the economy turns. More than one in four of these executives report this is already happening as they are seeing an increase in turnover of high-potentials during the March-May time period. Ipsos Reid found 22% of Canadian employees are expressing decreased loyalty to their employer. CIPD found 34% of employees would change jobs within the next year in an ideal world. (Links to surveys and research available here: http://globoforce.blogspot.com/2009/08/keep-your-greatest-competitive.html)
  
  Note that employees often understand why company leadership had to reduce headcount, cut costs, freeze pay, and other actions. It?s the lack of respect and recognition for what the remaining employees were able to do that is behind this mass desire to "find someplace where I?m appreciated."
  
  Employers who want to keep their greatest competitive advantage had better be asking themselves: "What am I doing to show I appreciate my employees today and value their contribution over the long term?"

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  5

  Matthew Chambers-Sinclair

  11/10/09 | Report as spam

  Slash & Burn Will Eventually Apply to Profits

  I find it hard to believe that any employers are using the tactics mentioned here, let alone the majority of them. I haven't had the displeasure of working for a company that does this to its employees, perhaps something more common in Canada?
  
  Who in their right mind would short-change the well-being of employees for such short-lived gains? What possible rationale could be applied to such an unspeakable act? Only through the actions of incompetence could this ever become policy.

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  6

  KarBar110

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Sooo...I love the story about the company that supposedly
  created 2000 new jobs, only to find out that 1700 of those
  were jobs that were created by OUTSOURCING TO CHINA! Oh
  yes! The benefit to our economy was the measly remaining
  300 people who will run the company here in the US. Nice
  huh? Thank a lot jackass!

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  7

  Stella0Stella

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  I have noticed an increase in requests for volunteer labor,
  especially in the area of marketing, public relations and web
  development. Our state-run employment office listings have
  about 2-1 ratio of volunteer postings. These are primarily
  from non-profit agencies that terminated these positions
  when many funding sources disappeared last year. The
  listings, however, are not exclusively non-profit, there are a
  number of for-profit companies attempting the same.
  
  Where does the volunteer labor force fit into these
  statistics? Is this local trend being seen elsewhere in the
  country? Would like to hear input on this topic. Regards

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  8

  Eric617

  11/10/09 | Report as spam

  Nucleus Research - Boston

  We need to know how productivity is measured. For example, to
  calculate the ROI of a project, we use a proprietary productivity
  correction factor because time saved (due to gains in efficiency
  or avoidance of new hires) does not equal time re-invested in
  work. For example, in a highly supervised environment, workers
  might reinvest an hour for an hour. But sales people, who might
  gain an extra hour a day when a new CRM solution is
  implemented, probably won't reinvest time gained on a 1:1 basis
  as a result of a slick new software program. We call it the
  inefficient transfer of time. However, I agree with the overarching
  assertion that workers are far more productive in this economy. It
  makes perfect sense - and something we studied in business
  school.

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  9

  rwilliams@...

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  The first post to this question hit it right on the the head.
  
  As a current lay-off survivor and recipient of the responsibilities of 3 of the last 4 employees to be laid off, I am finding it very hard to maintain this level of productivity and sense of loyalty. Where is the benefit to the company, if you burn out your top employees?

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  nealandemma

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Does this not suggest that most employers were previously
  operating with "fat" in the system and that, therefore, this is a
  true reflection of productivity?

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  pobox593

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  In my dept, 3 people left and my team has been reduced to 1 person. The other team has 5 people, as the team leader is friends with one of the managers. Every time I complain, I'm told to work harder. The boss knows there is nothing I else I can do if I want to keep the job and is squeezing this lemon as much as he can. When hiring bounces back, it's bye bye from me.

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  onelia

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  In my area I would say each individual is more productive but the slashing has been so sever that the section is less productive as we just cant do all the work that used to be done, ie they went too far. There are only so many hours in the day and only so much unpaid over time you are willing to do before you decide food and sleep are more important. Sadly there is no indication that this will improve any time, lets just hope us recession survivors can survive the inevitable burnout that is fast heading our way *sigh*

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  abhay.ambati

  11/10/09 | Report as spam

  Behavioral Economics

  Coy's point may seem commonsense, but in a way, most parts of the current crisis has been a behavioral response than a "rational" or numbers-driven.
  
  We are still near the tail ends of a bell curve. So, Coy could be very true in his hypothesis!

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  14

  melofellow

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  I suspect there are at least several reasons. Less people are performing more work. We are wearing additonal 'hats' to keep the doors open and owners satisfied.
  When profits are up and work loads increase, we hire additional people. Unfortunately, when business conditions start to soften, we hold on to non-essential people. The conundrum is that these are people with whom we have developed a relationship - our extended families. It is tough to layoff your family. In most cases, they have been trained to perform specific tasks and have value.
  I read at least one article per week that various industries bemoan losing their experienced employees to retirement with no one to take their place. It rings a little false to me.

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  DCisDifferent

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Using the two companies I've worked for as a sample, I'd have fully agree that lay-offs have directly translated into immediate productivity increases. The ebbs and flows of the economy certainly added to this measure of productivity. Fiscal policy, government subsidies (the two giants that led us out of recession and which will probably hang us out to dry later), and steady rises in commodities prices have all contributed to this as well.

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  maty118

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  I know this trend all too well, and am surprised it seems anomalous or confusing to some!
  
  In response to the question of how productivity is measured, I would guess it varies widely by industry, but for all of the consulting companies I've worked for, it's been as follows: number of billable hours per week divided by 40 hours = an individual's "utilization rate." Trouble is, the rate "goal" (e.g., 90% utilized) usually doesn't allow sufficient time for things like marketing (which is essential and mandated, but not billable). It also doesn't factor in much time for mandated admin activities (like staff meetings). Often, it only allows for the bare minimum of nonbillable "slack," like holidays, vacation and sick time.
  
  Therefore, in order to hit the goal (and look competitive with peers), one has to take on so much billable project work that the utilization goal is hit EVEN THOUGH one must also do a substantial amount of non-billable work. So, these "extras" occur above and beyond the 40 hours per week: at dinner time, while your spouse is putting the kids to bed, at 4 AM before work, etc. The typical workweek is therefore more like 45-55 hours instead of the 40 paid by the employer.
  
  What I've noticed happening now, though, is that employees are also being asked to "contribute" billable hours to the firm. So pay and "hours worked" are technically cut to 80%, but the "day off" one gets in exchange is still spent working - on nonbillable activities as usual, but now also on billable work (pure profit for the employer, since they're not paying for the work!).
  
  Thus, productivity is up while hours and pay are down. And employees stay put (for now!) because they have few other options.
  
  (And from personal experience, I find it somewhat offensive that anyone would misconceptualize this as "trimming the fat." While I'm sure that's the case sometimes, I had one glorious week in June when I worked 104 hours, was paid for 32, and then got laid off by voicemail the next Monday. I feel truly sorry for those who remain!)

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  17

  nwpmike

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  in my area of Washington State we have a much higher unemployment than the rest of the state. In our business we are not only not seeing higher productivity but we have not had a full staff in 6 month. Getting qualified workers is a major problem. At our company an average sales person can make $208.00 per day without even breaking a sweat. In our state its easier to be on welfare and get help from DSHS than work.
  If things don 't improve i may close the doors and add another 25 to the unemployment list.
  
  

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  almcfarland

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Of course productivity increases with layoffs. (Simple math.)
  
  Is it sustainable? Sure. Because we are still entering into a market where labor moves freely across international boundaries.
  
  Will people burn out? Sure. But they'll hold on longer and longer anyway to forestall having their positions outsourced.
  
  Alas, these are some of the "benefits" of a global economy. We're just spoiled because we've been on the positive side of the equation for so long.
  
  http://pivotpointsolutions.net/

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  19

  verycold

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  For about 10 years I worked as an outside contractor in the commuter field and so I got to work for may of the top companies in the US. With all honesty, I felt the vast majority of companies needed to scale down their employees and keep only the ones that were productive. I worked a lot in the health care field which is IMO very fat. I saw a lot of mid managers reading newspapers or playing card games on their computers. I saw a lot of the office help standing around planning parties, talking on the phone all day to family members. Maybe now all that "fat" is gone and the ones remaining might consider working.
  
  A close family member runs a mid size company here in the US. There were no lay-offs and they have little turnover. They get paid better than others in the industry and have better benefits. The focus is profits which have been stellar, but also providing a good working place for employees. They have posted a few jobs this year and per job got about 200 applicants in 1 day.
  
  My family also started and owns a small business that employees about 15. I am no longer involved in day to day operations, but I know there have been no lay-offs and in fact they have continued to grow and add employees. We have been waiting for the shoe to drop, but so far it hasn't happened. It has been tough to find workers that consistently work hard. So I am saying that their work performance varies which for an employer is not easy to tolerate, but it is a reality.
  
  I would make this comment that might add to the discussion. When we first began the business, it wasn't so busy. So those employees hired knew a certain pace. When business picked up, some bitterly resented the increased load, and decided it wasn't worth staying. I would like to point out that the more work they did they were all compensated. So as the work increased so did their pay. For some it didn't matter the pay, they didn't want to work for anybody that hard.
  
  In many cases it is not possible to hire more people to help with the business load, since it is sporadic. So workers must learn to step on the gas, and then when to shift back and take a break. Many people don't know how to step on the gas at all. They knew one speed and that is it.
  
  With regards to volunteerism, I remember doing some of that back in the 70s. I took advantage of those extra hours to learn more things so that I had more skills.
  
  My motto; never waste a minute. There is always something to learn.

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  apgsub@...

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  I just make my 'macro' observations on these 'macro' news clips.!
  Recession is on. We have yet to see the real bottom of it.
  May be by mid-2010 and reversal to start thereafter very cautiously and slowly.
  In the circumstances, productivity increases , inter-alia, are due to following major reasons.
  i) Reduced workforce manage to sustain the same levels of production or a little lower, causing productivity increase in linear proportions.
  ii) Innovative & survival business methodologies, efficient and improved approaches by reorganisation and rationalisation of technology / processes, cost-cutting and waste reduction measures with a view to toning up bottomlines resulted in artificially enhanced productivity in short to medium terms since the onset of the present crisis way back from late 2007.
  Prof.S.Subramanian
  (Retd-Senior Executive, Reserve Bank of India)
  EMail : apgsub@yahoo.com
  Mobile : +91 9841057857 +91 9841057857 (Chennai, India)
  
  Adviser & Senior Management Consultant (BFSI)
  Gradatim IT Ventures (India) Ltd
  www.gradatimin.com
  NCR Consultants Ltd
  Guest / Visiting Faculty for Reputed B Schools
  

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  21

  adncube

  11/10/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  I will also be interested in understanding the investment in automation in most of these companies because it also plays a significant role in increasing productivity, i.e, getting more output per head emplyeed. Imagine a manual assembly line requiring 20 workers. I wouldnt be surprised to see a gradual labor reduction of 60-75% in labor with the introduction of Automated Assembly Lines over a period of say 3years. Employees work smarter and safer as a result, quality improves reducing reworks which have a negative impact on productivity, So the report might be biased if we dont look at all perspectives.
  
  Further to this, we have got to remember that the words Lean, optimization, Business Process reengineering have become buzz words, gone are the days where the focus was on task completion irregardless of the means, we now talk of lean operations, better tooling, standardized procedures etc.

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  22

  zeinashennak

  11/11/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  i believe that through out this recession period, employees are doing there best and working harder to maintain their current position at their company, if the company feels that you are too good to be left then your employment situation will remain stable for a certain level, meaning: it makes sense that productivity level is higher with lees employees, coz employees are working harder double of not triple, as they do have the inner instanbility; if i dont do it well, other will!

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  23

  miso_sama

  11/11/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  without going into the productivity measurement methods, Wouldn't Coy?s assessment contradict its self?
  "productivity has risen because unemployment has also gone up and there are fewer employees left to handle all the work"
  which should mean that in 2003 the unemployment rates were as high as now. I don't think this is possible, is it?

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  young professional

  11/11/09 | Reported as spam

  RE: Productivity Rises...But So Does Unemployment

  Bouchart, can not agree with you on this one. Its only a temporarly solution, but on the long term you risk to have burn out and demotivation from employees.
  
  I do however agree with the author, taking the company i'm working for as example. My line manager has left the company, and the company announcing no hire policy, there is much more work left on my plate, making me work overhours to keep up with the load of work i've handling on my own. So, yes, productiviity has risen up, so is the unemplyment.

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  joblessinMichigan

  11/11/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Watch your spelling Stefan, or you will find yourself on the unemployment line. "Higher" and "hire" may sound alike, but have vastly different definitions. See paragraph one.

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  26

  Lemons to Lemonaid

  11/11/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  The salacious title in the email didn't really match this
  article but...
  
  Managers too are cutting through malarky that prevents
  productivity. In lean times you learn very quickly what
  works and what doesn't and you naturally stop doing what's
  less productive, which probably also artificially increases
  the percentage.
  
  But it happens every day, even in times of plenty. Some
  directors like to squeeze water from rocks and are only
  happy if staff are working until after 8pm on a regular basis
  for their salaries. Midnight? Ok we'll hire one more...

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  27

  gir7375

  11/11/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  Coy's assessment is correct. More work, less pay and this is unsustainable, something has to give. The problem is the companies instill fear in people that they will lose their job if they take vacation, are sick or are out of the office for any reason... never mind speak up. Further, most employees are in over their head finally so the company owns them. People are making more and more mistakes to get by and this will catch up in the end. Companies will eventually get what they pay for and this is coming from a fiscal conservative in a manager role. I have never seen so many people unmotivated and burned out, we are losing our edge as country... while the few at the very top continue to reap the rewards.

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  28

  ivana235

  11/12/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  i would not agree that this is sustainable. It may be for the people wherein their values, work is on the first place, and second, and third... The economy creates more and more workaholics - people who actually do not have a genuinely fulfilled/-ing life and resort to endless work.
  But for many, long-term overtime work (increased productivity cannot be sustainable in the long run - batteries empty as well) does not comply with their concepts of happiness achieved through a balanced life.
  Happier people are more productive people with less working hours.

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  miso_sama

  11/12/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  over time doesn't account as an increase in the productivity of the employee per HOUR, which the mentioned statistics is providing.

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  verycold

  11/12/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  My sense from many of these posts is that many are disgruntled about working hard PERIOD. I am not sure that the past couple generations have any concept of working hard as compared to who? I have worked for both private business and government. Government is the most slow paced environment to be imagined. Even with no pressure whatsoever, there are still plenty of grievances. When I switched from the "real" world, to the government world, I thought I had died and gone to heaven.
  
  I will use a specific industry that I would say had tedious jobs requiring intense concentration and manual dexterity. That would be the semiconductor industry which I worked in some years ago. When I joined, there had been a few suicides which I heard came from intense working pressures coupled with long hours. At that time, this very well known company was dealing with a strong recession and trying to find every penny to save. A few years later, during boom years, it was party time all the time.
  
  My point is that higher sales mask many underlying problems that often don't get addressed until leaner times.
  
  I would also say that each generation is less likely to ever match the hard work needed and expected during the depression years. It is why we call one generation "the greatest generation" because they are still the ones even with advanced years doing for themselves and watching every penny. They remember "hard' times.

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  31

  Quench

  11/14/09 | Report as spam

  RE: Productivity Rises...But So Does Unemployment

  This is reality. Employees are working longer hours and more days. 7 days per week in some cases.
  
  Because of the uncertainty in the economy and whether this trend is sustainable, employers are not inclined to hire more staff to service a "blip" in the productivity curve.

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  32

  Stefan Deeran

  11/18/09 | Report as spam

  Great discussion everyone!

  Thanks for participating.
  
  BTW @joblessinMichigan spelling error fixed!