Productivity strategies for businesses

Explore how strategic strategic people management and technology can boost productivity and ensure sustainable growth for businesses.

If you heard that Australia had a record surge in employment, you’d automatically expect increased productivity. Right? 

Well, shockingly, this isn’t the state of our economy. Despite an unprecedented 6.9% increase in hours worked in the financial year 2022-23, productivity across the board actually fell by 3.7%. This counterintuitive scenario, detailed in the Productivity Commission’s latest report, underscores a troubling disconnect: more Australians are working longer hours than ever, yet the nation’s overall output isn’t keeping up.

This alarming trend raises critical questions and this blog addresses how businesses and policymakers can shift from merely increasing workforce numbers to improving the efficiency and productivity of our work processes. This change sets the stage for a stronger and more sustainable economy, the nature of work and efficiency in Australia. Alex Robson, the Commission’s Deputy Chair, while assessing the statistics and trends explains, “Australians’ incomes grew in 2022-23, mostly because they worked more hours. But productivity growth is about working smarter, not working harder or longer.” This revelation is a wake-up call that challenges us to rethink our approach to workforce management and economic growth. 

The key issue here is not just the increase in labour but the effectiveness of that labour. With the labour market participation near record highs and minimal growth in wages relative to inflation, the real concern becomes evident: without genuine productivity improvements, we can’t sustain long-term wage growth or control inflation effectively. 

The disconnect between increased labour and productivity

The recent insights from the Productivity Commission are indeed troubling. The discrepancy between the increased hours worked and decreased productivity underscores a critical challenge: simply increasing labour hours does not necessarily equate to improved output or efficiency. 

The impact of insufficient investment:

A significant contributor to this productivity shortfall is the inadequate investment in capital resources necessary to support a growing workforce. The capital-to-labour ratio, a key indicator of how much is being invested in tools and equipment per worker, experienced a sharp decrease of 4.9% over the last year. This decline shows that although more people are employed, companies haven’t invested proportionately in the tools, technology and training needed to enhance productivity.  

The consequences of overlooked efficiency:

The urgency to fill job vacancies has often resulted in hiring practices that favour quantity over quality. Many of these positions are in sectors like retail and hospitality, which are typically associated with lower productivity levels. In addition, incorporating less experienced or less productive labour into the workforce without adequate support or training dilutes the overall effectiveness of the workforce.

Refocusing on quality and efficiency:

To counteract these trends, businesses must shift their focus. Rather than merely increasing headcount, they should aim to enhance the productivity of each work hour. This requires a strategic revision of resource allocation, technology integration, and employee engagement.

Investing in people and technology:

For sustainable growth, it is essential that companies increase their investments in both human capital and technological resources. Equipping employees with the appropriate tools and ensuring they have the skills and training to use these resources effectively are crucial steps. Emphasising continuous learning and adaptability is crucial to keep pace with technological advancements and evolving market demands.

Creating a culture of efficiency:

Leadership plays a crucial role in creating a workplace culture that values and actively pursues efficiency. This involves setting clear expectations, offering consistent feedback, and promoting innovation and problem-solving across all levels of the business. A culture that prioritises process and workflow optimisation can significantly boost overall productivity. 


The crucial role of effective people management

Understanding the disconnect between lower productivity despite an increased workforce sets the basis towards understanding the inefficiencies within Australia’s workforce. Let’s examine how strategic people management can turn these challenges into opportunities for growth. 

Effective management is a crucial factor in maximising our workforce’s potential and reversing the trend of declining productivity. Let’s look at how focused human resource strategies can transform productivity outcomes and have a positive impact on long-term economic growth. 

Identifying and addressing skill gaps:

Skill gaps in the workforce can significantly hamper productivity. Identifying these gaps through regular assessments and feedback allows businesses to pinpoint specific areas where training is needed. Implementing targeted training programs to close these gaps, both boosts individual employee performance and enhances overall business efficiency.

Strategic recruitment practices:

Recruitment practices have a big influence on productivity. By adopting a more strategic approach to hiring, businesses can ensure they attract candidates who closely fit the job requirements and the culture and ethos of the company. This involves a thorough understanding of the role’s demands and a careful evaluation of how candidates’ skills and experiences align with those needs.

Enhancing employee engagement:

Engaged employees are more likely to be productive. Strategies to increase engagement can include clear and transparent communication, recognition programs, and opportunities for career development. Ensuring that employees feel valued and understood can lead to increased satisfaction and motivation, which are crucial for maintaining productivity.

Optimising workforce management:

Effective people management isn’t just about overseeing employees; it requires a dynamic approach to managing their workloads, providing support, and encouraging a positive work environment. Techniques such as flexible working conditions, better resource allocation, and supportive leadership can help maintain high levels of productivity by creating an environment where employees can thrive.

Measuring and enhancing performance:

Regular performance reviews are essential to provide feedback and also to set future goals. Utilising performance metrics aligned with business objectives can help managers understand individual contributions to the company’s productivity. This also allows for the adjustment of strategies in real-time to address any emerging challenges.

By focusing on these areas, businesses can develop a more capable, engaged, and efficiently managed workforce, which is key to reversing the trend of declining productivity. Strategic people management not only addresses immediate productivity concerns but also builds a foundation for sustained growth and competitiveness.

Innovative work practices and technologies 

As important as effective people management is the need for businesses to embrace innovative work practices and technologies. This approach complements the strategic management of human resources and also moves businesses towards operation excellence. Here are a few examples of how companies can boost productivity and remain competitive. 

IAdopting felxible work arrangements:

Offering flexible work arrangements to employees can enhance employee satisfaction and reduce burnout, thus increasing productivity. Businesses can implement various forms of flexibility such as remote working, flexible hours and condensed workweeks. 

For example, allowing employees to choose their working hours or work from home for part of the week could improve employees’ work-life balance, decrease absenteeism and turnover rates. 

Implementing collaborative technologies: 

When considering or managing hybrid or fully remote settings, effective collaboration technologies are crucial for enhanced communication and project management within the various teams. 

For example, companies can significantly reduce time wasted on miscommunication and inefficient processes by asking their teams to use tools like Slack for communication, Asana for task management and Google Workspace for document management and collaboration.

Harnessing the power of AI and ML:

Artificial Intelligence (AI) and Machine Learning (ML) offer powerful opportunities for automating routine tasks and optimising business processes. 

For example, businesses can make use of AI-driven chatbots to handle routine inquiries and frequently asked questions (FAQs). This allows their human staff to focus on more complex customer issues or other value-added services. 

Emphasising sustainable practices:

Incorporating sustainable practices into business operations can lead to significant efficiency improvements. 

For example, transitioning to digital documentation reduces paper use, speeds up information retrieval and cuts costs. 

Utlising analytics for better decision making: 

Data analytics help businesses to better understand their operations, customer satisfaction and overall performance. Simple, user-friendly analytics tools can help businesses measure and understand performance across various aspects of their business, from sales and marketing to customer engagement and operational efficiency.

For example, service companies can use data analytics to identify bottlenecks, thus helping them to reorganise their teams and improve customer service response times.  

These innovative work practices and technologies help businesses enhance their productivity and also align themselves with modern business standards. These strategies help create a proactive, efficient, and sustainable business environment.


Evaluating and adapting business strategies

To maintain productivity and drive growth, businesses must not only implement but also continuously evaluate and adapt their strategies. This approach ensures that operations meet internal objectives and are also aligned with market conditions. 

Here’s how businesses can integrate continuous strategy evaluation into their operations for sustained success.

Continuous evaluation of performance:

Regularly monitoring and assessing business strategies is essential to confirm their effectiveness and identify areas for improvement. Using real-time data analysis and performance metrics allows businesses to make informed decisions quickly. For example, using analytics to track customer engagement and sales performance can help businesses understand the impact of a new marketing strategy or product launch.

Incorporating feedback loops:

Feedback is a critical component of strategy adaptation. Establishing effective feedback mechanisms from all stakeholders – employees, customers and suppliers – helps businesses remain responsive to needs and expectations. This could be as simple as regular customer satisfaction surveys or as involved as a monthly review meeting with key clients or a digital platform for employee suggestions. These feedback loops help companies to stay connected to their community and to iterate on their services or products effectively.

The role of leadership in strategic adaption: 

Leadership is vital in navigating through strategic changes. Leaders must help create an environment where flexibility and adaptability are part of the business culture. This requires clear communication about the reasons for changes, expected outcomes, and how these adjustments align with the broader business goals. Leaders should encourage a mindset among employees that views feedback and change positively, as opportunities for personal and business growth.

Learning from real-world applications:

Drawing on real-world examples from businesses that have successfully adapted their strategies can provide valuable insights. Companies like Toyota have long been recognised for their continuous improvement processes, where constant incremental changes are made to processes and production techniques to enhance quality and efficiency. Similarly, many tech companies continuously update their software products based on user feedback to enhance functionality and user experience.


A call to action for a more productive future 

The data is out there, the signs are clear. Even with a bigger workforce, despite more people being hired, our productivity isn’t keeping pace. The findings from the Productivity Commission are clear – simply adding more hours or people isn’t the answer. Instead, we need to make every hour count by enhancing how we manage our teams and integrate technology.

As we’ve seen, boosting productivity involves much more than just increasing labour. It’s about smarter management, leveraging the right technology, and cultivating a workplace culture that values continual improvement and efficiency. From flexible work arrangements to adopting new tech tools, these aren’t just ideas but practical steps that any business, big or small, can start implementing to see real results.

In today’s economy, staying static isn’t an option. We need to be proactive, not just in responding to changes but in anticipating them. This means continually re-evaluating and refining our strategies to ensure they align with both our team’s needs and market dynamics.

It’s time for business leaders and policymakers to take these insights and turn them into action. The roadmap to reversing our productivity slump is clear – invest in our people, embrace technology, and keep adapting. By committing to these strategies, we can transform these challenges into opportunities for innovation and growth, ensuring a resilient and thriving future for Australian businesses.


Let’s not just aim to meet the standards but set new ones. Here’s to building a more efficient, dynamic, and competitive Australian economy.

If you would like to chat further about how you can increase productivity and review technology, book in a free 30-minute consultation here.