Saturday, 25 June 2016

Are investors the cause of falling productivity?

Over the last 5 years - in fact since the great recession hit - many companies seem to have concentrated on short term gains - and have rewarded their CEOs with generous bonuses  for producing them.   This is in response to a real or imagined investor need for quick results and dividends - to offset money they might previously have received in interest payments on part of their capital.

So, the CEO gets his/her bonus; the company makes profits; the investor receives dividends.  What's not to like?

Well, this is a recipe for declining productivity - or at least non-rising productivity.  Money is going out in these term payments instead of being invested in infrastructure, new capital equipment and new technologies.  It is those kinds of investment that replace labour with capital and drive up labour productivity.  It is those kinds of investment that have not been made in recent years.

Now, as I said earlier, I am not sure whether the investor pressure for short term gains and immediate dividends is real or imagined - but perhaps we should find out.  If investors would accept a longer  term view, we could start to make those transformational investments and all would gain in that longer term.  

Saturday, 18 June 2016

The Role of a Boss

Does your boss enhance, or detract from, your productivity?

If you ask this question of employees, you might expect them to answer 'enhance' - but they rarely do.

Too many people see their boss as 'interfering' or 'meddling', confusing rather than directing them.

Does this say something about the employees - and their perceptions versus expectations - or about the bosses?

This is not clear.  Probably a bit of both.  It certainly means that most bosses need to think about how they relate to, and engage with, their employees.  If employees feel their productivity is lowered, it probably is .. indirectly rather than directly, perhaps, but lowered nevertheless.

Saturday, 11 June 2016

The New Normal?

I 've written quite a few times in the last year about low productivity figures - across all developed nations.  I've even offered advice on occasions about what might be done to improve the figures - as have better men - and certainly better thinkers - than me.

But the figures stubbornly refuse to rise.

I've also tried to explain this - by suggesting amongst other things that we fail to capture the economic benefit of much i-activity.  If someone writes an app and gives it away for free , does it contribute to economic activity - directly or indirectly?

Perhaps we have to get used to lower productivity growth - and accept it as the new normal. Perhaps we can then start to havre intelligent conversations about employment, about wages, about interest rates and so forth.  Or do we just keep on hoping and praying for a recovery - retaining our old thinking in the face of the overwhelming evidence that things have changed?

Saturday, 4 June 2016

Correlation? Causation?

2 recent sets of figures from the USA raise a question of 'connectivity'/  Labour productivity refuses to rise - and investment in plant and equipment has declined over the last 10 years.  These can probably be correlated but is there a causal relationship?

Well, I can't prove anything but let's just say that labour productivity rises most quickly when capital is substituted for labour.