Is productivity growth on your KPI radar?

We’re heading into baseball season and if you have a favorite team and favorite players, you can expect them both to go into a slump sometime during the season. (Despite their incredible success over the years, it even happens to my Cards!)

In recent years, U.S. productivity has experienced a slump. Last year, the economy notched its longest stretch of falling worker productivity in 40 years. Hours worked increased faster than output.

Large corporations regularly consider their productivity growth, but I don’t think productivity growth – at least in the direct sense of the term – figures in the plans of most small business owners. We know that the overall growth of small business is the catalyst for overall economic growth, so I don’t think I’m going out on a limb to suggest that improvements in small business productivity growth will make a significant impact on improving our country’s productivity.

However, if you aren’t measuring it, you can’t control it.

Get the productivity facts

Do you know how many worker hours go into every thousand dollars of sales? Count everything. Overhead, marketing, sales, direct labor, and every other department in your organization. Get a feel for your productivity growth over time. Roll the calendar back through the years and compute this figure over time. Plot the figures on a graph. Is the line going up, down, or staying the same?

If you see that your productivity is improving, give yourself a pat on the back and keep doing what you have been doing. If your line is flat or going in the wrong direction, it’s time to take a step back and see if there is a problem. If you’ve been trying to establish a new business area, it’s reasonable to expect a drop in productivity. However, if you’ve just been cruising along and not making any bold moves, you need to take a cold hard look at your management and leadership.

One of the recent headlines in the news has been how the burger chain Wendy’s is going to install some automated ordering kiosks in 1,000 of its restaurants. If this is successful, it will eliminate jobs and this will be reflected in an uptick of Wendy’s productivity growth.

No one likes to see anyone lose their job, but in the larger picture, we need to be educating and training people to do higher level tasks. I hope that Wendy’s will be able to find positions for any crew members who get replaced by a kiosk.

Productivity growth strategies

Automation and computerization are two major ways you can improve productivity growth in your small business. If your small business relies on sales reps who travel, improvements as simple as moving to a smart travel expensing software system can make your team more productive. If you have delivery vehicles out on the road, smart GPS tracking and route planning can boost productivity. All the steps within your sales funnel can be made less labor burdensome with a wide variety of apps.

Customer service can become less labor intensive with FAQs, user forums, and artificial intelligence chatbots (check out this Mixergy interview between Andrew Warner and Dmitry Dumik all about chatbots) and other business-oriented bots.

Also, consider the huge selection of cloud-based services. They can enhance your productivity because you can buy the level of service that you need; you don’t have to buy a “system” that sits idle for most of the day.

I don’t want to skip over more traditional methods of producing increased productivity growth, such as investing in new machinery that delivers higher output and requires less maintenance hours.

Make the investment

Finally, I understand that all of these require an initial investment, but I can’t think of a better time to make that investment. Optimism from all corners is on the rise. Consumer optimism is at its highest level in decades and on a curve that tells me it’s going to go even higher. Small business optimism is showing a similar pattern. Investors are expressing their optimism by driving up all the major indexes to all-time highs.

So let me ask the question that started this discussion: Is productivity growth on your KPI radar? As you study your key performance indicators, don’t forget to take a good look at your small business productivity.