A Viscous Cycle
U.S. workers increased their productivity — the amount of output per hour of work — this past summer by the largest amount in a year and half, and they cost their employers less money in the process.
The U.S. Department of Labor (DOL) says productivity rose at an annual rate of 3.1 percent in the July-September quarter after two straight quarterly declines.
Labor costs dropped at an annual rate of 2.4 percent in the third quarter, the first decline since late 2010.
The jump in productivity in the third quarter reflected the fact that the economy had its best quarterly growth in a year, while hours worked were little changed.
The trend is good for corporate profits, but not necessarily for job growth.
If workers are highly productive and able to produce desired results with limited resources, additional employees are not likely to be hired.
So, What''s The Problem?
Increased productivity and decreased operating expenses are great, right?
Yes and no.
There is an unwritten expectation that workers will continuously do their jobs more efficiently as time progresses — making them more valuable to employers.
But, there is always a point when efficiency and efficacy flat line, and if one facet of the equation increases, the other naturally decreases.
It is at this point that additional investments must be made in terms of hiring more employees or purchasing newer technologies — both of which cost an employer more money.
Then, the process of maximizing productivity with the available resources starts anew.
This productivity phenomenon, if illustrated, would resemble a chart of the U.S. stock market: Consistent peaks and valleys.
Of course, cleaning operations are less volatile than financial markets and much more predictable.
So, the next time you are asking more of your employees, stop and think about the resources available to them and whether or not further increasing productivity would actually make results suffer — the exact opposite of what is desired.
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