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Why Productivity Matters and What You Can Do About It

Productivity is a term linked to strong economies, successful businesses, and the efficiency of clever staff. If businesses were more efficient, we’d see fewer failures, more jobs, and better incomes for everyone.

According to the Xero Small Business Insights special report in Australia, the most productive industry in 2023 was wholesale trade ($214.20/hour), while hospitality lagged at $40.20/hour. Though productivity dipped across all industries, ten sectors, including manufacturing, agriculture, and construction, outperformed the national average ($100.30). Western Australia was the most productive state ($102.50/hour), with productivity 15% higher than Tasmania ($89.00/hour), the least productive state.

What is Productivity?

Productivity measures how efficiently a business turns inputs into outputs. The more productive you are, the better you turn resources like labour, capital, or materials into products or services you can sell.

Types of Productivity

  1. People Productivity: How much work it takes to deliver products or services to customers, usually measured as hours worked per dollar earned.
  2. Financial Productivity: How well a business monetises its investments in assets like machinery, often measured as the return on capital invested.
  3. Materials Productivity: How much a business spends on materials to generate sales, including inventory and energy.

Why Productivity Matters

More productive businesses get more from less. This boosts their potential to profit, handle inflation or slowdowns, and withstand price competition. Productivity gains are harder to come by nowadays, but digital tools have levelled the playing field, allowing small businesses to compete with larger ones.

How to Increase Productivity

There are four main ways to boost productivity:

  1. Better Tools: Tools amplify efforts. Invest in software or equipment that reduces manual work. For instance, a booking system that integrates with your calendar and payment systems.
  2. Smarter Methods: Continuously review and improve your processes.
  3. Skilled Workers: Invest in training and development.
  4. Entrepreneurship Mindset: Embrace optimisation and innovation.

Increasing Productivity Checklist

  1. Better Tools:
    • List potential investments and their costs.
    • Estimate the return on each investment.
    • Choose the best mix of affordability and impact.
  2. Smarter Methods:
    • Map out and document your work processes.
    • Identify and address friction points.
    • Implement software for repetitive tasks.
    • Align processes with customer preferences.
  3. Skilled Workers:
    • Ensure clear job descriptions and training.
    • Regularly provide and receive feedback.
  4. Entrepreneurship Mindset:
    • Look for scaling opportunities.
    • Stay open to acquisitions.
    • Focus on niche opportunities.
    • Continuously improve supply chains.
    • Hire and empower entrepreneurial staff.

Boosting Productivity is an Attitude

Small businesses can significantly improve productivity by constantly refining processes, investing in tools, and eliminating inefficiencies. With smart investments in teams and technology, the benefits will add up. Efficient businesses experience fewer delays, miscommunications, and wasted efforts, leading to increased satisfaction and profit.

Are you hiring the best talent for your business culture?

Are you hiring the best talent for your business culture?

Your people are a vital asset, so when you hire a new starter , it’s critical that this new employee fits perfectly into your operations, culture, and values as a company.

But how do you know if a potential hire is a ‘good fit’? Will they drive your business to bigger and better success, or could this new employee create problems down the line?

Be transparent about your company values

Your company values are central to your mission as a business. So making sure those values are clearly outlined and shared is essential for hiring the right talent. By clearly defining and sharing these fundamental values, you’ll attract candidates who share your ethics, values and core motivations – making them a great potential fit for your company culture.

To do this:

  • Identify your core values and what’s important to you as a business and an owner.
  • Communicate your core values to your employees and all new starters
  • Live your values. Reflect them in the way you do business and how you treat people

Communicate your values, mission and culture in your job advert

When you’re hiring, this process isn’t just about you choosing an employee – it’s also about a worker choosing your company and understanding what you stand for. Make sure your job advert gives the best possible indication of what the job entails, but also what you’re like as a workplace. This is a great way to appeal to like-minded people with the best skills.

When advertising and interviewing:

  • Describe your mission and ask candidates if they are on board with these goals
  • Talk about your culture and ask candidates why this might appeal to them
  • Paint the most honest and appealing picture of your workplace

Ask interview questions that reveal the real candidate

You obviously want to know that a prospective hire has the right mix of experience, knowledge and professional skills. That’s a given. But it’s also sensible to ask questions that reveal more about their underlying values, morality, work ethic and interpersonal skills. This will help you to assess whether the candidate is a good fit for your company culture.

Here are some examples of interview questions that dig a little deeper:

  • What do you look for in an ideal employer? And how important are their core values?
  • Tell us about a time your faced conflict in the workplace, and how you resolved it
  • Our culture is front and centre. How do you see yourself fitting into our culture?
  • How do you see your career evolving as a valued team member in our business?

Ask your team for feedback on candidates

You may think a candidate is the bee’s knees, but what do the rest of your team think? Gauging the opinions of your management team and other team members is vitally important. These people will be working directly with this new hire, so they have to get a good vibe from them.

To encourage objective feedback, give your team members a chance to meet the candidate and take their feedback into account when making a hiring decision.

Monitor your new hire and have regular, ongoing performance reviews

Once you’ve made a hiring decision and have a new employee on the team, it’s vital to have regular and ongoing informal catch-ups and more formalised performance reviews. This helps you to measure how your new employee is settling in. It’s also an opportunity to gauge whether there are areas where they may need support from you and the wider team.

Don’t hold back. Be as open and transparent as possible:

  • Ask them how they’re feeling about their role, workload and their performance so far
  • Check their progress against set targets and objectives for their first three months.
  • Find out if they need help, support, further information or more onboarding support.
  • Check if they feel they are fitting into the team, and if they are feeling happy
  • Look out for potential issues that may be causing conflict in the team.

Having the very best talent in your team is central to achieving your goals for the business. So, making sure you hire the right people is actually a business-critical decision to make.