As American companies slashed jobs during the downturn, something interesting happened. Their output didn’t fall by nearly as much as their workforce size. Many companies found all kinds of ways to use the same number of people to do more. This has shown up in the U.S. macro data — U.S. worker productivity has surged over the last four quarters.
Are Americans being forced to work their tails off like never before? For many that may be the case, but surging productivity represents higher output per hour, so it’s not simply people working longer. Could it be that Americans are working smarter? We all may like to think this is the case on an individual basis, but higher productivity could also be the result of workers and managers simply wasting less time than they used to.
In fact, according to research performed by Celerant Consulting surveying 11,000 working hours across four industries (Energy, Healthcare, Chemicals, and Consumer Staples), the majority of American workers’ time is spent on activities which don’t add any value to the ‘process and final price’ of companies’ products or services. Maybe that’s why American companies were able to slash their workforces so liberally. Even if you weren’t personally unproductive, companies were able to fire you and then squeeze more out of your lazy colleague who somehow survived the cuts.
Below is the breakdown of time usage by the four industries. Consumer Staples workers spend the highest share of their time, 50%, performing value-added (VA) activities such as reading Business Insider religiously. Congrats. They nevertheless continue to spend 47% of their time on non-value added activities (NVA) and 3% on non-value-adding-but-required tasks (NVAR) which seems to be a bit of a grey area category created by Celerant. Who are the worst time wasters? Healthcare/Life Sciences workers were found to spend just 27% of their time on value-adding tasks. Shockingly, Workers in all four industries spent 50% or more of their time on NVA or NVAR tasks. Too bad they didn’t survey financial professionals…
Celerant’s conclusion is that U.S. worker productivity still has a long way to increase, and that companies have substantial room to increase their output without investing large sums in equipment or new people. (they might even be able to keep their current output with even further job cuts) It’s not exactly the kind of news unemployed Americans want to hear, but maybe the upshot is that new hires just have to spent 51% of their time productively in order to outshine their colleagues. Roll back the effort once you’re unionized.
Obviously, we’re sure many will question how Celerant measured ‘value-add’. You can chase up the details with them here, but let’s face it, deep down you’ve probably always suspected this time wasting statistic was true.