Weekly Thoughts: Empty Labor, Demographics and Relationship Building
Here are three things that caught our eye this week:
A year ago the Economist published an article titled Get a Life, featuring data (below) that suggested an inverse relationship between hours worked and productivity per hour. In it, the author highlights one very interesting, and perhaps counterintuitive, observation to prove the point:
“The Greeks are some of the most hardworking in the OECD, putting in over 2,000 hours a year on average. Germans, on the other hand, are comparative slackers, working about 1,400 hours each year. But German productivity is about 70% higher.”
Before you rush out of the office for some productivity boosting leisure time, remember correlation does not imply causation. Luckily, the Economist published a follow up article this week called Proof That You Should Get A Life detailing research by Stanford University’s John Pencavel that supports these initial findings. When looking at individual, rather than aggregate, data, Pencavel found a non-linear relationship between hours worked and output, with the “knot” at 50 hours per week. From the article:
“Below 49 weekly hours, variations in output are proportional to variations in hours. But when people worked more than about 50 hours, output rose at a decreasing rate…Reducing hours say, from 55 to 50 hours a week, would have had only small effects on output. The results are even starker when we are talking about very long working hours. Output at 70 hours of work differed little from output at 56 hours. That extra 14 hours was a waste of time.”
The topic of productivity has been one we often come back to with past posts on workplace engagement (Oct. 10), bad meetings (Nov. 28), and time management (Dec. 5) as we feel it is an important point of focus with far reaching implications. Chances are, in fact, that many of you have experienced the effects of declining marginal productivity first hand. In his recently published book, Empty Labor, Roland Paulsen reveals that the average employee “slacks off” for two hours a day, with some of the worst cases spending half their day shirking work.
Interestingly, the employee is often not the culprit. Paulsen notes that “empty labor” is generally a result driven by poor management, meaningless work, or just a lack of available tasks. For us, it is yet another reminder that poor organizational structure can create a negative feedback loop that saps engagement, slows productivity, and ultimately diminishes output.
This week on his FT blog, Andrew Smithers presented an interesting take on demographics and their relationship to economic activity. It is no secret that economic growth in developed markets has been lackluster since the Great Recession. Less well appreciated is that structural factors, specifically a decline in the growth of the working age populations, could represent a significant portion of the decline in overall trend growth. From the article:
“Population change manages to be both obvious and largely ignored in policy debates, mainly because changes in gross domestic product are habitually seen as the yardstick for judging economic success. But GDP alone is not a sensible measure for this purpose and it leads to incorrect conclusions being drawn about economic policy. If the change in a country’s welfare is being considered, then GDP per head is a better measure, and if it’s the success of economic policies, GDP per person of working age is more informative…
The impact of demography on the growth of individual countries has been important. But it is essential to take account of the different rates of change in the working age population of different countries when seeking to determine why trend GDP growth rates have changed.“
According to Smithers, in the US, as much as 40% of the decline in trend GDP growth since 2007 (relative the period from 1995 to 2007) can be attributed to changes in the working age population. As he mentions, the notion that some of the weak growth in recent years could be due to structural rather than cyclical factors has major policy implications. For us, it is also a reminder that any analysis is only as good as the metrics used, an important lesson to keep in mind as we continue to find new ways to evaluate potential business opportunities.
One common theme we’ve observed from countless hours of listening to entrepreneurship podcasts, attending business meetings, and reading leadership books is that at the core of most business success stories, relationships matter. However, we also think that establishing meaningful relationships is something much easier said than done, particularly for a group of introverts. As articulated by a Ted Article:
“Imagine almost any situation where two or more people are gathered—a wedding reception, a job interview, two off-duty cops hanging out in a Jacuzzi. What do these situations have in common? Almost all of them involve people trying to talk with each other. But in these very moments where a conversation would enhance an encounter, we often fall short. We can’t think of a thing to say. Or worse, we do a passable job at talking. We stagger through our romantic, professional and social worlds with the goal merely of not crashing, never considering that we might soar.”
Thankfully there are numerous resources filled with tips that can help us, and others, transform routine interactions from missed opportunities into foundations for meaningful relationships. For example, the article suggested asking for stories, not answers, to get beyond small talk. By asking open-ended questions, we can invite people to tell stories, rather than give bland, one word answers. For example, instead of asking, “How was your day?” try “What did you do today?”.
Similarly, a recent article about Dave Isay, Ted Prize 2015 winner, outlined tips on how to turn small talk into smart conversation, by asking questions such as: What are you grateful for? What are you proudest of? What are the most important lessons you’ve learned in life? What’s been the hardest moment of your life, and how did you get through it?
As we aim to continuously attack our weaknesses, we look forward to using these tips, and others, in an effort to refine the interpersonal skills that help us create and deepen relationships.
Have a great week,
Your Chenmark Capital Team