What Is the Productivity Paradox and How Do We Solve It?

February 15, 2018 • Rehack Team


It seems logical that increased investment in a goal should make the aspiration more likely to occur, but that’s not always true in the case of productivity. In fact, researchers have identified what’s referred to as the productivity paradox while researching this phenomenon.

In the early 1970s, IT had not reached the mainstream, but analysts correctly predicted it would eventually make a significant impact on the societal landscape. In those preliminary stages though, researchers thought the associated investments in technologies would raise productivity levels by three to four percent.

As it turned out, they only caused a one-percent boost. Scientists say the productivity paradox had five stages.

By the late 1980s, researchers came up with several possibilities to explain the productivity paradox. However, none of them were definitive, and people began to explore the possibility that they saw a symptom of a larger problem.

The findings discovered decades ago still hold true in modern times. Now, let’s take a look at some ways to make them less prevalent.

Understand How an Organization Defines Increased Productivity

A 2016 study examined whether increased technology investments at the university level would make those learning institutions more productive. The research team discovered that it’s not possible to reach a concise conclusion when answering that question and looking at all universities broadly.

That’s because university staff members are collectively responsible for various kinds of outputs that can’t be captured in a single metric.

For example, public universities versus private ones may have differing goals, as could institutions that focus primarily on research compared to those that do not. With these things in mind, it’s crucial for organizations of all types to come up with specific ways to describe what increased productivity means at a given facility.

It’s not sufficient to merely put all establishments of a kind into one category and use a universal metric to gauge productivity.

Once a more specialized approach occurs, it’s easier for organizations to accurately see how certain investments are paying off in relation to others. Plus, in the process, groups may identify certain practices associated with investments that are working well and others that are hindering productivity.

Focus on Solutions That Foster Collaboration

Many investments meant to boost productivity could be contributing to increased boredom because they don’t cater to the knowledge employees already possess or want to have. The results of a 2014 survey found 51 percent of workers were disengaged with their tasks.

Analysts suggest one way to make employees more productive is to seek out strategies that allow them to exercise autonomy while simultaneously encouraging them to cooperate. When workers strive towards common goals, they require fewer resources, theoretically laying the foundations needed for an increase in output.

Take Lag Time into Account and Plan for Later Measurements

Historical data shows that when productivity-enhancing technologies are quite new and therefore still mostly unfamiliar, there’s a long lag time before seeing their full impacts compared with innovations that are not so groundbreaking.

A recently published paper gathers compelling evidence for the opinion that artificial intelligence (AI) could become what the authors call a general-purpose technology, comparable to electricity.

However, the research details how some of the most substantial improvements to work processes required complementary projects that took years to develop, like factory redesigns and new product launches.

When a business is capitalizing on AI or similarly disruptive technologies, it must remain cognizant of the respective lag time that could result. If a drastically different process based on an emerging technology first appears to make work output levels worse, it may be necessary to reassess things several years later.

Then, it’d be possible to determine whether the apparent decrease in productivity initially only appeared that way because the other components needed to make the technology work well were not fully in place yet.

When business leaders have all-encompassing perspectives about how to help employees harness their capabilities, they’re involved in a long but worthwhile process that could make recent investments more fruitful years later.

The strategies and research studies above shed light on a problem that seems to have persisted for decades. However, when employers and their workforces remain aware of the tips above, they move ever closer to investments that genuinely enhance potential rather than prevent it.