Key to productivity is a great boss

Christina Boedker

Lifting Australia’s productivity is an ongoing challenge. Business leaders have blamed the industrial relations framework and almost every day there are calls to make labour more flexible – to some, this means cheaper and more disposable.

But manipulating staff as inputs within a market equation is not a sustainable way to lift productivity. Cutting wages and conditions is hardly an incentive for individual employees to work harder and produce more.

A critical part of lifting workplace productivity is having a great boss. Great bosses are those that enable workers at all levels of organisational hierarchies to lead change and be the best they possibly can.

Ongoing research that I have led since 2009 has canvassed more than 5600 employees at 77 Australian companies. It clearly identifies leadership as having the greatest correlation with firm productivity and profitability. It is the interpersonal and motivational skills of bosses that prompt staff to exercise discretionary effort.

Front-line managers especially have the strongest impact on profitability. This level of leaders manages important relationships with customers and has the biggest span of control.

Great leadership is about valuing employees and being compassionate. Compassion does not necessarily mean being soft: sometimes as leaders we have to ‘be cruel to be kind’. This will involve having hard conversations.

Compassion is also a two-way thing. It flows from the ‘top down’ but also, importantly, from the ‘bottom up’. In other words, hard conversations must be initiated by all staff, including subordinates. A great leader then, is a person who values feedback and criticism as learning opportunities.

The key question for Australia in future decades is how to sustain our position as a leading economy. Enterprise bargaining during the 1990s got the productivity levers moving at a workplace level, but what is the next big thing for moving Australia’s productivity agenda forward?

Focus could be provided by a new entity, such as the leadership institute recommended by the Prime Minister’s manufacturing task force. It could help firms lift leadership skills through education and research programs. And it should work with all sectors, operating collaborative industry projects that collect and benchmark productivity data to generate new policy insights.

Here, too, a compassionate approach will be required. A government-sponsored initiative can provide support and offer leadership, but unless it fosters the co-operation and engagement of industry and workers across all sectors, nothing will happen. Government, enterprise and its associations, unions and others all have to come together to jointly drive this agenda.

Dr Christina Boedker is a senior lecturer at the Australian School of Business. She will discuss her research at the Australian Graduate School of Management’s 35^th anniversary conference in Sydney on 11 September. This opinion piece was previously published in The Australian Financial Review: Bosses are key to productivity.