Did you feel you like your business was just treading water in 2024, or worse still, you were peddling faster but still couldn’t pull out ahead? Here are the 4 things you didn’t consider in 2024 that will power up your business productivity and push you to the front of the pack in 2025.
Australia is experiencing an unprecedented productivity challenge, with labour productivity falling by 3.7% in FY2023 – the largest decline since records began. The deterioration in our productivity has coincided with a 6.9% surge in hours worked, the highest annual increase in history, highlighting a worrying trend: Australians are working harder, but not necessarily smarter.
Comparatively, Australia’s productivity output lags behind other advanced economies. Surprisingly the USA has seen stronger productivity gains recently, driven by significant investments in technology and innovation, while Australia has stagnated. This has directly impacted economic growth in Australia with disposable incomes falling more sharply than during any major recession since the 1950s.
For business leaders, these numbers are more than just economic indicators – they are a call to action.
Addressing this productivity slump is critical not only for remaining competitive in a global market, but also to drive sustainable business growth domestically.
What’s Causing This Decline?
Several factors have contributed to Australia’s productivity stagnation, including:
- Lagging Technology Adoption: While Australia boasts high rates of technology penetration, we are traditionally very slow to adopt the latest innovations.
- Labour Force Challenges: Skill shortages, underemployment, and disengaged employees are reducing the effectiveness of our workforce.
- Inefficiencies In Processes: Many businesses remain bogged down by outdated systems and workflows that drain time and energy without delivering value.
Why This Matters To You
For business leaders, productivity is more than just an economic indicator – it’s a key driver of profitability, growth, and competitiveness. Lower productivity means:
- Higher operational costs
- Slower time-to-market for products and services
- Reduced employee engagement and retention
- Difficulty competing in a global market
In the professional services industry, labour costs represent up to 60% of total business costs, making efficiency gains a critical opportunity for increased profitability.
Lessons from Productivity Leaders
The United States, one of the world’s most productive economies, demonstrates the power of strategic capital investment to drive efficiency and growth. While Australia has relied on increased labour hours, US businesses have consistently invested in technologies and infrastructure to force productivity gains, enabling them to scale operations without a proportionate rise in labour costs.
The learning for Australian businesses is clear: transformative capital investment in technology and process improvements is critical to overcoming productivity challenges.
Turning Challenges into Opportunities
Despite the seemingly grim statistics, there are bright lights on the horizon. Businesses that proactively address productivity challenges can create a significant competitive edge. Here are four practical steps to boost productivity:
1. Invest in Automation
Streamline repetitive tasks using tools you likely already own, such as Microsoft 365. This reduces manual errors and allows your labour force to focus on higher-value activities.
Impact: HIGH
Significant efficiency and profitability gains achievable across daily work and administrative tasks
Cost: LOW – MED
Existing tools can often be leveraged using built-in workflow features and M365 Power Automate
Timeframe: 3-6 MONTHS
Simple automations can yield immediate results; Broader BPAs can generate efficiencies this FY.
2 Adopt Innovation & Continuous Improvement
Encourage employees to identify inefficiencies, fostering a culture of innovation and improvement.
Impact: MED-HIGH
Fostering a culture of innovation and continuous improvement will yield long-term, consistent gains
Cost: LOW
Main cost are people and culture related focused on leadership alignment, training and enablement.
Timeframe: 6-12 MONTHS
Cultural adoption takes longer than technical change. Getting everyone onboard takes time.
3. Simplify & Consolidate Processes
Reduce complexity by eliminating redundant workflows and integrating systems.
Impact: HIGH
Seamless repeatable process execution improve productivity across the business.
Cost: MED
Costs may vary depending on the scope of the processes and guardrails required.
Timeframe: 3-6 MONTHS
Bringing in external expertise to delivery and guide process design can fast-track results.
4. Leverage Data
Use analytics to identify bottlenecks and trends.
Impact: HIGH
Effective use of data informs better decision making and resource allocation.
Cost: LOW
Put data generated every day through platforms like Microsoft 365 to effective use.
Timeframe: 1-3 MONTHS
If you already have most of your data in the cloud, you could be making data-driven decisions in a few weeks.
The Role of Strategic IT Partnerships
Tackling productivity challenges alone can be overwhelming, especially when balancing the demands of day-to-day operations. Partnering with an experienced Managed Service Provider (MSP) can make this journey more manageable by reducing costs, shortening adoption timeframes, and removing complexities associated with change.
At Maxsum Consulting, we help businesses identify and implement productivity drivers through a mix of digital transformation, automation, and strategic advisory services. Together, we can position your business for sustained growth in an increasingly competitive market.
Let us know your thoughts – how has the productivity decline impacted your business? We invite you to discuss strategies to counter this challenge. We’re here to help.
