Productivity growth is caught in a decline, and business cannot be complacent about what a productivity crisis could mean: adverse effects on profits, limits in the ability to grow and compete, and a threat to job creation and global economic growth, for a start. To maintain global economic growth and living standards, productivity will have to be raised by 60 percent compared to the last 10 years before the recession. It will become the primary source of competitiveness and profitability, and increasing productivity is not just about working your people harder.
Research shows that the decline in productivity is largely due to inefficient investments in production inputs such as machines and equipment, human capital, and organizational processes. Thus investments have to be made in innovation, technology, and intangible assets—all of which have associated requirements such as creating an innovation culture; ensuring proper integration of new technology and balancing it with workforce skills; and a keen focus on R&D, software and data, business organization, and brand capital.
This report details the context of the productivity crisis in depth, illustrates the relationship between productivity and profitability, and provides specific ways to reverse the productivity slowdown.