In early 2023, Goldman Sachs CEO David Solomon announced a “return-to-office” mandate: full attendance five days a week. Half of the employees refused. Solomon forcefully reiterated his position — with limited success — for many months. More recently, Amazon CEO Andrew Jassy told workers they must get to the office five days a week starting in January. Many employees, valuing the flexibility and autonomy of remote work, experience these calls as a regression, as arbitrary leadership based more on “belief” (Jassy) than facts.
That debate isn’t just about where work happens; it’s a symptom of our failure to define productivity. It is a triumph of authority over data-informed insight. Failing to define and agree on what productivity is, we fail to achieve it.
Productivity isn’t about where you work or the volume you produce. True productivity is about doing more, and doing better, with less. The ongoing debate over return-to-office policies is a window into how our failure to understand productivity has very real impacts on our organizations, our people and our standing in our communities and the marketplace.
The Productivity Ratio: Beyond the Simplistic
Too often, productivity is mistaken for output. Productivity is reduced to “units per hour of work.” This is not productivity; this is a simplistic efficiency metric that fails to calculate real costs or real value.
At the national level, productivity is frequently measured as GDP per hour worked — another blunt tool that fails to account for outputs like innovation or worker well-being. At the firm level, metrics like revenue per employee, while useful, also disregard factors such as costs and investments, quality and sustainable value creation. For businesses, especially smaller ones, improving productivity shouldn’t be just about pushing harder or producing more; it’s about smarter investment, thoughtful work design and a holistic understanding of how we create value for customers.
Productivity is a ratio. It describes the relationship between inputs and outputs. It describes our ability to do more and better, with less. All things being equal, if the same task with the same output can be done in less time, you are being productive. If the same task is done in the same amount of time, but the quality is higher and the failures fewer, you are being productive.
Building a Culture of Productivity
Improving productivity, particularly for smaller businesses, starts with understanding what real productivity means and using data rather than opinions to inform decisions. Productivity is a system-level outcome; it’s influenced by company culture, leadership and operational excellence. It doesn’t live in the abstract; it must be aligned with our strategic understanding of how we create value for customers, profitably.
The remarkable book The Good Jobs Strategy by MIT’s Zeynep Ton illustrates this powerfully. It suggests that fair compensation, stability and empowering employees are crucial for — and in turn require — operational excellence. Companies like Costco and Trader Joe’s are deeply committed to this approach, investing in their people and operational excellence to realize true productivity.
Productivity is a virtuous circle: Effective operational processes and a culture of transparency support the engagement of employees in high levels of discretionary effort. The result is higher-quality work and delighted customers. This drives better sales and better margins, which can in turn fuel improved employee compensation and lower turnover, driving further excellence.
Practical Strategies for Small Businesses
- Use data to inform and measure what matters: Most leaders struggle to define how they measure productivity, even when they invoke it as a reason to demand a return to office. We need to get past this and use data beyond simple output metrics (far too often driving and measuring “busyness,” not productivity) to incorporate customer satisfaction, employee engagement and quality into our productivity measures. Understand how value is created and where opportunities for improvement exist.
- Invest in your people: The term “human resources” is a problem. Resources exist to be consumed. Humans are assets to invest in. Workforce development is not a cost; it’s a vital investment. Well-trained and well-compensated employees are proven to be more productive.
- Adopt a systems perspective: Productivity isn’t about optimizing isolated tasks or isolated factors like where employees are working from. It’s about understanding how all parts of your business interact. Use data to identify bottlenecks, simplify and standardize processes, and ensure employees feel connected to the value your organization creates for its customers.
Productivity is about doing more and better with less; higher quality with less waste. To be productive in increasingly volatile and complex environments, we need to be in continual dialogue with our people and on a continual drive towards operational excellence. One is not possible without the other, and neither is possible without a clearer and shared understanding of what “productivity” truly means in our organizations.
Clemens Rettich is an organizational consultant with Beaton Rettich Waters. Once and always a musician and an educator, he has spent over 30 years practising the art of management. Rettich also shares his passion for leadership and organizational behaviour with his students at the Peter. B. Gustavson School of Business at the University of Victoria.
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