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Why IT is making companies less productive

Research finds that although organisations are introducing innovative technology they are failing to match this with innovation across the rest of the business

Businesses are failing to improve their productivity, despite decades of investment in technology.

Research by the Boston Consulting Group (BCG), a management consultancy, reveals that despite the push to digital technology, productivity across leading economies is falling.

In the 1970s, the 15 largest economies grew by 5% a year; today the growth rate is 1%, and in the UK productivity has been growing at 0% since 2006, according to Yves Morieux, senior partner in BCG's People and Organisation practice.

The underlying problem, according to BCG, is that organisations are introducing innovative technology but are failing to match this with innovation in the rest of the business.

“Whenever we use new information and communication technologies without organisation innovations or collaboration, the impact on productivity is negative,” said Morieux.

The way companies organise work today is the same way they organised work 40 years ago, but the world has become much more complex, he told delegates at a human resources (HR) technology conference.

Digital, but still complex

Organisations have responded by digitising their businesses, leading to an explosion of chief digital officers and digital tsars in every organisation.

The result is that, rather than become more efficient, organisations have simply automated complexity, BCG’s research suggests.

When we don’t co-operate as much as we should, we need more resources, we need more time, we need more systems
Yves Morieux, Boston Consulting Group

Employees are wasting between 40% and 80% of their time on non-strategic work, but are working longer and harder.

And managers are spending so much time writing reports or attending meetings that, at most, they can only spend 30% of their time helping employees work more effectively.

When there is a problem with back office and front office communicating, companies create a middle office – and that makes the problem worse.

In one case a bank ended up with seven data systems because its employees were working in silos, rather than working together.

Encourage employee collaboration

To break this cycle, companies need to rethink the way their managers work and encourage employees to collaborate much more effectively than in the past.

“It is not so much about structure, it is about liberating the nervous system. That is what maximises human potential at work,” said Morieux, speaking at the HR Tech World Congress in Paris.

Companies can do more with few resources and fewer IT systems if they have a culture that encourages employees to collaborate.

He used the example of a European railway company that was failing to meet its punctuality targets. Whenever a train was late, the company – which employs 165,000 people – conducted a detailed investigation to find out which part of the organisation was responsible for the delay.

Employees reacted by trying to cover up the delay and not informing their colleagues, as no one wanted to take the blame. After changing its approach, however, the company saw punctuality rates jump from 80% to 89% across the organisation.

By improving collaboration between employees, companies will find they have less need to invest in IT systems.

“When we don’t co-operate as much as we should, we need more resources, we need more time, we need more systems,” said Morieux.

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