Following an announcement in 2010 by the Economic Strategies Committee to reach a productivity growth target of 2-3% per year over the next decade, the Singapore government has since introduced a slew of initiatives to raise productivity.
From the Productivity and Innovation Credit (PIC) scheme under the Inland Revenue Authority of Singapore (IRAS), to the Innovation and Capability Voucher administered by SPRING, and more recently, the creation of the Committee on the Future Economy and the SkillsFuture movement – it is clear that the productivity push has grown to become a national agenda for the advanced economy.
Despite these investments, labour productivity continues to be a challenge for the small, resource-constrained Singapore. Real productivity growth averaged only 0.4% per year over the past five years, against a real average wage growth of 1.1% per year. In 2015, real wage growth was at 7% but productivity shrank by 0.1%. The recently released biennial Singapore Public Sector Outcome Review also reported that productivity growth remained modest amidst a subdued global economy in 2016.
The wage and productivity equation
According to labour economics, the rise in real wages without a corresponding increase in labour productivity is a sign of impending danger. In the long run, without a breakthrough in productivity growth, the country’s economic competitiveness takes a hit.
For businesses, marginal productivity performance accompanied by rising costs due to high wages and rental costs could translate into declining profit margins. Whilst reducing manpower remains an option, certain sectors and industries remain heavily reliant on manpower.
As a result, what could happen is employers squeezing higher-qualified workers in order to boost their productivity, so as to manage overtly high-wage rates without having to lay off the cream of the payroll.
Against this backdrop, the long-term focus has to be on employees, a crucial pillar of productivity. Building a stronger culture of upgrading and training, changing mindsets to embrace workforce changes and making a concerted effort to implement training programmes that are productivity-centric.
On one end, the government can fund programmes and restructure agencies – but both employers and employees also have a part to play by working towards specialisation and skills mastery, thereby reducing the gap between productivity and wages.
Leveraging the right technologies
Successful organisations are those that take advantage of emerging, enabling technologies to manage their most valuable asset – human capital. In recent years, human resource (HR) practitioners have realised the inefficiencies created due to non-integrated HR systems – from duplication of efforts, to an inconsistent workflow process and an inability to efficiently plan workforce needs.
With so many aspects to HR, having an integrated platform that mines data around recruitment, workforce planning, and performance management can help leaders identify if they have a lean workforce; if employees are fully engaged, and if their skills are being put to best use. Being able to make these educated manpower decisions are particularly crucial in Singapore, where firms are facing increased competition in their bid to hire and retain the best talent amidst a tightening labour market.
Being able to rely on these technologies to draw insights also means that more time can be spent on training and developing employees for the next frontier of growth and innovation.
Elevating performance through targetted training
Global trends like the rise of technology have reshaped the functions and requirements of jobs – and naturally, workers now need to develop new skill sets in order to commensurate with their job responsibilities and sustain productivity levels. However, in order to further drive engagement, organisations should employ specialised training approaches that cater to their employees’ learning preferences, goals, strengths, and weaknesses.
One way of personalising the learning experience is to first identify the employees’ learning preferences before delivering a training programme; finding out if they are better suited for classroom-style, computer-based, or hands-on learning. After all, the method of learning in any training programme is equally as important as the content being delivered, and employees might not respond well to training programmes if their needs are not addressed.
Creating a coaching, performance-based culture
Most leaders acknowledge that their actions have impact on their employees’ performance, but only a small proportion know how to go about cultivating a positive environment to engage their workforce.
Coaching, when done correctly, provides the forum for clear direction and support to employees in their existing roles and personal development. It is a chance to delegate responsibility, discuss concerns, gather feedback, and can be a great way to iron out any issues that may be having a negative impact on performance and productivity.
Similarly, nurturing a performance-based culture results in a productive workforce because it inspires and motivates employees by giving them attainable goals to reach on a regular basis. High-performing organisations know how to integrate coaching into everyday management routines and establish clear coaching goals for every individual in their team; goals that are tied to specific behaviours, competencies, and clear parameters. When employees know what they are reaching for, they will be able to achieve it more optimally.
Looking ahead, it will become more crucial for organisations to adapt their talent management strategies in order to drive workforce productivity and boost their competitive edge, especially amidst an unpredictable economic environment.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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