The global economy is facing a productivity problem. In April, IMF Managing Director Christine Lagarde stated that “in advanced economies, for example, productivity growth has dropped to 0.3 percent, down from a pre-crisis average of about 1 percent.” She also warned that “another decade of weak productivity growth would seriously undermine the rise in global living standards” and that slow growth could weaken global financial and social stability.
The United Kingdom in particular faces major challenges in productivity slowdown, and the Financial Times reported that Chancellor Phillip Hammond announced a £31 billion investment fund to try to improve workers’ efficiency. The fund will help build more houses, build economic infrastructure, and fund research and development.
The government’s efforts will help, but accountants have a major role to play as well. As we become financial advisors in addition to accountants, clients will ask us about funds like these as well as how they can boost their own productivity. In order to answer that question, we have to understand what is causing the productivity slowdown and how we can lead other businesses to a better, more productive economy.
The Productivity Paradox and Technological Adaptation
Declining productivity numbers have puzzled economists for years now. We turn on the news and hear about new, advancing technologies like the cloud, Big Data, automation and robots, and so on. Some analysts have even speculated about a near future where automation and robots put humans out of work.
Despite these new technologies, productivity growth has slowed and economists are trying to figure out why. A major possible reason is that while we may read about new technologies, businesses may not actually be adapting these technologies as much as expected.
A basic example of this failure to adapt is Microsoft Excel. Excel has its uses, but accountants know that it is seriously inadequate as an accounting software. Many UK businesses do not even use Excel and rely on paper spreadsheets, so much so that KashFlow notes that the government’s attempts to digitize self-assessment tax returns had to be delayed.
Accountant firms are not doing their taxes and accounting by paper these days, but they have to clearly persuade their clients to follow their approach and adapt the latest technologies.
As noted above, there are plenty of new technologies on the horizon, and accounting firms should already be using them in their own workforce. Cloud technology lets clients see your work faster at any time without tedious emails or downloads. Big Data helps your firms analyze trends and store client data to give them better advice. Automation data entry means that clients and accountants no longer have to spend tedious hours entering data into a spreadsheet and can thus engage in more creative and productive work.
Talk to your clients about the value of such software, as well as describing how they can make that technological transition as smooth as possible. Even basic accounting software like QuickBooks can save clients valuable time, improve their productivity, and help your businesses as well as the national economy.
Work Smarter, not longer
In addition to proposing technological solutions, accountants should also discuss with their clients how changing working hours could increase productivity. Because while this may sound easy, both clients and accountants alike are making a huge mistake.
Most people logically assume that if you want more productivity, workers need to work more. But the Harvard Business Review and other researchers have discovered that excessively long hours can backfire and hurt net productivity. In one study, managers were unable to detect any difference in work quality between those who actually worked 80 hours per week and those who pretend to.
And that is just in the short term. Working too much and sleeping too little in the long run can damage your employees’ health, make them more irritable, and increase the chances that they make mistakes. This can lead to accidents while they're driving to work (you can read more about cheap temporary car insurance here). While businesses may sometimes need workers to work extended hours for a short period, doing it for long stretches will hurt productivity.
Accountants thus should talk to their clients about measuring productivity not by hours worked, but by what was actually accomplished. Of course, it is important to practice what you preach. Instead of focusing on hours, look at how much revenue your accountants produce and the quality of their work. Working more than 50 hours per week should be an incredible exception and not the norm.
Making a Difference
By talking about how to improve productivity, accounting firms can help make a real difference to their clients. A digitized business not suffering from overworked employees will be more efficient and help jumpstart productivity just like the UK needs. Also make sure to the same in your own firm, and the result will be a more motivated and productive workforce.