What’s Wrong With Productivity?

Bill Hackos, Comtech Services, Inc.

Have you wondered why your senior management makes so many decisions that seem so irrational? Senior management-directed downsizing decimates your Pubs Department, having a severe negative effect on the quality and usability of your documentation library. The same thing happens to development. Documentation is outsourced or sent offshore, even though it lowers quality and potentially increases costs. Senior writing staff are fired for no apparent reason except that they have high salaries. Your company acquires or is acquired while management does nothing to support the acquisition. Big mergers are made with negative consequences for both parties in the merger.

Information development is not alone. The same things are happening across the board all over corporate America. What is going on? The answer to understanding these bizarre decisions by upper management can be found in their goals. We tend to make the naive assumption that the goals of upper management are the health and welfare of their companies and long-term profitability. We need to look further.

I’ve found an interesting article, with a somewhat censored abstract in the July-August Harvard Business Review and a complete article on the Web site of Henry Mintzberg, a professor of Management Studies at McGill University that helps to explain upper-management behavior.

  • Henry Mintzberg, “Productivity is Killing American Enterprise,” Harvard Business Review, July-August, 2007, 25.
  • “How Productivity Killed American Enterprise”, Henry Mintzberg,http://www.mintzberg.com

Professor Mintzberg writes his original article from the point of view of an economist in the future, trying to understand the great depression of 2008. He points out that based on productivity measurements, the economy seemed in great shape in 2007. Stocks were at record levels.

Mintzberg finds that the “productivity” of 2007 was artificial. Managements’ goals had shifted from their traditional goals to the goal of maximizing the stock price in the short term. They referred to it as “shareholder value.” They were under such pressure to maintain high stock prices (much of their compensation was in stock options) that they were willing to mortgage the future health of their companies by cutting staff, even though it meant lower quality, reducing research and development and damaging their companies’ brands, in order to make short-term increases in “productivity” to impress stockholders and their analysts. After all, they would probably move on before the damage was noticed by the stockholders.

Mintzberg recommends that upper management return to the more traditional goals of healthy growth and profitability that have made the American economy strong. Mintzberg, in these articles, is giving fair warning to American upper management to do something before it’s too late.

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