HR Tech: What is the Productivity Paradox?

What is the productivity paradox?

The term “productivity paradox” was coined and popularized by American economists and analysts in the early 1990s. It was an attempt to understand the slump in productivity experienced in the American marketplaces despite heavy investments being made in IT infrastructure. In essence, it states that though unprecedented investments are being made in the information technology sector and on providing world-class facilities & opportunities; to the workforce, their overall productivity is not on the rise.

Needless to say, investments being made on the IT infrastructure are still on the rise. Business process automation is the phenomenon that has gained and continues to gain mass following and popularity in recent times. Well, if the productivity paradox holds true, and if the investments being made in various business processes including HR, could backfire and lead to a loss of productivity; so why are we doing them?

Are we measuring the measurable?

We strongly believe that the productivity paradox is not a result of reduced productivity due to investments in IT or automation. A lot about the theory is dependant on the definition of improvement in productivity.

Mismeasured Outputs: The Mere complexity of inputs that go into calculating productivity leads to the error and mismeasurement. Are indirect savings like reduced training time or improvements like the quality of output being considered in the definition plays a major role in deciding productivity of a process?

Ambiguous goals: When it comes to websites, there are two contrasting sets of ideologies or beliefs to measure efficiency & productivity. On one hand, e-commerce websites are lauded for making visitors stay longer; it is believed that it proves beneficial in the long run and prompts them to purchase more. On the other hand, people argue that a good user experience allows the user to purchase & exit the site as soon & seamlessly as possible.

Same is the case for software used for HR process automation.

When an investment is made in an HRMS, it is assumed that it is successful if people spend time with it. However, a better system will facilitate the process without demanding excess time from the user.

Multifactor Impact on productivity: Last and slightly more obvious fault in any argument concerning cause-effect measurement is about how insulated is the experiment from multiple external factors that can be impacting the outcome. And the measurement of productivity is definitely not one of them for it depends on multiple factors that won’t work in isolation.

Two sides of the same coin

There can definitely be counter arguments like, probably we don’t engage in mental math because a calculator is always available at our disposal. Or, we don’t do enough manual record keeping and eliminate the scope of human error by virtue of practice because we always have a computer at our desk. This has led us to be less productive than what we could have been in absence of technology.

But pause and think, isn’t that equivalent to saying we don’t walk miles because we have easy access to automobiles?

Simplifying processes and aiding the human mind to do so much more is what the purpose of technology is!

Is HR tech relevant to the debate?

HR Technology is an umbrella term used to describe software and solutions that help in the automation & digitization of processes pertaining to Human resource management.

By enabling knowledge workers to do so much more than struggling with basic and cumbersome processes, HR Tech has helped boost business efficiency in general. In fact, it is one technology that is relevant to firms across sectors due to the omnipresence of human resources.

In addition to this, the impact of HR technology extends beyond just efficiency. Using HR technology has made it easier for employees to voice themselves on issues that matter to them; thus boosting employee engagement and interaction. HR Tech has also brought more clarity and transparency to HR policies and operations.

The productivity paradox as an observation of patterns in the early 90’s may have been relevant to the market scenarios then. But we have come a long way from that! Not only is our technology more developed than what it used to be, consumption patterns of people including employees have changed too! Hence its pertinence to the present day workforce is as dicey as it is debatable.

So, is the productivity paradox a setback to automation strategies; or is it just another hoax blown out of proportion by the hyper-skeptical watchkeepers of development? Get in touch with us, for we’d love to hear your opinions on this!

  1. Do you think HR technology is relevant to the productivity paradox debate?
  2. What would you measure as productivity from HR Technology?
  3. How do you decide what should be automated and what should not be, when it comes to HR Tech?

 

 

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