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Australia has a productivity problem.
This year’s OECD global employment report delivered a dramatic critique of Australia’s productivity levels. The July release ranked the productivity performance of all 38 OECD members between 1995 and 2025 and the land down under has fallen way under. Over the past 6 years, Australia has landed squarely in the third-last position.
On a scale as grand as this, distilling something as nebulous as productivity into one scale of measurement can feel like an oversimplification, a tidy packaging up of multi-faceted drivers.
That notwithstanding, where there is smoke, there’s usually fire. A deeper look at labour productivity, in particular, tells a similar story.
Essentially, labour productivity is the sum of economic output ÷ hours worked.
To put that into real terms:
Say that a business has 10 employees who will collectively produce $1 million worth of work this year. If they can produce $1.05 million next year for working the same number of hours, perhaps because they have better technology, processes, or skills, then productivity has risen.
Unfortunately, this has not been the recent trend in Australia. Over the past few years, we’ve seen more hours be put into the economy, yet output has increased very little. In fact, labour productivity is sitting slightly below pre-pandemic levels.
Working in business insights and advisory, we’ve seen time and time again just how real the cost of lost productivity is. When we conduct business audits and analyses for our clients, we’re constantly uncovering situations where labour input-to-output just isn’t adding up.
Almost never is this because staff just aren’t working hard enough. Rather, it’s lag in processes and tools to get the job done that most often hamper productivity.
In my view, this is where AI tools offer business owners a golden opportunity. With the right skills and knowledge driving them, generative AI technology can provide businesses with a pathway to improving both output and efficiency.
We’ve seen the monumental potential of these technologies in both our clients’ businesses and our own. Considering the AI boom has happened virtually overnight and is continuing to explode at a pace faster than anyone anticipated, the learning is ongoing and with no end in sight. But it’s a journey we’re on and having seen the commercial benefits firsthand, it’s one we’re passionate about taking our clients on too.
If you’re yet to explore how these tools can be used to boost productivity in your business, here’s some pointers to take forward:
1. Look at your workflows before you look at the tech.
To reap any benefit from AI tools, or any tool for that matter, you need to have a clear grasp on the problem you’re trying to solve.
If your intention is to use AI tools to increase productivity, you need to first ask:
- Which areas of the business are we putting in more than we’re getting out?
- Where are the biggest bottlenecks in our workflows?
- Which parts of those processes are highly structured and/or repetitive?
Gut feel isn’t enough here. You need definitive answers. The good news is that productivity is quantifiable and through proper analysis, your financial data can lead you directly to the areas of the business that most need attention.
This is something my team and I work through with clients regularly. With the help of industry benchmark data, we look into the numbers to identify where productivity is being lost, then collaborate with our clients to really dig into what’s driving it.
More often than not, the downward drivers of productivity are processes and procedures that rely on duplicated effort or are archaic, in that they haven’t evolved with time and technology. While AI tools are not a silver bullet for all productivity issues, when the specific task is both related to process and carried out on a computer, there’s a likely chance that this is an area that can be optimised with AI.
But what tools specifically? And how should they be put to work? Well, that depends on the specific process you’re looking to optimise. The point here is that you need to fully understand the problem to stand any chance of solving it.
2. Help your staff understand that the goal is to better utilise the team, not shrink it.
The AI and automation boom has triggered what sociologists refer to as FOBO, fear of becoming obsolete. It’s a phenomenon that has followed every technology boom to date, though the FOBO we’re seeing and hearing in the current climate has certainly reached fever pitch.
As a business owner, it’s important to be aware of this reality and exercise sensitivity in how you communicate your AI implementation plans to your employees. After all, the success of any new tool is hugely dependent on your staff’s willingness to adopt it. So, my advice to all business owners is:
A. Introduce the specific AI tool as a solution to their problem
Like all fears, FOBO thrives when people aren’t knowledgeable on the specifics of the “threat” and when they’re exposed to high levels of polarised media content, which however factually right or wrong, gives validation to their concerns.
Quelling these concerns starts with taking the approach mentioned earlier, so the conversation isn’t “We’re introducing AI”. Instead, it’s “This is the specific problem we know you’re dealing with in your role and this is how we think it can be solved.”
This approach presents your staff with a new way of thinking about AI. Rather than it being a looming (and potentially harmful) great unknown, they can begin to see its value as a practical solution to a real problem they are dealing with in the day-to-day.
B. Start small
Let’s say that through our analysis, we identify six administration workflows that bear the hallmarks of being ripe for optimisation through AI tools.
If you’re just starting your journey with AI, my advice is to start with the one workflow that is both the most straightforward to optimise and likely to deliver the greatest impact. A measured approach helps your people get comfortable with the tools they are using and gives your business the opportunity to determine the value of the solution before rolling it out on a grander scale.
3. Understand that there is no substitute for specialist judgement
The guiding tenet of AI use: if you put garbage in, you’re going to get garbage out.
An AI tool can dramatically speed up parts of a task, but it can’t replace the specialist knowledge required to judge whether its output is actually correct. Only a person can do that.
I see this in my own work all the time.
I regularly use Copilot, an app we favour for its locked-down environment, to help with analysis and reporting. Before using it, I’d spend a considerable amount of time working out the formulas or code needed to pull a particular result from a dataset.
Now, I can give Copilot the inputs I have, explain what I’m trying to find and have it produce the formula or code required to get me there. In a matter of moments, I have something to work with.
Then, the second step and the most important one: Challenging whether the result is actually correct. Often it is. Sometimes it isn’t. And it takes human expertise to know the difference.
When the result isn’t right, I need enough subject matter knowledge to recognise that and then interrogate the inputs and identify exactly what has gone awry so I can refine my prompts accordingly.
AI’s real value comes from putting it in the hands of someone who already knows what they are doing. Without human expertise to extract and validate findings, you run the risk of basing your decisions on unstable ground and inaccurate information.
4. The best time to start was yesterday. The second best time is today.
Having seen the impact that AI tools have had within Ulton and within our clients’ businesses, I am more certain than ever that such tools, wielded strategically, have the capacity to substantially lift labour productivity.
And in an environment where the cost of doing business just keeps climbing, greater efficiency is a true competitive advantage.
The businesses that start building AI capability now will be the ones getting more from their time and resources in a year’s time. And as those productivity gains grow, so too will the competitive gap between those who have started and those who haven’t.
Curious about putting generative AI to work for you, but not sure where to start? Get in touch. The Business Insights team and I would be more than happy to discuss your AI journey and share learning from our own. Reach out on: (07) 4154 0400.
