How to offset rising costs in Australia with productivity improvement
Australian businesses are at a crossroads. Inflationary pressures, coupled with lagging productivity growth, suggest that interest rate relief may not arrive until 2025.
An Australian Financial Review report showed a handful of economic analysts observing signs that the Reserve Bank of Australia may delay rate cuts to next year.
“We see the RBA as unlikely to want to cut rates when the housing market is so tight and housing prices are rising solidly, for fear of pump-priming and driving a further housing price boom,” Paul Bloxham, HSBC chief, told the AFR.
This extended high-cost environment demands that businesses transcend traditional cost-cutting tactics and embrace a strategic focus on productivity.
Investment in upskilling and harnessing next-generation technology appears as the most potent tools for achieving sustainable productivity gains and offsetting rising costs in Australia.
Upskilling in Australia: investing in your workforce versus inflation
Skills directly translate to productivity. A highly skilled team can produce more value in less time compared to an under-skilled one.
When labour costs rise, businesses need to get more output for each dollar spent on wages. This is when upskilling becomes a crucial strategy.
Establishing continuous upskilling initiatives will address immediate skill gaps and create a culture of ongoing learning, hitting two birds with one stone.
Organisations that prioritise skills development can future-proof their businesses against economic headwinds by maximising the potential of their teams.
Process optimisation: streamlining for efficiency gains
Process optimisation is the systematic identification and improvement of how work gets done, eliminating waste in a high-cost business environment.
Examining internal processes, up to the tiniest details, is crucial for this endeavour as even minute changes can yield compounding benefits over time.
Here are some practical but savvy tips for process optimisation that human resource leaders can begin exploring:
1. Start with mapping
Visually map out existing processes for hiring, onboarding, performance management, etc. This can be as simple as sticky notes on a whiteboard. Just seeing the flow reveals bottlenecks.
2. Always ask “why”
Repeatedly ask "why" something is done a certain way. Routine tasks often started for a reason that no longer applies.
3. Automate where possible
Explore tools for automating repetitive steps such as form filling, data entry, and approvals. It frees people up for higher-value work. It may cost you a few bucks but the gains are so much bigger.
4. Measure and iterate
Get data where possible. Track simple metrics like time-to-hire or average resolution time for benefits queries. Improvements create both cost savings and better employee experience.
By eliminating unnecessary steps, automating tasks, and improving workflows, organisations can save significant amounts of time and money. This translates into the ability to deliver the same output with reduced labour costs – a crucial factor in combatting inflation's impact.
Real-world productivity solutions for Australian companies
Upskilling and process optimisation are powerful concepts, but let's get real: it's not always easy to translate them into action. HR professionals, in particular, are pulled in many directions within a business.
But it doesn’t mean this endeavour is meant to fail. Here are some actionable steps to start implementing a productivity-focused mindset:
1. Small wins, big impact
Rather than overhauling entire systems, identify one pain point. Is there a bottleneck in payroll? Is onboarding new hires chaotic? Solving those focused issues motivates further change.
2. Collaboration is key
Don’t work in a silo. Partner with departmental managers to understand where productivity lags are costing time and money. Often, solutions cross departmental lines.
3. Employee input matters
Your people are the ones in the trenches. Ask what makes their jobs harder and where they waste time. You might be surprised by the ideas they bring.
4. Don't fear failure
Not every change will be a huge win. Embrace experimentation and the idea that iteration is part of finding what truly works for your organisation.
Productivity has always been a colourful discussion in Australia, with productivity numbers dipping in 2022.
However, Australia’s productivity has started to bounce back in 2023, hitting 95.8 points in the last quarter, according to the Australian Bureau of Statistics.
While inflation might be the catalyst for focusing on productivity, it shouldn't be a temporary fix. Businesses that consistently prioritise productivity have a built-in competitive advantage. It allows them to weather economic storms, maximise output from their workforce, and consistently deliver better value to their customers.