When productivity meets reality: Why working harder isn't the answer

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Australia must shift from tracking hours to redesigning processes if it wants to solve its long-term productivity growth crisis, says UNSW Business School's Frederik Anseel

Australia faces a productivity crisis that threatens the living standards of future generations. While businesses chase efficiency through surveillance software and billable hours, they miss the fundamental truth about what drives real economic progress.

According to the Productivity Commission, for example, multifactor productivity growth in Australia’s market sector rose by just 0.1% between 2022-23 and 2023-24, well below the 20-year average of 0.3% and far below the 1.6% annual rate recorded between 1994-95 and 2003-04. And over the last decade, Australia’s productivity growth has averaged just 0.2% per year, which is among the worst in the advanced world. If productivity had grown at the long-term target of 1.2%, annual GDP would be about $250 billion higher, and annual tax revenue would be $50 billion higher.

These figures underscore the challenge: Australia’s sluggish productivity growth is not only outpaced by its own historical standards but also by its global peers, raising concerns about future living standards for the next generation. Frederik Anseel, Professor of Management and Dean of UNSW Business School, frames the stakes clearly: “There’s a famous quote by Nobel Prize winner Paul Krugman, and he says, ‘Productivity might not be everything, but in the long run it’s almost everything.’ And I very much subscribe to that.”

This reality extends far beyond corporate spreadsheets. Productivity growth determines retirement savings, infrastructure investment, and education funding. When societies fail to improve productivity, they condemn future generations to stagnation. “If people today feel that they’re not better off than their parents or their grandparents, that is productivity growth. This idea that every new generation has it better than their parents, that is productivity growth,” said Prof. Anseel, who was recently interviewed by Dr Juliet Bourke, Adjunct Professor in the School of Management and Governance at UNSW Business School for The Business Of, a podcast from UNSW Business School.

Understanding true productivity beyond time sheets

The traditional approach to measuring productivity focuses on time spent rather than value created. Companies install tracking software to monitor keystrokes and screen time, reducing complex work to simple metrics. This misguided focus reveals a fundamental misunderstanding of how breakthrough results occur.

Prof. Anseel challenges this time-based thinking with a powerful observation: “In a lot of businesses, one great idea can change everything. I don’t care, then, if you had that breakthrough on the beach, in the shower, on a bike, but that idea could compensate for 20 hours, 50 hours, maybe thousands of hours of work.”

Learn more: The business case for hybrid work: Focus on profit (not productivity)

The problem becomes particularly acute when organisations prioritise easily measured outputs over transformational thinking. Employees learn to game these systems, focusing on appearing busy rather than generating genuine value. The irony emerges when companies accidentally discourage the very behaviours that drive breakthrough results – reflection, creative thinking, and unstructured problem-solving.

The Model T assembly line exemplifies this principle. Henry Ford’s innovation transformed car manufacturing not through individual workers trying harder, but through completely redesigning the production process. The productivity gains came from systematic change, not personal effort. “This has nothing to do with an individual working a bit more or working a bit harder, it is changing the complete way of how we produce,” Prof. Anseel notes.

The bureaucracy trap that steals productive time

Beyond measurement issues, organisations face what Prof. Anseel described as time theft through unnecessary bureaucracy. "Don't feed the bureaucracy. If a form, a procedure, a meeting, an email is not needed, do not create one."

This bureaucratic burden reflects a fundamental misunderstanding about time management. Most time management training focuses on individual efficiency, teaching people to optimise their own schedules and workflows. However, this approach creates an unintended consequence: individuals become protective of their time whilst inadvertently consuming others' time through meetings, emails, and administrative requests.

Learn more: Does hybrid working really lead to less productivity?

"We need to care for each other's time," Prof. Anseel emphasised. "Whenever we send an email, we organise a meeting, we ask people to complete a form, we don't need to think about this is maybe more efficient for me, we need to think about the 10, 20, 100 other people that were basically stealing their time."

The solution requires organisations to audit their processes, not for individual efficiency, but for collective time consumption. Every procedure, meeting, and communication should justify its existence based on value creation rather than convenience for the person initiating it.

The remote work revelation

The pandemic provided an unexpected productivity experiment when millions of workers shifted to home offices overnight. The results challenged conventional management wisdom about workplace control and supervision.

“What was striking was that we almost had no productivity loss,” Prof. Anseel observes about the sudden transition to remote work. Research by Stanford economist Nick Bloom supports this finding, showing that hybrid working arrangements maintain or even improve productivity while reducing costs.

Yet many organisations pulled workers back to offices based on management anxiety rather than evidence. Prof. Anseel identifies this as “the illusion of control” – the belief that physical presence equals productive output. Senior managers worried that unsupervised employees would become “lazy bums” sitting on beaches instead of working.

The data tells a different story. Hybrid working arrangements show no productivity loss and offer significant profitability gains through reduced office costs and improved employee satisfaction. The resistance comes not from performance metrics but from management discomfort with new ways of measuring results.

AI’s promise and productivity pitfall

Artificial intelligence offers incremental productivity gains for individuals who master tools like ChatGPT and Claude. These early adopters save minutes on routine tasks, with many keeping their AI usage secret from employers. However, this individual productivity boost won’t drive the transformational changes Australia needs.

“True productivity growth comes from technological innovation where you suddenly say, ‘Well, everything that we’ve been doing, let’s redesign that completely,’ and suddenly you have jumps in productivity of 10, 20, 30%,” Prof. Anseel explains. Current AI applications provide marginal improvements rather than revolutionary breakthroughs.

Learn more: How AI is changing work and boosting economic productivity

The real productivity gains will emerge when organisations redesign entire processes around AI capabilities, similar to how the assembly line transformed manufacturing. Companies that simply layer AI onto existing workflows miss the transformational opportunity.

Consulting and law firms already demonstrate this principle by openly using AI to produce presentations and analyses, then banking the time savings as increased profit rather than reduced workload. This approach recognises that productivity improvements create capacity for additional value creation rather than leisure time.

The innovation imperative for business

Australia’s productivity challenge requires more than individual efficiency improvements. The solution lies in systematic innovation and process redesign that creates step-change improvements rather than marginal gains.

Prof. Anseel cited research on Apple’s developer conference, which illustrates why human interaction remains crucial for innovation. When the company moved from in-person to virtual format, app innovations dropped 13% and customer satisfaction ratings fell 4%. The only variable that changed was informal face-to-face conversation among developers.

This finding challenges the assumption that all work can be optimised through digital efficiency. “You need to become unproductive to become productive in the long run,” Prof. Anseel suggests, emphasising the value of seemingly wasteful activities like coffee conversations and casual encounters.

Successful productivity growth requires organisations to eliminate genuine inefficiencies while preserving the human interactions that drive breakthrough thinking. The key lies in distinguishing between productive “unproductivity” that generates ideas and genuine time waste that adds no value.

Beyond individual metrics to collective progress

The path forward requires abandoning the fallacy that national productivity growth simply equals the sum of individual productivity improvements. While personal efficiency matters, transformational change comes from reimagining how work gets done rather than doing existing work faster.

Instead, organisations need to deliberately preserve and create opportunities for unstructured interaction. The most productive offices might need to become less efficient in traditional terms – scheduling coffee breaks, designing spaces that encourage chance encounters, and protecting time for reflection and informal discussion.

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The challenge facing Australian businesses extends beyond implementing new technologies or measuring different metrics. Prof. Anseel said this requires fundamentally rethinking what productivity means in an economy where ideas matter more than hours, where breakthrough innovations emerge from unexpected moments, and where human connections drive results that no algorithm can replicate. 

The organisations that thrive will be those that resist the temptation to measure everything that moves and instead create environments where great ideas can emerge, regardless of when or where they happen.