Why should the public sector ‘CARE’ about workforce productivity?

Workforce productivity, the new imperative for the public sector

Rapid population growth, urbanisation and the rising expectations of citizens have led the public sector to try to achieve more with fewer resources – something that has been particularly challenging due to rising costs. COVID-19 has only exacerbated the situation. Therefore, it is not surprising that since the outbreak of the pandemic, ‘productivity’ has become a buzzword for public sector organisations and private sector businesses alike. As employees are grappling with alternative ways of working, executives are faced with the challenge of understanding how productive their employees are in this new normal.

What is productivity?

Productivity is essentially the ratio of the outputs to the inputs in any production process. Workforce productivity, also known as labour productivity, is a specific type of productivity which looks at only a single type of input ‒ labour. 

Although conceptually as simple as a ratio, the measure accounts for quantity and quality of service output and labour input. Whereas quantity is relatively easy to measure, the quality is measured using various indicators, such as service outcomes, customer satisfaction, employee performance and so on. Given workforce productivity looks at the efficiency of the team it is also different from employee performance indicators which are often focused on individual efficiency and effectiveness.


Why does workforce productivity matter?

At the national level, workforce productivity is a critical macroeconomic indicator

National-level workforce productivity correlates with crucial economic indicators, such as the standard of living and the growth of GDP. Therefore, higher workforce productivity suggests a better standard of living and increased economic growth. The measure also helps governments understand the value public services add to the economy, so they can optimise the allocation of government resources. As a result, workforce productivity plays an important part in government rankings of efficiency, competitiveness and quality of life that help attract global talent and investment.

At the entity-level, measuring workforce productivity drives efficiency, digital transformation and upskilling

Workforce productivity as a measure helps government entities:

Workforce productivity is able to highlight specific underperformance issues of a given team or service, enabling the management to formulate precise action plans.

Workforce productivity is able to uncover process inefficiency, allowing entities to improve target processes based on factual analysis rather than implement general process improvements.

Workforce productivity is also able to inform resourcing decisions, helping entities redirect resources to target underproductive services and activities.

Key enablers of workforce productivity

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Technology

Technology that has been utilised for automating and digitising services not only expedites service delivery, allowing entities to increase service output, but also reduces costs and enhances employee satisfaction and engagement.

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People

A competent workforce that is continuously upskilled and aligned with changing work requirements leads to increased workforce productivity.1 Moreover, investment in upskilling can deliver a more loyal, motivated workforce that aspires to achieve objectives, overcome challenges and take initiative.

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Process

Streamlined business processes with clearly identified interdependencies and opportunities for synergy lead to enhanced process efficiency, which further translates into increased workforce productivity. 

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Culture

A collaborative culture that encourages the sharing of resources, data and knowledge contributes to optimised resource utilisation, which drives better workforce productivity across the whole of government.


Workforce productivity is more important than ever

Long before the COVID-19 pandemic, rapid population growth and urbanisation had started to put the public sector under pressure to deliver more with less. Expectations of citizens were rising, governments around the world were under pressure to deliver more and better quality services amidst challenges, such as increasing payroll costs, and then the COVID-19 pandemic hit.

The recent crisis has brought many changes to the way public sector organisations operate. Remote working, which was initially a contingent response to the pandemic, is here to stay. Government entities in the region have either adopted or are in the process of adopting new ways of working.2 Technologies that digitise and automate the workplace and enable communication and collaboration among colleagues and customers are now a crucial part of the new normal. However, the transition into alternative ways of working, coupled with the expedited adoption of new technologies, has had its challenges. Government entities are faced with the difficult task of tracking their employees’ performance to ensure optimal utilisation of their human capital. Many government entities around the world and in the region have also had to take cost-cutting measures, such as budget cuts, hiring freezes and pay cuts.3

Workforce productivity is a powerful tool that can help governments manage the impact of COVID-19 in the new normal

Workforce productivity as a measure can help the public sector understand the impact of the COVID-19 pandemic on both the employees and service delivery. Increased adoption of technology and digitisation has led to a blurring of lines between work and personal life. Managing and measuring workforce productivity can help organisations increase efficiency while ensuring work-life balance is not negatively affected. Productivity measurement drives continuous improvement with minimum disruptions to service and shifts the focus from inputs and outputs to intended outcomes. In a nutshell, the measurement and management of workforce productivity will be a key tool that will help governments achieve their vision more efficiently.

How is workforce productivity measured?

Today, workforce productivity of the private sector is a regular economic indicator measured by international organisations and governments around the world and in the region. It is often expressed as the ratio of the Gross Value Added (GVA) ‒ the net income of goods and services ‒ or the Gross Domestic Output (GDP) to the number of workers or hours worked.

However, the measurement of workforce productivity for the public sector is not as straightforward for multiple reasons. Public sector services are often either subsidised or freely provided which underestimates their true economic welfare as valued by the consumers; and their attributes of non-excludability and non-rivalry make it difficult to measure the units of outputs. The UK’s Office for National Statistics (ONS) was the pioneer in adopting a quality-adjusted measurement of the quantity of outputs for the public sector. Currently, this is regarded as the most advanced approach used for public sector productivity measurements by statistics bureaus in Organisation for Economic Co-operation and Development (OECD) countries and around the world, many of which have started to employ this method.

Building on the internationally recognised measurement method and best practices around public sector productivity management, PwC Middle East has recently designed a workforce productivity solution that can enable governments to understand and track the productivity of their workforce. The solution has distinctive features that set it apart from common approaches, namely that it's hybrid, holistic and scalable.

 

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Hybrid

The solution helps diagnose the granularity of current data and service types and proposes the most suitable measurement method for each service accordingly. This hybrid approach provides flexibility and adaptability for the government to roll out the framework quickly and enhance the data quality continuously.

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Holistic

The solution takes into account the workforce of centralised support services (e.g. human resources, finance and procurement) that indirectly participate in the delivery of customer-facing core services, ensuring the measurement framework is as holistic as possible.

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Scalable

The solution measures workforce productivity at the service-level and then aggregates it up to the entity level. It can also be adapted to aggregate at the national or sub-national level, informing resourcing strategy and policy making across all scales of governance within the public sector.

PwC’s ‘CARE’ framework

PwC’s ‘CARE’ framework is based on best practices but localised to suit the region. It covers both measurement and governance aspects of workforce productivity management and outlines four critical actions – collect, assess, recommend and endorse – with corresponding roles and responsibilities of the relevant stakeholders. The framework also offers measurement solutions that ensure accurate and standardised application across public sector entities, allowing for data analytics and visualisation dashboards.

Collect

Collect, clean and validate the data required for measuring productivity. This includes identifying priority services and data requirements to enable robust data collection efforts.

Assess

Assess the quality and integrity of the collected data, develop the methodology for the measurement and assessment of workforce productivity and undertake the measurement. This includes examining current technical capabilities and tools that can be leveraged for workforce productivity measurement purposes.

Recommend

Recommend initiatives and policies for enhancing workforce productivity based on an evidence-based assessment, while continuously developing the workforce productivity framework and the capabilities of stakeholders.

Endorse

Endorse and enable the workforce productivity agenda at the top level of government, while overseeing the whole ecosystem through a robust workforce productivity solution supported by digital dashboards.


Outcomes

Adoption of the ‘CARE’ framework can help governments achieve the following outcomes:

1) Upskilling for shared prosperity, Zahidi & Moritz, World Economic Forum in collaboration with PwC (2021)
2) Abu Dhabi government to cut workplace attendance to 30 per cent. Duncan, The National News (2021); Sheikh Hamdan approves work-from-home system at Dubai government. Al Amir, Gulf News (2020)
3) Covid-19: Dubai tells government agencies to cut spending, freeze hiring. Reuters, Khaleej Times (2020); Saudi Arabia plans spending cuts to trim deficit amid virus. Debre, AP News (2020); UAE cuts spending in 2021 federal budget. Reuters (2020); How COVID-19 is Driving Big Job Losses in State and Local Government. Rosewicz, PEW (2020)

 

Contact us

Rami  Nazer

Rami Nazer

Middle East Government and Public Sector Leader & Global Advisory Government and Public Sector Leader, PwC Middle East

Tel: +971 2 694 6800

Randa Bahsoun

Randa Bahsoun

Labour and Social Development Leader | Government and Public Sector Partner, PwC Middle East

Tel: +971 4 304 3487

Khaled Bin Braik

Khaled Bin Braik

Consulting Partner and Emiratisation Programme Leader, PwC Middle East

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