The Relationship Between Workplace Practices and Firm Level Productivity in New Zealand

Abstract

Raising New Zealand’s growth in productivity (ie output per person employed or hour worked) has become a topic of increasing political and academic debate. This has been driven by recognition that the relative decline in our incomes (compared to those of other developed nations) is a direct consequence of our inability to raise our productivity at a comparable rate.

In this paper, we examine issues relating to achievement of productivity growth within organisations. We firstly contextualise this by providing a general overview of productivity trends, including the connection between firm­level and wider productivity. We then outline a framework for considering business practices and how these might affect workplace productivity; review New Zealand research findings about the relationship between workplace practices and firm­level productivity growth; and discuss the results of recent studies (done or funded by the Department of Labour) of change processes within organisations.

From this, we conclude that there is a wide range of business improvement options, depending on the needs of the individual organisation; that significant improvements in workplace practices can be achieved; and that these contribute to a range of better operational outcomes. Ultimate benefits in productivity can be expected but are harder to attribute. However, the experience of the organisations studied highlights the challenges inherent in these processes, which require sustained commitment, and buy­in from people at all levels. There were significant differences in outcomes between those organisations that began with positive internal relationships and culture, and management leadership, and those where these conditions were absent.