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  • How Leaders in Latin American Companies Are Preparing for the World Cup

    The World Cup kicks off tomorrow in Brazil. Well, the game is in Brazil, but it kicks off just about everywhere. So smart office managers are getting prepared for distracted workers. Mercer gathered some intel on how managers in four of the most football/futbol/soccer crazed nations are planning on handling game time, and here is a glimpse of the findings: See the full-size infographic here .
  • Seriously, Humor at Work is Good Business

    We don't know of any performance reviews that measure how often an employee laughed at work or made her colleagues laugh. And frankly, we're scared of what that might bring about (call it the Michael Scott effect). But increasing the frequency of smiles, guffaws, and giggles is not only a worthy goal, according to A.J. Jacobs and Peter McGraw , it is essential to success. In this interview with Knowledge@Wharton 's Adam Grant , Jacobs and McGraw discuss the time and place for humor at work, and why it is a necessary element of a successful work environment:
  • Workplace Culture and the Challenge of Remaining 'Quick and Nimble'

    You may be familiar with Adam Bryant for his Corner Office interviews with the New York Times . Earlier this year, Bryant released a book based on the hundreds of interviews he did with CEOs, called Quick and Nimble . In the book, Bryant shares valuable insights into the challenges companies face as they grow. It is important to remain "quick and nimble," like a start-up, as the company scales. But doing so takes special leadership skills and company-wide self awareness. Bryant shares some of the key takeaways from his work in this Big Think video:
  • Time to Move to Angola; Or How Pay Varies Around the Globe

    Having just filed your taxes, you probably have a very clear sense of what you earned in 2013. Now, Mercer 's MThink researchers want you to better understand how other people are paid in other countries. In this infographic they share some top-line findings from their most recent global survey on salary differentials . (Go to the full-size image at MThink here ):
  • The Case for Data Driven Management

    The Wharton School is hosting a conference on people analytics this weekend. What are people analytics? In this case, the term refers to a data-driven approach to management, in which human resource decisions are made through analyzing information rather than intuition. As Wharton professor Cade Massey notes in this Knowledge@Wharton interview, there is so much data about human behavior available, that shrewd managers can be much more strategic and forward thinking about how they build teams and organizations. IF they know how to use the data effectively:
  • Breaking the Habit of Overworking

    Hopefully, if you work in the U.S., you are spending Martin Luther King Day someplace other than your office. Not only to honor Dr. King, but also because you realize that working more hours does not necessarily make you more productive, and some time away from your work can be healthy for you and your company. In his New Yorker column, James Surowiecki makes the point that working more and more is now driven more by a cult-like workplace culture than by the bottom line (unless, that is, you get paid by the hour): Thirty years ago, the best-paid workers in the U.S. were much less likely to work long days than low-paid workers were. By 2006, the best paid were twice as likely to work long hours as the poorly paid, and the trend seems to be accelerating. A 2008 Harvard Business School survey of a thousand professionals found that ninety-four per cent worked fifty hours or more a week, and almost half worked in excess of sixty-five hours a week. Overwork has become a credential of prosperity. The perplexing thing about the cult of overwork is that, as we’ve known for a while, long hours diminish both productivity and quality. Among industrial workers, overtime raises the rate of mistakes and safety mishaps; likewise, for knowledge workers fatigue and sleep-deprivation make it hard to perform at a high cognitive level. As Solomon put it, past a certain point overworked people become “less efficient and less effective.” And the effects are cumulative. The bankers Michel studied started to break down in their fourth year on the job. They suffered from depression, anxiety, and immune-system problems, and performance reviews showed that their creativity and judgment declined. If the benefits of working fewer hours are this clear, why has it been so hard for businesses to embrace the idea? Simple economics certainly plays a role: in some cases, such as law firms that bill by the hour, the system can reward you for working longer, not smarter. And even if a person pulling all-nighters is less productive than a well-rested substitute would be, it’s still cheaper to pay one person to work a hundred hours a week than two people to work fifty hours apiece. (In the case of medicine, residents work long hours not just because it’s good training but also because they’re a cheap source of labor.) On top of this, the productivity of most knowledge workers is much harder to quantify than that of, say, an assembly-line worker. So, as Bob Pozen, a former president of Fidelity Management and the author of “Extreme Productivity,” a book on slashing work hours, told me, “Time becomes an easy metric to measure how productive someone is, even though it doesn’t have any necessary connection to what they achieve.” Read The Cult of Overwork here .
  • Field Study Finds That Bonuses, Not Raises, Spur Productivity

    You want more productivity out of your employees? Give them more money. But really give it to them. Don't add it to their salary, and don't attach it to performance. At least that's what Harvard Business Professors Michael Luca and Deepak Malhotra , along with doctoral candidate Duncan Gilchrist , found in a recent field study. From the paper: Our results show that the structure of the gift is central to generating reciprocity: simply hiring at and paying workers a high wage has no effect at all compared with hiring at and paying workers a low wage , but hiring workers at a low wage and then offering them an unexpected raise significantly increases performance. One common model of reciprocity in labor markets (Akerlof 1982, Akerlof and Yellen 1990) assumes that high wages are the determinant of reciprocation – a model that does not differentiate between our 3+ 1 and 4 offers. Field experiments have similarly not differentiated between these two treatments. Our experiment takes place on oDesk, an online labor market with several milli on registered contractors. Using the oDesk platform allows us to vary wages and gifts in a setting where workers are accustomed to tasks like ours, making this a natural field setting. Additionally, using oDesk allows us to hire workers with varying levels of work experience on the platform so that we can analyze precisely how experience and the reference point it sets interact with reaction s to the gift . Importantly, the oDesk marketplace allows us to conduct targeted hiring by directly inviting workers to take up our job instead of simply posting a job publicly and waiting for applications. This means we are able to hire workers at different base wages so that we can test whether it is t he base wage or the unexpected gift that affects performance. Normally selection would be a concern when hiring at different wages but the take up rate is 95% among workers with prior experience . Furthermore, recruiting through oDesk means we are addition ally able to compare and control for the entire oDesk work histories of our employees . Our experimental design, which we describe in more detail in the next section, proceeds by hiring three groups of oDesk workers for a data entry task , all of whom request wages less than $3 per hour according to their oDesk profiles. We are clear in our recruitment messages that this is a one - time job. The first group is hired at $3 per hour ( i.e., the “ 3 ” condition ) . The second group is also hired at $3 per hour, but be fore starting work group two is then told that we unexpectedly have extra money in the budget and will pay an extra $1 per hour, so that the total they will receive is $4 per hour ( “ 3+1 ” ) . The third group is hired directly at $4 per hour so the fact that w e are paying them the higher above - market wage does not signal a “gift” in a salient way ( “ 4 ” ). To ensure the validity of the results, we choose a data entry task (entering CAPTCHAs , to be described in more detail later ) that is fairly common on online lab or markets and we only recruited workers who listed data entry as a specialty on their oDesk profiles. Consistent with the notion of reciprocity, we find that higher wages that come as a surprise gift after hiring the employee (3+1) lead to higher and more persistent effort across our task relative to the other two groups ( 3 and 4) : an unexpected 33% raise increases average productivity by 20% . The effect is strongest for the workers for whom the gift is most likely to be salient: employees with the lowest prior wages, the most experience (who are more familiar with the standard wage structure), and those who have worked most recently. Among this first group, the percentage increase in productivity is actually greater than the percentage increase in cost relative to the condition in which workers received the low base wage and no unexpected raise (3) . However, we find that varying the base wage from $3 to $4 in the original contract has no statistically distinguishable effect on productivity – in fact , the point estimate is that the effect is 0. Access the full paper here . (Hat tip Lauren Davidson, Quartz )
  • Germany's Weakening Infrastructure May Be a Sign of Larger Economic Vulnerability

    Germany continues to be hailed as the model developed economy--the one that has braved the storm while others have paid the price for careless economic policies. But talk to any of your German friends this summer and you are likely to hear them complain--if not about the overall strength of the economy, then about potholes and slipping train reliability. Der Spiegel does a bit of an ego-check in this week's issue. Apparently, the German Institute of Economic Research has come out with a report that "paints the picture of an ailing economy that has been seriously out of balance for years." The diagnosis is alarming. Although Germany has weathered the financial and economic crisis better than all other large industrialized nations and created over a million new jobs, this comes largely thanks to years of wage restraint by the country's trade unions. To make matters worse, the productivity of these jobs -- a decisive aspect of long-term growth and prosperity -- has contributed just as little to the current upswing as consumer demand, which has been an important growth driver in other countries. The Berlin institute points to a chronic lack of investments as the main cause for this low productivity. Both the state and the private sector spend too little money on infrastructure, education, plants and machinery. "Despite all the successes of the past few years, Germany has not created an investment basis to ensure robust growth," the researchers conclude. In other words, Germany is living off its reserves. Bridges are crumbling, factories and universities are deteriorating, and not enough is being spent to maintain phone networks. This has resulted in a massive impoverishment of the country, according to DIW calculations. Nearly 15 years ago, the state's net assets still corresponded to 20 percent of gross domestic product (GDP). When adjusted for inflation, this amounts to nearly €500 billion ($650 billion). By 2011, this had dwindled to 0.5 percent of GDP, or a mere €13 billion, primarily due to systematic neglect. All of Germany's political parties have pledged to spend more money on highways, transportation and education during the upcoming legislative period -- but they have often made such promises in the past. In the end, however, the already meager budgets for investment were slashed and the money was distributed to preferential groups of voters. It could be a similar story this time around. As for the infrastructure investment problem, take a look at where Germany stacks up: Read Ailing Infrastructure: Scrimping Threatens Germany's Future here .
  • Lost Momentum in Manufacturing Multifactor Productivity

    The Bureau of Labor Statistics has released some interesting data on the manufacturing sector today--specifically on multifactor productivity during the great recession and the ongoing recovery. Multifactor productivity--"the change in output per unit of combined inputs"--rose 0.8% (annual rate) in 2011. That rate of increase was a big dropoff from 2010, when multifactor productivity rose an unprecedented 4.5%. From the release: Multifactor productivity in manufacturing grew 1.3 percent annually from 1987 to 2011 with sectoral output increasing at an annual rate of 1.7 percent, faster than the 0.3 percent annual increase in combined inputs. During the same period, output per hour (labor productivity) increased 3.3 percent annually. (See table A.) Of the 3.3 percent growth rate in labor productivity, multifactor productivity added 1.3 percent, capital intensity contributed 0.6 percent, materials intensity added 0.9 percent, and purchased business services intensity added a 0.4 percent increase. The contribution of energy intensity was unchanged. For the 2007-2011 period, multifactor productivity rose at a 0.6 percent annual rate compared to a larger 2.0 percent annual growth rate in the 2000-2007 period. Sectoral output declined 2.3 percent and combined inputs declined 2.9 percent over the 2007-2011 period. In 2011, fewer NAICS three-digit manufacturing industries exhibited an increase in multifactor productivity growth and sectoral output growth compared to the previous year. The number of industries exhibiting an increase in combined inputs remained steady at 13, the same number as in 2010. Eleven out of 18 manufacturing industries exhibited an increase in multifactor productivity. Thirteen industries showed increasing output. Seven industries experienced a decline in multifactor productivity growth. Of these seven industries, two were durable manufacturing industries: primary metals and miscellaneous manufacturing. The remaining five industries were in the nondurable manufacturing sector: food, beverage, and tobacco products; textile mills and textile product mills; apparel, leather, and allied products; petroleum and coal products; and plastics and rubber products. Read the full release here .
  • Dan Ariely on What Truly Motivates Us to do Good Work

    What do we want from our work? Money? Happiness? Well, maybe. But Dan Ariely has found that we crazy humans are motivated a lot by meaning and pride. Companies that can get their workers to feel pride in their work, and feel as though they are accomplishing something that matters, whether that be solving a tricky engineering problem or helping advance a good cause, get more productivity out of their workforce. In this TedX talk, Ariely speaks about some of the experiments he has done that led him to a greater understanding of how to make workers more productive and happy.
  • Richard Florida Calls Rising Creative Class the "Growth force of our time"

    It has been more than a decade since Richard Florida got our attention with his book, The Rise of the Creative Class . Even with the tumult of the last several years, Florida has not changed his position. He continues to believe that workplaces that tap into, and encourage, the creativity in workers will reap benefits in today's global economy. In this Big Think interview, Florida discusses the continuing rise of the creative class:
  • Census Bureau: 10.8 Million Americans Travel at Least an Hour Each Way for Work

    Yahoo CEO Marissa Mayer has us all engaging in conversations about the relative merits of telecommuting . As for real, physical, get in a car or train or bus commuting, the Census Bureau has some data for us. A lot more Americans, it turns out, travel an hour or more to get to work than telecommute. And some 600,000 travel 90 minutes or longer--each way. About 8.1 percent of U.S. workers have commutes of 60 minutes or longer, 4.3 percent work from home, and nearly 600,000 full-time workers had "megacommutes" of at least 90 minutes and 50 miles. The average one-way daily commute for workers across the country is 25.5 minutes, and one in four commuters leave their county to work. These figures come from the U.S. Census Bureau's annual American Community Survey, which provides local statistics on a variety of topics for even the smallest communities. According to Out-of-State and Long Commutes:2011 , 23.0 percent of workers with long commutes (60 minutes or more) use public transit, compared with 5.3 percent for all workers. Only 61.1 percent of workers with long commutes drove to work alone, compared with 79.9 percent for all workers who worked outside the home. "The average travel time for workers who commute by public transportation is higher than that of workers who use other modes. For some workers, using transit is a necessity, but others simply choose a longer travel time over sitting in traffic," said Brian McKenzie, a Census Bureau statistician and author of the brief. Rail travel accounted for 11.8 percent of workers with long commutes, and other forms of public transportation accounted for 11.2 percent. Workers who live in New York state show the highest rate of long commutes at 16.2 percent, followed by Maryland and New Jersey at 14.8 percent and 14.6 percent, respectively. The estimates for Maryland and New Jersey are not statistically different from each other. These states and several others with high rates of long commutes contain or are adjacent to large metropolitan areas. Here is a helpful breakdown of commute times from the Out-of-State and Long Commutes report: Read the full release here .
  • BLS: Productivity Decreased in Fourth Quarter

    Productivity dropped 2.0 percent (annual rate) in the fourth quarter of 2012, according to new figures released by the Bureau of Labor Statistics . Output rose just 0.1 percent while hours worked rose 2.2percent. From the report: Unit labor costs in nonfarm businesses increased 4.5 percent in the fourth quarter of 2012, the combined effect of the 2.0 percent decrease in productivity and a 2.4 percent increase in hourly compensation. Unit labor costs rose 1.9 percent over the last four quarters. BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them. Manufacturing sector productivity increased 0.5 percent in the fourth quarter of 2012, as output increased 0.7 percent and hours increased 0.1 percent. Productivity increased 1.6 percent in the durable goods sector and decreased 0.5 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.3 percent, as output increased 2.8 percent and hours worked rose 1.5 percent. Unit labor costs in manufacturing increased 0.4 percent in the fourth quarter of 2012 and increased 3.4 percent from the same quarter a year ago. Read the full release here .
  • The Cost of Sleep to U.S. Productivity

    Many Americans need to get some sleep in order to get to work. The Wall Street Journal 's Lauren Weber , citing a Harvard Medical School study, reports that exhaustion is costing the U.S. economy "billions of dollars in lost productivity." Some companies are realizing that the nonstop work culture isn't producing enough work and are training their employees to be better sleepers. Weber: The Centers for Disease Control and Prevention estimates 40.6 million American workers, or 30% of the civilian workforce, don't get enough rest. And the Harvard scientists estimated in 2011 that sleep deprivation costs U.S. companies $63.2 billion in lost productivity per year, mainly because of "presenteeism," people showing up for work but operating at subpar levels. One example, from a separate team at Singapore Management University: Workers waste an extra 8.4 minutes online—checking email, refreshing the TMZ.com home page, and so on—for every hour of interrupted sleep the previous night. Managers struggle to motivate exhausted workers. During busy holiday periods at the Park Hyatt Beaver Creek resort in Avon, Colo., long hours sometimes lead to short fuses among staff. "You have to try to figure out who's feeling frustrated and help them cut loose to get some rest," said Scott Gubrud, director of sales and marketing at the hotel, which last week began a series of better-sleep initiatives for both employees and guests. "If we treated machinery like we treat the human body, there would be breakdowns all the time," said James Maas, a former Cornell University psychologist and author of "Sleep for Success." Companies have been slow to grasp the effects of sleep deprivation on productivity, but it is now a hot topic even in hard-driving industries, such as finance, where pulling all-nighters is often viewed as crucial to getting ahead. Read Go Ahead, Hit the Snooze Button here . (h/t Boston Innovation )
  • Chicago Fed: the Slowing of Growth in Productivity

    In a new Chicago Fed Letter , Chicago Fed Economists Jake Fabina and Mark L. J. Wright try to make sense of the reduction of the rate of growth in productivity in the U.S. and other advanced economies. Take a look at the trend: From Fabina and Wright: Figure 1 plots Fernald’s measure of the level of multifactor productivity of the U.S. business sector (i.e., excluding general government and household production) quarterly from 1973 to 2012. The data are scaled so as to equal 100 in 1973:Q1. The figure identifies four distinct periods of productivity growth. The first is the ten years beginning in 1973, which corresponds to the wellknown productivity slowdown of the 1970s. This was succeeded by a period of modest growth of productivity that continued into the mid-1990s. In the third period, multifactor productivity growth increased again to 1.7% per year. The fourth and final period shows a dramatic decline in the rate of growth of multifactor productivity to about 0.5% per year. This period begins somewhere around 2004, in advance of the Great Recession. The Great Recession is associated with a large temporary drop in the level of multifactor productivity, reflecting the fact that both labor and capital were underutilized during the recession. In asking the big question, "Where has all the productivity growth gone?" Fabina and Wright lay out a series of other questions that are helpful in understanding all the key variables to productivity: It is possible that the current slowdown is a short-term aberration, and that as the advanced economies emerge from this period of economic crisis, fasterproductivity growth will also reemerge. If not, then it is tempting to revisit explanations that were proposed for the 1970s productivity slowdown. Is it perhaps simply a problem of measurement related to the increasing share of the economy devoted to services—in particular, business and financial services— for which it is difficult to measure output (and, hence, productivity)? Or is it perhaps due to a more widespread problem with the measurement of intangible investments (see, e.g., Aizcorbe, Moylan, and Robbins, 2009)? Alternatively, might it be due to the exhaustion of the gains from the information technology revolution? Or to declines in the quality of education and, hence, the quality of the labor force? Or even to declines in government investments in infrastructure? Depending on the answer, slow measured productivity growth may be consistent with continued rising living standards or a period of stagnation in the developed world. Read Where has all the productivity growth gone? here .