Don’t Sacrifice Employee Upskilling for Productivity

Reports that U.S. productivity was up 3% in the fourth quarter of 2023 were seen as good news for the economy. But to understand what’s really happening — and avoid the perils of misplaced confidence within C-suites across the country — it’s important to dig deeper.

Last year, businesses used more methods to track their employees’ productivity than in previous years. But businesses that stepped up their scrutiny of employee performance did not see bigger productivity gains. And in adopting all those new methods, they cut back on something even more important — growth and development — which will hurt them in the long run.

In our latest annual study of management trends, we surveyed more than 600 employees in the fourth quarter of 2023 across a wide range of industries and job functions. We also conducted a roundtable discussion with 15 leaders to gauge their priorities, challenges, and concerns.

We found that workers are broadly frustrated with the steps their companies are taking to track their output. Only 39% feel that their companies conduct a fair and consistent evaluation, a big drop from 48% in 2021. We also found that companies began using more tools last year to track their staffs’ output. Their approaches included evaluating business goals or OKRs (objectives and key results) throughout the year, having employees complete self-assessments, asking colleagues to provide feedback on one another, and more. The top reason for conducting these assessments, employees said, was to lift productivity.

But in taking these actions, organizations paid less attention to employee growth, development, and support. Less than half (46%) of employees said their organizations encouraged them to learn new skills, a 7-point drop from 2021. Skill development is essential for long-term productivity gains. As the Brookings Institution noted, a higher-skilled workforce is “less vulnerable to disruptions from coming technological innovations.”

Organizations also cut back on something else: ensuring that managers had conversations with employees about their growth. That figure dropped from 60% in 2019 to 50% last year.