The impact of technology on the productivity of Companies

The impact of technology on the productivity of Companies

Technology, Company, Efficiency and Resources are words that are associated when defining Productivity. In this article we will try to bring you basic aspects about the definitions and problems that should be taken into account when measuring the productivity of an organization based on technological changes.

The growth of productivity supported by technology

From the incorporation of the pen to the use of smartphones, all the varieties of technologies that we know have changed the way of working of the human being.

We could affirm that the new technologies used, aligned with a knowledge and business strategy, increase efficiency and productivity.

Why do we clarify “aligned with a knowledge and business strategy“? Because technology itself will not add value to our company, on the contrary, the implementation of new technologies without a study of quantitative and qualitative benefits can produce a waste of economic and human resources generating results inverse to the expected: Low productivity , operational saturation, bureaucracy, etc.

Statistics support the relationship of Technology – Productivity

According to figures from the US National Bureau of Economic Research, during the first half of the 1990s, real technological productivity grew at an annual rate of 1.2%, although it increased to 3.1% during the period between 1995 and 1999. The percentage of investment Technology (as part of the total investment) increased from 3% in the late 1980s to 6% in 1999.

Similarly in Europe, a study by London Econimics shows that investment in Technology represented 25% of total growth and 47% of the total increase in labor productivity during the period between 1992 and 2000 in the United Kingdom.

These figures suggest that a transition period is necessary before knowledge workers can fully utilize the tools offered by technology to increase their own real productivity. It also suggests that we are witnessing the benefits of technology in productivity.

Human Capital and its preparation for new technological formats

The preparation of the human resources of the companies for the reception of the Technology, is another one of the most delicate points to be worked within the organizations. Several aspects must be taken into account within this point, starting with the distribution of salaries according to the preparation that the worker must have. The growing use of technology has meant that many workers have to develop new knowledge or functions within their organizations.

The distribution of functions and knowledge generate an impact on the organizational structure that requires support from the Management of the Company and the Human Capital sectors to develop strong communication schemes with their employees, leveraging the development of their skills for the new challenges within of the company.

The basic steps to measure productivity

We can say that we are more efficient, that productivity improved, that the company uses its resources better, etc. But we should not rely on perception, but on indicators that we can measure, generating reports with results.

The definition of a Performance Indicator (Key Performance Indicator) on a process allows us to obtain performance values ​​of the process and how the process “reacts” to changes that seek to generate benefits for the company. In this way we can perform a sustained follow-up to determine if the applied adjustments are providing the expected benefits, or if further adjustments are needed.

The indicators of “Productivity” are the most used when determining if a process on which a certain reengineering was applied with technological support, has generated economic and qualitative benefits for the company.

A study by Columbia University led by professors of economics Ann Bartel and Casey Ichniowki have shown, based on studies with performance indicators, the relationship of improvement in productivity with the correct implementation of technologies within organizations, highlighting the importance of the correct selection of the data that will be part of the indicators and their valid origin. At this point, it is essential that the veracity and accuracy of the data is met in order not to lose the references and credibility of the information generated, a fundamental basis for technological growth and evolution and positive results within the organization.

Applied technology + Productivity = Flexibility

The studies of the University of Columbia also showed that one of the consequences of the correct application of the technology, not only was a better productivity, because they also determined “Flexibility” in the structure of the Organizations that adopted these changes.

The reduction of the time devoted to certain processes, the training and adaptation of resources to new modalities and technologies have provided a level of flexibility (in times of adaptation) to the changes that companies need to be more competitive.


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