The way we manage our business has changed; we must be leaner, cut back on our spending and demand more for less! It’s a rally cry from many companies in this new era of saving money whilst still having high expectations of ourselves, our direct reports and our peers.
Shouldn’t we be able to cut spending whilst increasing output? What effect does this have on the quality of our work and our motivation?
The Law of Diminishing Returns Disclaimer: this blog post does contain economic principles! But please don’t glaze over, it’s really very fascinating. Diminishing returns is the point at which adding more gives us less. In economic terms it usually refers to the point where adding more resources (workers, raw materials etc.) no longer produces the same output.
The output begins to decrease per additional ‘unit’ produced. For example, a business produces pencils – at the pencil factory we would expect that the more pencils produced the more money we make. Right? Wrong…we actually make less money per pencil until we finally make a loss.
To make more pencils we need to employ more people and more people = more costs. This is in terms of productivity (recruiting lower skillsets, tardiness) and the addition of extra costs (benefits, wages) This can be illustrated by a U-curve.
So why is this important?
The U-curve I believe also applies to our workload and our goals and has a direct effect on an employee’s engagement and motivation in the workplace. As a leader the more you demand (or the greater your expectations) will provide a better ‘return’ over the short-term.
For example, if you increase your goals from 1 to 3 you will be stretched, your output is greater and your motivation increases. Your workload is likely to be manageable.
When an optimum level (the top of the U) is reached, say at 5 goals, adding any more will start to give you less in return over the long-term and could lead to a poorer quality of output, goals not being met and sub-optimal levels of motivation. You are overcommitted and your workload becomes unmanageable.
Why Small Class Sizes Don’t Improve Education – Evidence for the U-Curve
I have been reading Malcolm Gladwell’s latest book ‘David and Goliath’ where he uses an inverted U-curve to describe the point at which what we do is no longer positive.
One of the examples used is around the debate of large class sizes and the quality of education. We assume large class sizes are bad for our children’s education. However, do we also consider how very small class sizes can also have a negative effect on learning? We would assume the children get more attention…
In reality the teachers rarely change their teaching style to one that is appropriate for a smaller class and there are fewer children to contribute their opinion and to add creativity and energy to the group. There’s an optimum group size (the bottom of the U, or in Gladwell’s example the top of the inverted-U).
The clear point is that there’s a tipping point between to much of something or too little that no longer yields a positive return.
In this era of ‘doing more with less’, are we ‘demanding more and getting less’? Whether this is in terms of diminishing returns, higher turnover (due to the pressure placed on colleagues) or sub-optimal motivation potentially leading to a ‘quit and stayed’ attitude.
I am by no means a perfect example of someone who has the balance correct, but my aim for the next 6 months is to review my priorities every month and ask myself questions honest questions linking to these thoughts:
- Doing more = getting less – We do not have an infinitive capacity for work – more work and more targets do not automatically mean more output.
- Learn when to say no, be selective for the right reasons – Don’t over-commit yourself, it’s sometimes OK to say no and remember that there are trade offs (if I do X, I cannot do Y – am I OK with that?).
- Add more time to your commitments – give yourself extra time to do a good job (we all think things take a lot less time than they actually do), are you being realistic about what can be achieved?
- What are your optimum levels – Think about ‘optimum’ levels – are you in balance? Review goals and your ‘to do’ list.
- Think about your quality – for example, this could be the impact on customer service and quality assurance. Don’t spread yourself or your team to thinly – make a ‘quality contribution’.
So the question is: where are you on the U-curve?
Lisa is the EMEA Client Services Manager at the Ken Blanchard Companies. The Client Services Team specialise in delivery; Project Management, Learning Services (virtual learning and online assessments) and Staffing (trainer allocation).