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#Written by David Tam, 1997. #
#davidkftam@netscape.net Copyright 1999#
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David Tam
Tuesday, March 25, 1997.
Business Press Review
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Kettle, John. "GDP reflects the productivity paradox". The Globe and Mail.
Friday, March 21, 1997. B8. ------------------
This article talks about how employee productivity appears to be decreasing
during the information age. The Gross Domestic Product is used as the
indicator of productivity growth. Supposedly, even though millions of dollars
are invested by businesses in information technology, the return on investment
is not as high as expected. Economists have termed this phenomenon as "the
productivity paradox".
Since the 1980s, businesses have been investing a lot of money in
information technology, empowering their employees. However, only a 1 %
increase in productivity is noticed annually. In contrast, before the
information age (between 1948 and 1973) productivity increased annually by
approximately 4 %. It must be kept in mind that productivity is measured in
terms of revenue generated by each employee per hour.
There are three possible explanations for this decrease. Perhaps increased
information technology increases quality as well as productivity. To some
extent, quality can not be fully measured using quantitative methods and is not
accounted for in statistics. Another possibility is that we are still in the
transition phase. Many employees are still not accustomed to taking advantage
of information technology. A third possibility is that most of the real
improvements in productivity are not accounted for based on the old model of
assessment. This situation can be clearly seen in the realm of finance, where
a small high-tech company's assets are not properly assessed by the banks using
traditional means.
This article relates to issues in human resources because it deals with
employee productivity. Concepts of employee empowerment as well as on-going
assessments can be derived from the article. Information technology empowers
employees while on-going, timely assessments of employees can provide feedback
to employers. This brings up the question of how human resources must deal
with trying to improve the quality of work as well as productivity. Should
quality be compromised for the sake of higher productivity? Does the current
definition of productivity account for quality of work? Clearly these issues
are interrelated and should account for one another.
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