The Cost of Lost Productivity

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    The cost of lost productivity can be difficult to measure, and the problem can be easy to ignore when it competes with items that have a more immediate perceived value on the bottom line, such as new product offerings or go-to-market strategies. But the problem of lost productivity will persist when you maintain the status quo, or simply accept things as they are.

    Where Has the Time Gone?

    Lost productivity may be hurting your business more than you realize. In fact, a McKinsey Global Institute report revealed that the average employee spends just 39 percent of their day accomplishing role-specific tasks. Let’s take a look at where the rest of the average knowledge worker’s time goes:

    Reading and Answering Emails—28% of Workday

    Yes, communication is critical to the success of your organization, but long email chains, repeated conversations, and constant back and forth leads to wasted time at work. Of course, it’s next to impossible to eliminate email altogether, but streamlining internal communication will drive productivity.

    An effective knowledge management software solution will take your team from relying on email to removing information silos and giving employees a single source of truth for answers to their questions. Look for software that allows users to comment on posts, tag other users, and publish questions for subject matter experts to answer. This will help make important company knowledge available on demand so that employees spend less time sending and answering email requests for information.

    Searching for and Gathering Information—19% of Workday

    Employees spend almost 20 percent of their time searching for internal information or finding a colleague who can assist with a task—that’s a full workday each week! One of the key challenges of knowledge management is implementing a centralized platform that not only stores company information but is also intuitive enough for employees to find that information efficiently. If it isn’t easily searchable, it can’t improve productivity.

    Find a solution that makes all content (including audio and video files) searchable and factors in the context and frequency of keywords to provide the most relevant search results to users. Provide your employees with a searchable record of company information that they can access whenever they need to. McKinsey has found that the right solution will increase value-added time by 5.5–6.5 percent and improve productivity by 30–35 percent.

    Communicating and Collaborating Internally—14% of Workday

    While having company information accessible is key to improving efficiencies and productivity, your team will perform best when they communicate and work together on how to use that information. According to McKinsey, employees spend up to 14 percent of their time asking repetitive questions and taking up the time of their team members to improve their performance and complete tasks. That’s a lot of wasted time at work, both for the person asking the question and the person answering.

    The right knowledge management solution can give your team a space to capture the knowledge of subject matter experts and grow the company knowledge base over time, improving productivity by 10-15 percent. 

    How the Cost of Lost Productivity Impacts Your Business

    All that time spent searching for information, and having inefficient internal communication results in minutes, hours, and weeks of wasted time and money.

    McKinsey found that a knowledge management strategy had the potential to raise productivity levels by 20 to 25 percent if implemented correctly. How? By facilitating faster and more effective collaboration and cutting down on time spent looking for information.

    Bloomfire has found that increased productivity through knowledge sharing can amount to significant savings. We’ve done the math to show you how much companies of different sizes and average salaries could save per month:

    # of Employees

    Average Salary

    Monthly Savings

    200 $55,000 $57,000
    200 $93,750 $93,750
    1000 $65,000 $203,125
    4000 $70,000 $875,000

    It’s time for reconsider the importance placed on improving workplace productivity. Even if you are more conservative with these numbers, the ROI of knowledge engagement is hard to ignore.
    And it may be easier to implement a knowledge management solution than you think. Many companies start with a pilot team to prove that implementing a culture of knowledge sharing can help productivity. They may use pre- and post-launch surveys to have employees estimate how much time they are spending on different activities, and they can use this data to identify areas of productivity improvement. From there, they can estimate the ROI of productivity savings and make the case to expand the solution to multiple teams, departments, or the entire company.

    Businesses can’t afford to shoulder the cost of lost productivity, and employees don’t want to feel frustrated when it takes longer than expected to find and share knowledge. Taking a proactive approach to knowledge management can help reduce both the cost and frustration of lost productivity: a win-win for employers and employees. 

    This blog post was originally published in 2017 under the title “Your Business Can’t Afford the Cost of Lost Productivity.” It was updated and expanded in December 2021.

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