Why Aren’t Knowledge Workers More Productive?

Knowledge-intensive sectors such as finance, insurance, and professional services are some of the most digitized, yet their real productivity growth has been anemic or even negative over the past two decades. Why?

One reason is that they are going about digital transformation in the wrong way. Many digital transformation initiatives over-index on “digital” and forget the “transformation.” For example, a frog client and financial services executive described one of their firm’s paper-driven processes that was undergoing digitalization. The discussion quickly moved to which cloud-based system would make the best host for various data capture forms, and how it should be linked to their existing systems. But more fundamental questions were overlooked: What is the purpose of the process and of the data being captured? How does it meet the needs of the bank’s customers? Could those needs be met in better ways? This type of strategic thinking and questioning is the essence of real digital transformation.

At frog, a strategy and design consultancy, we have worked with leading management consulting firms, systems integrators, advertising agencies, recruiting/talent management firms and global audit/tax services firms to craft more strategic digital transformations. Our work has focused on three broad areas: internal tools, knowledge management design, and employee experience design. Below are some general patterns and lessons that we’ve drawn from our work with these clients.

Internal Tools
Until 2010, it was rare for companies to invest in designing good internal tools. The general attitude of business leaders was that their employees are getting paid to work, so they should put up with whatever tools the company provided to them. When funding was provided for high-quality design talent, it was typically reserved for public facing software (think SAP, Microsoft, etc.) rather than internal tools. This is, of course, short-sighted. Well-designed software makes knowledge workers more productive, increases the accuracy of their work, and increases employee satisfaction and fulfillment, which is critical to employee retention. These factors impact the profitability of professional services firms, where people are their main cost and only asset.

In the past decade, we have seen a dramatic change in this thinking. As part of digital transformation initiatives, the larger professional services firms are investing in thoughtfully designed internal tools. Back when we started designing internal tools, user expectations were low. We made recruiters at a talent management firm more consistent in their evaluations and faster at candidate placement by developing highly visual tools that were rolled out globally. We even received love notes from accountants at a major accounting firm after overhauling their audit tool suite!

Today, employee expectations at professional services firms are rightly higher, but the business case for investing in good tools remains the same. It’s all about productivity and profit, with the added bonus of greater employee satisfaction.

Knowledge Management Design
Professional services firms have a linear scaling problem: If you win more accounting, advertising, recruiting or consulting work, you need to add more employees. Almost all professional services firms are looking for “non-linear” revenue opportunities to get out of this rut. But failing that elusive quest, the next best approach is to make your most valuable asset–your people– more productive. Enter knowledge management.

One way to make employees more efficient is enabling them to find information, methodologies and case studies from other projects more quickly. Process-oriented firms (“hire us because we have done this dozens of times before”) are most able to codify their employees’ project work into replicable best practices, while brains-oriented firms (“hire us because we are clever and will work this out”) are the least capable of repeatable processes. But even here there are opportunities to share research findings to help engagement teams find short-cuts. We find two common challenges in knowledge management design: tools and process.

The first challenge is that knowledge management tools lack adequate search tools and capabilities. This is significant because the precise framework, factoid or piece of analysis that might help a team is usually locked inside presentations and spreadsheets. To work well, search needs to be technically sophisticated enough to search within documents, but user-friendly enough that the results can be filtered and easily digested.

Even greater challenges arise when poor knowledge management processes are embedded in a firm’s culture. In some firms, knowledge workers hoard knowledge rather than submit it to the system, or they sanitize content (with the good intention of protecting client confidentiality) to such an extent that the assets they submit are vague to the point of being useless. It is often unclear whose responsibility it is to collect, curate and contribute to a knowledge platform, and employees rarely have an incentive to do so. Even in very large firms, the true knowledge management system is a network of people (“go ask Lisa, she knows about that client”) rather than a tool.

We have learned that successful knowledge management requires tools tailored to the company culture, coupled with an investment in organization and process design. The rollout needs to be thoughtfully curated, and it should over-index on training and cultural change, rather than simply training employees on the tool itself. Carrots work better than sticks, and technology tools alone won’t cut it.

Designing a Great Employee Experience
Almost all organizations talk about the importance of their employees. In competitive talent markets, employee satisfaction is critical to recruiting and employee retention. But in professional services firms, people are truly the only asset they have. In the short run, a professional services firm can rely on its brand reputation and history to win new work, but once a project starts, the firm is only as good as its most recent result. That’s why talent management and design thinking for employee satisfaction is critical to professional services firms.

At frog, we have seen an uptick in what we’re calling employee experience design. We think of this work alongside customer experience design, but for employees. For example, one major auditing firm hired frog to design an employee experience that helped them to recruit and retain employees who value culture and personal growth over a paycheck. Using organizational and employee research, we defined key moments in the “employee journey” and designed new tools and experiences to double down on the moments that matter.

In large companies it can be hard to find the right people with the right knowledge for a project or task, or to find a project that leverages the talents of employees with special skills. Well designed Talent management systems can address these challenges. A global advertising agency hired frog to design an intuitive people directory and intranet that allows employees to find case studies and best practices, connect with peers globally and take action by launching new programs and initiatives. The resulting “centers of passion” brought together employees across disparate geographies and functions in a grassroots and organic way. Similarly, a global systems integrator hired frog to design a talent exchange, an internal marketplace for the firm to source independent experts for its projects. It simplified the legal and contracting process while lowering talent search costs. The systems integrator opened this platform to its clients, turning an internal tool into a revenue generating service.

The final aspect of employee experience is career management. Many professional services firms find it hard to evaluate their employees fairly and provide performance feedback because employees work on a series of different projects with different engagement leaders over the course of a year. This makes performance management burdensome for managers and frustrating for employees. One management consulting firm hired frog to concept, create, test and launch a feedback application for smartphones, paired with a browser-based talent hub to consolidate that feedback. The new system gave employees timely and project-specific feedback for personal growth, while reducing the time spent by managers on performance evaluations by 60 percent in its first year of operation.

Upshot
People hate change. Even good change. We all pay lip service to the wonders of innovation, but we like what we know, and we aren’t keen to learn new tricks. Knowledge workers in professional services firms are no exception to this general human characteristic. Indeed, knowledge workers tend to be clever and loosely managed, making it hard to force them to do anything.

This is why the tools of design are helpful in successful digital transformation of professional services firms. Only by focusing on the employee experience, researching the real job to be done, and questioning why a process exists in the first place can we truly transform a professional services business. In contrast, technology-first approaches tend to succeed in mere digitalization but fail to achieve transformation, often needing to be papered over with wide-scale change management initiatives, adding time and cost. That’s why many leading consulting and auditing firms have invested in design thinking for productivity and employee satisfaction, a more strategic and successful approach to digital transformation.