Companies Really Can ‘Do More With Less’

(Bloomberg Opinion) -- With the unemployment rate at generational lows, companies are increasingly trying to squeeze more economic growth out of their current workforces, rather than hiring. That may prove counterproductive, as shown in labor trends in fields where performance is closely monitored. While more difficult culturally, a better change would be to have more workers laboring for fewer hours each.

"Do more with less" is the typical corporate response whenever labor is scarce or revenue is pinched. If an employer downsizes, that means remaining workers take on more responsibilities. Businesses, which presumably are performance-driven, are doing the opposite of what's occurring in fields where employee performance is intensively measured.

Take pitchers in Major League Baseball. Monitoring pitch counts has been standard operating procedure in baseball for years, with starting pitchers rarely allowed to throw much beyond 100 pitches in a game anymore. Higher pitch counts are believed to lead to decreased effectiveness and greater risk of injury. Added to that is the somewhat newer notion of a "third time through the batting order" penalty, the theory that when batters see a pitcher for the third time in a game they're more successful.

Teams are increasingly putting these views into practice, using starting pitchers who throw harder for a shorter period of time, and then using bullpens for more innings in the middle and end of games. The gold standard for pitchers used to be "workhorses" who threw 200 innings a year, but that's a dying notion. In 2007 there were 38 pitchers in Major League Baseball who threw 200 innings. Last year there were 15. When it comes to pitching strategies, "overwork" has become something that's aggressively managed.

Or take the surprise success of the Las Vegas Golden Knights, who have made the Stanley Cup finals as an expansion team. One of the secrets to their success has been relying on four balanced lines, or shifts of offensive players, leading to their players being fresher at the end of games than other teams. It was partly an intentional strategy, partly a necessity because they didn't have superstar players like more established teams. If they could squeeze more out of their third and fourth lines, that could help compensate for deficiencies elsewhere.

Beyond sports, it's well-documented that in health care, providers make worse decisions the longer they've been on shifts. There's not much cognitive difference between a physician who's been awake for 24 hours and one who's drunk. This leads to higher costs and worse patient outcomes.

Aaron Edelheit made a similar argument in his recently published book, "The Hard Break," where he argues white-collar professionals toiling in an always-on smartphone culture should take a digital sabbath one day a week. He's been doing it for over a decade, and has found that it improves his mood and gives him time to be fully present with his family, and that consistent, predictable rest helps his creativity and productivity.

No matter how much evidence we have that there are diminishing returns to hours worked and clear benefits to rest and time off, businesses are always going to tend to think that hours worked equals productivity, and that time off equals lost production. But perhaps like the Golden Knights with little other choice, a constrained labor market may prompt employers to court workers – which could inadvertently help productivity.

With more employment alternatives, workers are likely to choose employers that offer more time off and compensation tied to performance rather than the willingness to sit in an office for 60 hours a week. Employers focused on finding workers willing to commit to grueling schedules are going to find it harder to attract and retain talent.

And from a broader economic standpoint, while the unemployment rate is at generational lows, labor-force participation is still below what it's been at prior economic peaks. There are probably more people we could induce to join the workforce in a part-time, productive fashion, if only employers would get a little more creative in how they operate.

If companies don't figure this out, they're going to pay the price in lost productivity and output – one way or the other.

©2018 Bloomberg L.P.