Dubai: Three years ago while moderating the Dubai Economic Outlook event, the topic turned to productivity, specifically the need to rely on soft infrastructure for economic gains.

Again, last week, while moderating the UAE Economic Outlook Forum, guess which topic arose? You guessed right, it is the need to shift from production by increased inputs to productivity coming from soft infrastructure.

That we need to focus on productivity is the moral of the story.

Simply defined, productivity is a measurement of output, which can come from either increased inputs such as capital, population or territory, or it can come from a more efficient use of inputs. This is the difference between production based on hard infrastructure growth and productivity from soft infrastructure — the people.

Productivity is a ratio to measure how well an organisation, industry or even a country converts input resources (labour, materials, machines, etc) into goods and services. One of the more relevant productivity measures for this region is workforce productivity, which is typically measured as output per hour worked.

Even though opportunities for reasonable growth have and do exist, companies are finding it incredibly difficult to capture more of the potential value available in the marketplace. Don’t get me wrong, companies are growing as a result of increased inputs driven by the economy’s dependence on hard infrastructure projects.

In recent years, the number of business opportunities available has increased exponentially, but the percentage of value being realised is relatively static or at best increasing incrementally.

Why? Well, ordinary growth is often connected to market growth, modelled on the idea ‘if the water in the harbour rises, so do the boats’. But “productivity” growth takes more than mere market growth.

It is not driven exclusively by external factors. Productivity is driven by more efficient use of existing assets, especially the workforce.

The one gauge from which the rate of success can be generalised is the ability to produce surplus value. As a criterion of profitability, value is the accumulated difference between returns and costs, obviously, reflecting the connection between profitability and productivity. But when a company is able to extract more from its asset base, without increasing input, only then will you be in a position to produce surplus value, which happens when you decouple your company’s output growth from the payroll and other input values.

Then the output can outgrow the input, making you more competitive compared with your peers, as you release the productivity needed for growth that doesn’t depend on external factors.

At the governmental level, Dubai specifically, and the UAE in general, are successfully diversifying away from an overreliance on petrochemicals. In the same fashion, the private sector needs to diversify beyond a reliance on a production-based — hard infrastructure developmental dependence — impetus for growth.

The consensus is that this must come from building a knowledge-based economy rather than being overdependent on importing outside ideas. Companies need to make better use of their employees to create knowledge that will lead to the decoupling from input based growth.

Private sector competitiveness, specifically surplus value, comes via improved employee productivity. The formula for this is rather simple — clarity, capability and execution. Another way to put it is: 1) Do they know what to do? 2) Do they know how to do it? and 3) Do they want to do it?

Too many times, the breakdown in performance comes from you making a false assumption that your employees know what to do, especially at the managerial levels. Your very first act is to be smarter about what your managers are doing and making sure they are aligned with what drives your business to grow.

It is too easy to accept effort in exchange for performance.

Once, you are absolutely certain they know what to do (and there are ways to know if they really do), make sure they know how to do it. The focus of the Economic Forum zeroed in on this point — the need to develop learning in the private sector to make better use of the employees.

The successful management of the productivity process is ultimately the key to survival for any organisation. Therefore, it should be your concern — and of all leaders, managers and employees.

— The writer is a leadership adviser and author of the best-selling ‘10 Tips for Leading in the Middle East’ and other writings. Follow him on Twitter: @tommyweir.