Reference no: EM131463780

Question: PCs and the Productivity Paradox*-despite the riotous instability of stock prices lately, some prognosticators are advising us not to worry. Sure, the stock market has experienced unprecedented growth without significant downslide for 7 straight years. And sure the market has always been cyclical in the past. But we're in the midst of a revolution, say the pundits, an information revolution. Spurred by personal computers and the Internet, the economy has morphed in a fundamental way. Information technology has ushered in a paradigm-smashing leap in productivity that might have made recession passé.

Not so fast, say those who've studied these issues. It's not even clear that personal computers have affected productivity appreciably, let alone leading to the kind of improvements that would allow us to sail off with our mutual fund investments into a tranquil prosperity. Bureau of Labor Statistics figures show that despite the personal computer "revolution" and the billions invested in technology, productivity gains measured in output per hour have remained at a feeble annual rate of 1% for the past 30 years, which pales in comparison to the brawny productivity growth of 3% annually experienced during the 1950s and 1960s.

Common sense indicates that personal computers should increase productivity. They let individuals plan and budget far more effectively than a calculator or a table. They make it possible to keep track of people and things far more easily than a roster or a list. They help people communicate far more efficiently than a typewriter or a telephone. They can tap far more research sources than the largest collection of periodicals or books. Even though some studies have shown that PCs have had a positive impact on productivity, and even though some experts contend that such intangibles as convenience and service don't show up in the statistics, the fact remains that the productivity figures haven't budged. This anomaly has been called the "productivity paradox," and if you look at your own habits and those of people around you, you'll see some of the reasons:

• Those memos with their fancy fonts and elaborate formatting take longer to create than the simple typewritten memos of the past.

• Likewise with those presentations adorned with graphics, sound effects, and animation.

• E-mail makes it easy to stay in the loop, but wading through scores of nonessential messages each day is definitely a time sink.

• The web can be an invaluable informational resource, but the temptation is great to jump from one site to another, each in turn less relevant to your work needs, not to mention using the web to shop, check out sports scores, and engage in chitchat.

Then there is the equipment maintenance. Whereas in the past only specialists got silicon under their fingernails, today everybody has to deal with software bugs, hardware conflicts, and system crashes. And when the machine is not cooperating, it lures you to tinker endlessly in pursuit of PC perfection.

• A few years ago, a survey by SBT Accounting Systems of San Rafael, California, showed that the typical computer user in a business setting wastes 5.1 h each week on PCs.

• Another study by Forrester Research of Cambridge, Massachusetts, showed that 20% of employees' time spent on the Internet at work doesn't involve their jobs.

This is not to say that you should trade your Pentium III machine for a typewriter or prevent workers from having access to the Internet. It's not the technology that's the villain. It's how we use it. Because the machines are so dumb-all they really do is add and subtract zeros and ones-we have to be smart in managing them.

a. What policies can a company establish to remedy some of the causes for the productivity paradox?

b. Should the productivity paradox be a factor when considering the application of information technology to business process design?