Productivity and the Fallacy of 100% Utilization: Why Asking the Right Question Matters

In one of the organizations I worked with, a newly appointed executive set out to boost productivity. The question posed to the management team was, “How can we increase the productivity of our employees?” After some discussion, the team decided to focus on measuring “Employee Utilization.” Any voices questioning this approach were quickly silenced, and an experienced project manager, along with senior technical staff, was tasked with developing software to monitor and report utilization.

A few months later, the software was ready for deployment. With much fanfare, it was rolled out across the department, and managers were instructed to ensure their teams recorded the hours worked. The result, however, was not what anyone expected.

Soon, reports showed that everyone was logging at least 10 hours a day. Those reporting fewer hours were assigned additional projects to “improve” their utilization. Within weeks, the reports indicated that everyone in the department was 100% utilized. The tool, intended to enhance productivity, had reached a dead end and was quietly decommissioned.

The Missed Elements of Productivity: Thought and Collaboration

In this scenario, essential aspects of knowledge work were ignored—namely, thought and collaboration.

Thought

Productivity in knowledge work depends on two modes of thinking: Focused Thinking and Diffused Thinking.

Focused Thinking is when we concentrate intensely on a specific task, like recalling syntax while coding. While necessary, this mode doesn’t foster the generation of new ideas or innovative solutions.

Diffused Thinking, on the other hand, encourages creativity and problem-solving. Ever noticed how solutions to stubborn problems often emerge when we’re relaxing or doing something unrelated? That’s diffused thinking at work. Innovators like Edison even developed techniques to switch between these modes deliberately.

Constantly switching between these modes is as essential as breathing. If people are expected to remain in a constant state of focused thinking without space to diffuse, burnout is inevitable. A productive environment needs room for employees to think freely and allow their minds to wander into diffused mode, where innovation truly happens.

Collaboration

In the knowledge economy, productivity and quality outcomes are achieved through collaboration. Particularly in software development, research shows that collaborative processes improve both product quality and customer satisfaction. Without a collaborative environment, productivity, innovation, and output quality will suffer.

Utilization-Based Productivity Metrics: The Pitfalls

When productivity is measured solely by utilization—essentially “seat time”—several problems arise:

1. Pressure to Produce, Without Thought

With the focus on “seat time,” employees are pressured to stay in focused mode. Since new ideas emerge in diffused mode, this focus reduces innovation and negatively impacts quality. In fields like software engineering, it leads to excessive technical debt, subpar solutions, unstable software, and diminished customer satisfaction.

2. Burnout from Compliance to Availability

Initially, compliance with utilization goals may yield increased output, but over time, it leads to burnout. Employees end up taking sick days or planned leave, and the drive to deliver real value diminishes. Eventually, disengagement takes it toll, management frequently responds with Resource Action and new hiring and the loop continues.

3. Reduced Collaboration

In cultures obsessed with 100% utilization, collaboration often gets labeled as a productivity loss. This stifles team morale, mutual respect, and goal alignment—all key features of high-performing teams. Please keep in mind that collaboration is not unending meetings, carefully monitored by leadership to weed out non performers.

What Does Utilization Have to Do with Productivity? Absolutely Nothing.

So, how can we improve productivity?

Start by Asking the Right Question

The question we ask shapes the metrics we use, and the metrics we use determine what we measure and improve. Instead of focusing on utilization, consider questions such as:

• What outcome are we aiming for?
• What does the customer want?
• How does our work benefit the customer?
• How stable is the product?
• How satisfied are customers with our solution?

Once we define the right questions, we can measure the right outcomes. When employees focus on these outcomes, they naturally align with customer value, which translates to stronger business results and better profitability.

So, to truly boost productivity, start by asking the right question!