The covid-19 pandemic has hit the Bangladeshi economy hard and hindered start-up growth in the country, an estimated 1 in 4 start-up firms was forced to shut down, with 56% of start-ups experiencing at least a 50% drop in revenue. Labor productivity vs startup failure is a must-talk now.
Despite the bleak outlook, Bangladesh was also one of the few countries this year with a net positive economic growth of 3.6%, and with the steady recovery of the world economy as well as crucial subsidies from the government, the economy will be propped back up to where it was pre-pandemic.
Labor Productivity vs Startup Failure
The scenario of Labor productivity vs startup failure is in Bangladesh is considered an untapped goldmine. Caught in the sphere of influence of the economic titans– India and China- we benefit massively from investments from both countries. Moreover, our ballooning population with a median age of 27.9 years, is a magnet for innovation as we are seeing a rise in skilled and educated labor.
Pre-pandemic Bangladesh benefitted from more than $200 million over the last four years from international investment from corporations and venture capitals. These investments have generated the creation of over 1000 startups, employing 1.5 million people.
This is only the beginning of the supergrowth in Bangladesh. Our middle class is growing at 10% per annum and will reach 34 million by 2025, our entire population has 98% mobile phone connection, 102+ million on the internet with 94 million mobile internet penetration. Our digital market size is immense and will continue to attract more overseas investment in the following years.
While now might be the best time in making a startup, we have to also remember there is a high margin of failure. While the exact reasons of why startups fail and the survival rates of firms might differ from country to country, there are a few primary reasons as to why most startups fail:
- Overspending or running out of capital too quickly
- Poor product and services
- Inadequate marketing and promotion
- Lack of motivation, innovation, and productivity
An often overlooked aspect of Bangladeshi startups is of critical importance on motivation and labor productivity. In 2018, a study carried out by the Institute of Diploma Engineers, Bangladesh (IDEB) found out that the national efficiency in terms of workforce productivity was astonishingly low compared to other countries.
Research showed that in the service sector the Bangladesh workforce productivity, in terms of GDP, was 23% of Thailand, 24% of Sri Lanka, 29% of China, 45% of India, and 65% of Vietnam.
IDEB identified key reasons for such low productivity rates, as lack of appropriate technology and mismatch between education and occupation. Moreover, Bangladesh was found to have only a 23.31 rating in the Global Innovation Index.
Low productivity is unsustainable because, in the long run, people become less motivated and innovative which in turn will breed inefficiency, thus increasing production costs. Bangladeshi firms will lose their competitive edge in the global market and to boost our investments it is paramount to increase labor productivity.
There are countless business theories of labor productivity and motivation such as the Management Theory of Elton Mayo, Taylor’s ‘Principle of Scientific Management’, McClelland’s Human Motivation Theory, and many more. We will be looking at two of the most popular theories of motivation that can not only be applied in the workspace but also in everyday life.
Maslow’s Hierarchy of Needs
Introduced by Abraham Maslow in 1943 on his psychology paper called ‘A Theory of Human Motivation’ where the hierarchical structure simplifies the wants and needs of humans.
The theory is simple: humans start at the lowest level, and once the needs of that level are satisfied, humans will strive to achieve the next level. In addition, once a need is satisfied it will no longer motivate individuals to action.
If for example, a worker is underpaid for the value of their labor, he will not be content with his basic needs, and thus cannot move up the pyramid. Do not just dump work on employees and then not pay them for overtime.
The knock-off effects of not compensating work properly will mean that their psychological needs will not be met which will foster stress, alienation, and demotivation. Hence, when it comes to the employee it is the goal of the employer to try their best to fulfill all of the needs according to Maslow, in order to get the best performance and ensure maximum motivation from workers.
Keep in mind, there are also several shortcomings with this method. Not all individuals have the same needs as assumed in the hierarchy, and it is hard to establish the degree to which each need has to be met to move on to the next one.
Herzberg’s two-factor theory
This theory first came out in 2003, as it is more recent they can apply to the more complex modern-day workforce. According to Herzberg’s two-factor theory, this states that there are certain factors (motivators) that drive motivation and job satisfaction, while there are separate, independent factors (hygiene factors) that can remove dissatisfaction.
The hygiene factors will not necessarily drive up motivation, but if fulfilled will remove dissatisfaction in the workplace. This is similar to Maslow’s hierarchy of needs, in that hygiene factors are basic needs that have to be fulfilled or else people cannot move on to the next level and thus be motivated enough to do a certain job.
Motivators focus more on the work itself and how enriching it is. This displays that workers love doing their jobs and in return expect to be recognized for their accomplishments. They expect to be delegated more responsibility, more advancement in the job, and self-growth as human beings.
If a person does the same tedious task repeatedly, they will easily lose motivation and be disillusioned. Herzberg’s theory emphasizes making the job interesting by allocating a range of tasks that can be measured for performance, as well as keeping open communication between the boss and their subordinates.
Workers value feedback when they make mistakes and deserve to be praised for when they create high-value output. Efficiency will also be enhanced if employees are given modern tools for their job, as it makes the work easier, quicker, and simple.
These motivational theories are used in all aspects of the workforce, and to build up labor productivity in a pragmatic manner, while keeping in mind the disadvantages of such methods. Hopefully, this taps into the unknown part of the gap while knowing about labor productivity vs startup failures.
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