Debates about productivity in business have probably been taking place for as long as there have been businesses in existence.
A familiar refrain is that UK companies are less productive than they could be, and certainly are when looked at in comparison with their counterparts in the rest of Europe.
Given that productivity is so important, this is something that should be a concern for business leaders across the UK. At a wider level, higher productivity is linked to increased wages and standards of living, while at a company level it correlates to improved profits and overall business performance.
But is this assessment of UK productivity fair, are companies in the UK really less productive than elsewhere? And if this is the case, what can UK businesses do to improve their own productivity?
Is UK productivity in decline?
Recent figures from the Office for National Statistics (ONS) did show UK productivity in a worrying light. Productivity in the UK fell at its fastest annual pace in five years in the April-to-June quarter, with the figure – measured by output per hour – falling by 0.5%, after two previous quarters of zero growth.
This applied to both services and manufacturing so it’s clearly something that affects a wide range of UK businesses. It’s also something that’s part of a longer-term pattern. After the late 20th century saw an improvement in productivity, brought about by advances in technology that initially saved people time, UK productivity has at best plateaued.
The recent drop in productivity highlighted by the ONS could be attributed to a number of things. In particular though, Brexit-based uncertainty has perhaps made firms more cautious about investing in the technology, training and tools that can improve productivity. But it’s also true to say that businesses must think more carefully about how they measure productivity and should focus much more on outcomes.
Are you aiming to be productive…or improve the customer experience?
An interesting example of how organisations measure productivity can be seen in the utilities sector. There has been a real drive in recent years to meet strict customer experience KPIs, and a failure to do so can see customers switch providers. In order to meet these KPIs, utility firms have kept engineers as ‘spare’, to help ensure that service levels do not drop.
This has an undoubted improvement on the customer experience, but the opposite can be said for productivity. There are more engineers doing approximately the same volume of work, so looked at in isolation, productivity has dipped. That’s why looking at productivity statistics and trends without the context of the bigger picture can be misleading.
There are areas of productivity improvement to be found in almost any organisation. Here are three actions that can yield strong results.
Look at the wider issues before implementing new tech to aid productivity – New technology can be attractive to businesses, drawn in by promises of speed, agility and efficiency. Yet while technology can certainly speed up individual tasks, it doesn’t always have much of an impact on overall productivity.
This is because the underlying issues behind the low productivity are still there. New technology always requires the right training for users, so they can use it to its fullest capacity and reap its benefits in all areas of their job. Only then will an improvement in overall productivity be visible.
Consider moving to an outcomes-based method of measurement – The measurement of productivity is hugely important in any overall assessment. In some instances, it is clear – a worker creating 20 widgets per day is more effective than one that creates 15 – but in others it’s much less so, which is why looking at outcomes is a much more revealing way of viewing productivity.
While a teacher teaching 30 children is more ‘productive’ than one teaching 20 children, it’s not something that many would see as desirable. Businesses might therefore need a focus on outcomes, not outputs. Productivity might appear on the surface to be low but measured and assessed in a more complete way, may reveal the reality to be different.
Ensure your people have the skills to be productive – A recent Managementors study revealed that frontline supervisors in the UK are spending more than half their working day on meetings and admin. Furthermore, they are spending less than half an hour each day on active management, the planning, strategy and active direction of staff that is so important to productivity and achieving business goals.
Addressing this should be a priority for any organisation concerned with productivity. Good productivity is essentially reliant on the removal of barriers to that productivity, so allowing your managers to manage by providing the skills and resource to do their job effectively is essential.
With the business climate in 2020 unlikely to be much more certain than in recent years, UK companies must be more pro-active in addressing productivity concerns. Failure to do so will result in further stagnation and the implications for both the company in question and the wider UK economy are not positive.
