Earlier this month the Office for National Statistics announced that UK labour productivity declined by 0.5% in the first three months of the year with productivity in the services sector shrinking by 0.6%. This means that workers, and their managers in the UK have produced less per hour than in the previous period. It has been reported that a British worker takes 5 days to produce something a French worker can do in 4 days and a German worker in 3.5. In fact, despite numerous rounds of cost cutting since the financial crisis of 2008, productivity in the UK is now back to levels seen in 2007. And that last sentence points to one of the reasons behind this. Managers have been focused on cost cutting which typically results in headcount reductions, a reduction in investment in new technology and a clamp down on external spend, such as consultancy and training.
Perhaps this might not be the answer after all…
The solution may, in fact, lie in more targeted spending aimed at creating a highly skilled workforce supported with the tools and technology required to deliver more for the same effort. Give managers the skills to manage their teams and create an environment where collaborative working and continuous improvement is the norm. Give them the tools to measure performance – and I don’t just mean time at work but also actual output – and build in objectives that support and encourage them to address the issues that are holding the business back. Once the spiral of decreasing productivity is broken, successful businesses see the results which can then be re-invested in further improvements in a virtuous circle. As output increases the resources become available to invest in new tools, new technology and more training.
This takes time and effort – it is certainly harder than cutting a position or two – and possibly doesn’t give such immediately obvious results, but given we have spent 10 years going nowhere it must be worth a try.
