The Governor of the Bank of England has initiated a timely debate about the alleged failure of the British economy to become more productive with the indictment:
“It has been worse than we had expected and worse than we had expected for the last several years. We have been successively disappointed.”
The UK’s productivity (gross domestic product – per worker) is currently a fifth lower than the G7 average. I will not get into the economic arguments as to whether this is really true in a modern economy which now only has a relatively small manufacturing base. I will also avoid detailed discussion about whether Britain has indulged in ‘labour hoarding’ i.e. the practice of hanging on to good staff that they do not really need to avoid redundancy costs and retain the talent they need in an upturn.
A big consequence of poor productivity is that growth in pay and living standards is also still weak. It is timely not least because of the Government’s intention to substantially increase and rename the minimum wage, which will be a major challenge to many of our clients and other SMEs, even if it is only for a small number of their staff.
ACAS has identified seven levers for workplace productivity. Their framework explains how workplaces can unlock their potential to be more productive, through:
- Well designed work
- Skilled managers
- Managing conflict effectively
- Clarity about rights and responsibilities
- Fairness
- Strong employee voice
- High trust
ACAS sensibly point out that these issues are interrelated and that it is not essential to have all seven fully in place. We would maintain that having all these in alignment should lead to an engaged loyal workforce with a constructive employee relations climate.
Well designed job is about how work is organised in ways that increase efficiency and make the most of people’s skills. This is the ‘traditional approach’ to making the workplace more productive and is important particularly as it requires skilled managers to make it happen. Managers must however be more than re-organising technocrats and they need the confidence and training to manage and lead effectively. This will mean developing their ability to motivate, communicate and handle difficult situations particularly on individual performance which is a direct contributor to better productivity.
ACAS tend to focus on having ‘systems’ in place to reduce the likelihood of problems arising and to deal with problems at every stage. We would tend to focus more on skilled management nipping problems in the bud rather than issues such as grievance procedures (important as they are).
In our experience having a working environment where everyone understands their rights and responsibilities through well written and publicised policies and contractual documentation, consistently applied, should be a pre-cursor to having employees who feel valued and treated fairly. Indeed an essential and core part of the service we provide to our clients is focused on such.
Having a ‘strong employee voice’ really just means having good open communications within the organisation, resulting in well informed employees who can contribute to business improvement because they understand business objectives and values and feel they are listened to.
This should in turn lead to organisational relationships which are based on trust, with employers and employees sharing information on continuous improvement and problem solving.
There are no easy answers to solving the national productivity problem but employers have an obligation to themselves and their employees to ‘do their bit’ not only to be more successful in the short-term; but to equip themselves for a post recession period with higher interest rates and competition for highly productive people.
Our work tends to focus on resolving conflict and producing better documentation but we are always aware that we can and do contribute more widely to client management development in our advisory work and also our training courses. Courses planned for the next 12 months on resolving conflict and retaining key staff are good examples of the work we do to aid productivity.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.
