By Ben Willmott, Head of Public Policy, CIPD, @Ben_Willmott
In the run up this week’s Budget, we know that one of the big problems preoccupying the Chancellor, George Osborne, is how to boost the UK’s stagnant productivity. He has promised to take action to address this – something the CIPD has been calling for over the last 18 months.
The UK has seen seven years of productivity standstill. While employment has consistently increased over the last two years, output per hour is still nearly 2% lower than it was when the recession started in early 2008, and the productivity gap with our major competitors has increased.
To date, much of the debate about how to boost the UK’s productivity and competitiveness has focused on big capital investments such as HS2 and a potential third runway for Heathrow and there is, of course, no doubt that infrastructure investment is important.
However, investment in the UK’s human capital – the knowledge and skills people have and how effectively these are deployed and put to use in workplaces across the country is equally critical. This investment needs to extend beyond government plans to create three million apprenticeships, to address some of the structural problems that exist in our labour market. We have a high proportion of people in low skilled and low paid jobs compared with most of our major international competitors. We also have a high degree of over-qualification – people who are unable to utilise the skills they do have effectively because of poor people management, work organisation and job design.
CIPD research published last week shines a light on the management and workplace characteristics associated with higher or lower productivity in organisations. The report shows that organisations that have strategies focusing on higher quality of products and services, rather than low cost, and firms that have increased their investment in training and development in the last two years are more likely to be higher performing.
In addition, companies that ensure their workplace culture is aligned with the future direction of the business tend to be higher performing, as are organisations with more smart working practices such as flexible working. Finally, firms that take efforts to measure productivity are also more likely to be associated with higher productivity and performance.
However, only 41% of firms have a current focus on improving productivity and a third of organisations report they have no measures of productivity. This suggests that many organisations are ill-equipped to think about how best they might be able to increase their workplace productivity even if it was a business priority.
The CIPD believes that it is crucial more organisations in both the private and public sectors develop a much more sophisticated understanding of what leadership and management and workforce development practices support increased productivity. To start addressing this, the CIPD has joined forces with the UK Commission for Employment and Skills (UKCES), and the Chartered Institute of Management Accountants (CIMA) on a major research and employer engagement programme exploring best practice in the use of human resource metrics and analysis to improve employers’ understanding of the value of their workforce and the benefit to the business of the investment they make in their people.
Improved data and evidence on the value of people can help increase investment in leadership and management capability and broader workforce skills development and, over time, make a significant contribution to helping to improve workplace productivity.
The CIPD believes that government can help encourage enhanced use and reporting of workforce metrics by setting voluntary human capital reporting standards for FTSE 350 organisations, for example, on the total cost of workforce employed (including contingent labour), investment in training and development, recruitment and retention costs and employee engagement data.
In addition, the government can also lead by example and require all public sector organisations to report annually on how they recruit, develop and manage their people in order to provide enhanced value to service users and tax payers.
Government can also play a key role in supporting efforts to boost productivity in the wider economy. A good instance of government and business working together are the UKCES-supported industrial partnerships. For example, the automotive industrial partnership is bringing together major automotive businesses to ensure future skills needs are met for UK vehicle manufacturers and supply chain companies. Small and medium-sized enterprises (SMEs) will also be supported in gaining access to industry standard skills development.
However, much more still needs to be done to engage with and support SMEs, which are responsible for 60 per cent of private sector employment in the UK, in building their people management capability. Most will never have been involved in any government skills initiative and will lie outside formal supply chains and existing SME networks. There needs to be much greater emphasis on the provision of high-quality HR support, advice and guidance at a local level, driven by clear leadership from bodies such as Local Enterprise Partnerships and local authorities. More local business growth hubs need to be created to provide hard-to-reach SMEs with cost effective and easy to find advice and support to improve their people management capability, as well as to access available public skills funding and high quality training to get the most from their people and grow.
Agreement over the need to take action to address these issues at a local level will not be easy, particularly with the move towards further devolution of skills policy and funding to cities and regions. This is one reason why the CIPD believes we need a fundamental review of skills policy. The landscape has changed massively since the last major overhaul of overall skills policy (Leitch 2006), and policy makers at national and local levels need to be on the same page if we are to see meaningful progress in addressing our productivity deficit.
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I'd be very interested to learn more about the CIPD/UKCES/CIMA programme, particularly in relation to SMEs as I'm working with employers in this sector on improving workforce performance and productivity. How can I find out more please?
13 Jul, 2015 11:55
We can associate with having less time and more pressure in the workplace. The "carry on as we are, everything will be alright" approach doesn't help anyone - hope is not a strategy.
I always think that getting away from your desk and and "switching off" for a few mins enables me to return refreshed and refocused.
I think also identifying what drives and motivates people can potentially be very powerful, and giving them flexibility to explore this.
Obviously training employees and empowering them with new skills and knowledge can also help. By communicating company goals, they can also see how their role and new skills can contribute towards achieving these goals.
There's also software on the market, for example for training providers, that helps boos productivity through automation and streamlining of repetitive tasks; www.interactivesoftware.co.uk/achiever-training-management-software
The responsibility really is down to business leaders to understand what makes people happy - focusing on the employee, it's actually the business that will benefit in the long term.
13 Aug, 2015 14:59
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