Productivity in UK Companies Declines Further

Recently, the BBC reported that official figures indicate the productivity of UK workers has fallen for the second quarter in a row.

Hourly output fell 0.1% in the April-to-June period according to the Office for National Statistics (ONS). This follows a 0.5% decline in the first three months of the year.

Economists have warned that the UK’s productivity continues to lag behind its major trading partners such as the US, France and Germany.

There used to be the perception that if companies and the government invested in enhanced technology and skills, each individual worker would produce more goods or services, increasing revenues and profits for employers. This did, indeed, work for a vast number of years; however, since 2007, productivity hasn’t increased. This coincides with the start of the financial crisis and, whilst the economy has grown, all this means is more people been added to the workforce, through a mixture of EU migrants and pensioners choosing not to retire yet. We now have the lowest rate of unemployment for the last 45 years.

‘And that is what our economy has been doing,’ as Andy Verity, an economics correspondent, points out. ‘Without improving the amount each worker produces. If you want to know why average wages haven’t improved much in the same period, flat productivity is a big part of the answer.’

So, the big task now is how to drive productivity in other ways. “Productivity has been a long-term challenge, which is why we must invest now to step up our performance,” said a Treasury spokesperson.

The focus really needs to be placed on ensuring managers actively manage their teams, using effective tools and processes to identify and remove issues that prevent people from completing jobs first time or cause delays in the job.

People typically have the skills required to do the job and new technology has often already been implemented by the time we are engaged in companies. Therefore, by focusing on behavioural change, through ensuring processes are efficient and forecasting, planning, control and reporting tools are effective, this will help drive any productivity benefits that companies hoped to yield through technology enhancements.

Behavioural change can’t happen in a classroom, though concepts can be explained there. A proper transformation with real, tangible benefits, can only be achieved through working with people on the shop floor.