Is there a crisis in productivity?

Posted on Jul 16 2015 - 2:00pm by John Peters
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Official figures from the ONS show that UK labour productivity (measured by output per hour) fell by 0.2% in the fourth quarter of 2014 compared with the previous quarter, and remains slightly lower than in 2007, prior to the global financial

 Official figures from the ONS show that UK labour productivity


Official figures from the ONS show that UK labour productivity

crisis.

It’s fair to say that the economic downturn has heightened the UK’s productivity crisis, something which the LSE’s Centre for Economic Performance (CEP) describes as “probably the greatest challenge facing the UK economy”.

Last month, the UK’s poor productivity was acknowledged by the Bank of England, which cut its forecast for productivity growth this year to 0.25% from 0.75%. Even in 2016, the Bank anticipates productivity growth of only 1.75%, a figure significantly below the 2.75% average for the 10 years preceding the crisis.

Here, PITR asks a number of industry experts for their thoughts on the productivity crisis and their suggestions for improving efficiency, whether that’s through increasing salaries, adopting (or restricting) the use of digital channels for communication, or upping employee engagement strategies.

Michael Burke, Managing Director, Purpose Software

“People work for reward, so at a time when this is low, such as a zero salary increase or 1-2% at best, perhaps the reward for working hard is not sufficiently motivating.

“Sometimes fear is a good motivator, but this is not effective when the employment rate and job security are high. As inflation returns and salary increases grow, productivity will return. Whilst a 2% pay rise when inflation is 0% and a 4% pay rise when inflation is 2% give the same net increase, 4% sounds greater and is more motivating.”

www.purposesoftware.co.uk

Steven Steenhaut, Senior Marketing Director EMEA,Nuance Communications

 Steven Steenhaut, Senior Marketing Director EMEA,Nuance Communications


Steven Steenhaut, Senior Marketing Director EMEA,Nuance Communications

“The drop in the UK’s productivity is a concern, and a baffling one at that, given that Britain grew faster than any other G7 country in 2014.

“Reasons often cited for the productivity fall acknowledge that the country has a surplus of workers, and related to that are the issues of zero-hours contracts, low pay and job security. These could be factors that affect staff motivation, which in turn impacts their productivity. Furthermore, when labour is cheap and easy to find, businesses can be reluctant to make a capital cost investment in productivity-enhancing technologies, choosing instead to opt for low-paid and dispensable staff. Arguably, that strategy is detrimental to both short- and long-term productivity.

“Meanwhile, some industries are working harder to achieve the results they used to enjoy in more buoyant economic times. A car dealership is a good example: in a recovering but still sluggish market, its sales team is probably making more calls than ever before, but it’s probably not experiencing a relative increase in actual sales. The effort you put in isn’t always reflected in actual sales results or output.

“What makes this productivity conundrum so surprising across all industries and sectors, is that it has happened at a time when there is so much affordable technology available designed to drive efficiency in the workplace.

“Let’s take Small to Medium Businesses (SMBs) as an example. A recent report compiled by Marketiers4DC shows that the efficiency of SMBs in the UK is – in part – being hindered by the management and creation of text-based documents, including reports, contracts, funding applications, tender documents and marketing collateral. This really needn’t be the case given the considerable progress made in efficiency-driving and proven productivity-boosting solutions including accurate desktop speech recognition technology like Dragon NaturallySpeaking and much more affordable PDF solutions, like Power PDF.

“The report, entitled Better technology, greater efficiency, hints at another reason behind the productivity bottleneck: 41% of SMBs stated they don’t have the time to consider what potential improvements they could make to their efficiency and are unaware that productivity improvements could be driven by simple IT upgrades.

“However, it also showed that a barrier to them actually achieving greater efficiencies is the rate at which they review their software requirements, with a third of SMBs stating they review them only every year, every 18 months or longer. Given the pace at which technology develops, some SMBs are missing out on the opportunity to be not just more productive, but more competitive and – ultimately – successful. It seems odd, then, that even though the world is increasingly conducting business digitally, many organisations are still tied to time-consuming and outmoded processes for creating and managing essential paper-based documents.

“There is no short answer to the UK’s productivity paradox, as it has its roots in politics, local and global economics and plain old bad practice. But as a starting point for getting back on track, developing truly innovative products, processes and solutions, while investing in people to give them the skills and tools they need and the wages they deserve, could be some of the measures needed to revive productivity in the UK.”

www.nuance.co.uk

John Glover, Sales & Marketing Director of cloud collaboration software provider Kahootz.com

“Although the precise reasons for Britain’s modest productivity are hotly debated, we believe insufficient attention is being paid to the fact that productivity suffers when people can’t work together and communicate effectively. While workplace technology has done a lot to enhance individual productivity, there is still huge scope for improving or extending how we work in teams. This applies as much to small project groups as it does to large organisations that operate an ‘extended enterprise’, where many core activities are outsourced altogether or co-developed with different partner organisations and suppliers.

“In our work with large UK organisations that have invested in new technologies, we see that many team hours are still wasted wading through long and complex email chains, retrieving the most recent version of an important fie or travelling to meetings where vital knowledge is shared but not recorded or acted upon. How often do these siloed working practices and a lack of visibility into how other departments are working stifle productivity and the potential for innovation?

“Increasingly, we’re seeing cloud-enabled tools have a transformative effect on productivity because they remove technical, structural and mental barriers to collaboration. Working in the cloud, there is a major opportunity for organisations in every industry to build an ‘agile working’ culture that is inherently more productive.

“Interestingly, we are seeing an upturn in clients’ capabilities with project teams now using highly scalable cloud-based tools to meet customer or development needs that would previously have been beyond them, largely because of those siloed working practices and logistical constraints. The current productivity debate may in time need to be extended to consider UK firms rethinking their capabilities as much as boosting existing productivity levels.

“Today’s businesses need IT solutions that are quick to deploy and immediately responsive when circumstances change. I believe collaboration tools that enable organisations and project teams to personalise their workspaces will lead to more agile working practices and thereby play a key role in boosting productivity in the UK.”

www.Kahootz.com

Alpesh Unalkat, Managing Director, Capita Document and Information Services managed print business

“We are living through a time of unprecedented change in the world of communications and if you’re being thrown information from all angles, there needs to be a logical and methodical way of handling and processing it.

“Every day we receive and digest more information than we did the day before. It can feel like we are bombarded with facts and figures, snowed under with email and squeezed for time, as more and more companies and people vie for our attention.

“Trying to do it all and complete all our tasks can feel overwhelming at times, but is it fair to say we are facing a crisis in productivity?

“Office user productivity is being impacted by multiple sources of info flying around in the workplace. Before the advent of the internet and highly sophisticated machinery, office work and documents were limited to paper, but now it’s about media in all its different guises.

“Often, there is still a ‘disconnect’ between solutions for print, online and digital documentation. Not all businesses work with this full package and, when that happens, productivity can be compromised. For example, fie sharing and cloud-based systems such as SharePoint work brilliantly when the entire workforce is joined up and aligned to the same computer system. However, if only half the workforce is using it, it means that the other 50% are doing something different when it comes to sharing documents and info. That can only mean a duplication of effort, the potential to miss out on vital information and for the gap between one part of the organisation and another to widen. And, of course, it allows scope for inefficiencies and waste.

“Let’s take another example: an insurance claims handler is working with a paper policy document, of which there is only one copy. If it is not in a digital format, then only one person can work with the document at a time, and this means time is wasted.”

“These slow, disjointed and duplicated ways of working just aren’t conducive to a productive environment. To make sure this doesn’t happen, all areas of communication need to be linked together into one overarching, connected solution. Get the right fit for your company and productivity goes up.

“As the print and online worlds grow ever closer, it would be remiss of businesses both small and large to ignore what is obvious, that aligning paper and digital communications is the best way to increase productivity and get ready for the future, whatever that may bring.

“So, if there is a crisis in productivity, I haven’t seen it. There are challenges, yes; ways to be better prepared and equipped, of course; but I don’t think we should be panicking yet.”

www.capita-dis.co.uk

Donald McLaughlin, Director, Scotland & Ireland, Cisco Systems

“I recently sat on a panel discussion on the second day of UCEXPO and one thing really stuck with me – how technology is actually driving a need for cultural change within businesses.

“The way we consume technology in our personal lives has changed massively in the past few years and we are now seeing that in the world of enterprise as well.

“On top of this, for organisations and governments to realise their full productivity potential they must accept that it is going to be harder and harder to get any more out of individuals. Instead, the next wave of improvements will come by fostering teamwork and collaboration.

“In my view, it is CIOs who must lead this charge and I believe they will have to really take ownership and drive the conversation.

“We must remember advancements in technology have led to their roles changing. It’s all about how people use the tech, and what they get out of it. It puts the CIO at the heart of that process, and I’m confident they will be stepping up to the challenge. I also believe we will see a much bigger focus on user adoption from a business side.

“The upside of this is users are becoming more familiar with the technology in their hands, as a result of what they experience at home. This should free up more time for CIOs to focus on owning this cultural change within their organisation.

“By its very definition, collaboration is anything that allows people to communicate and work better together. Collaboration needs to be about making technology accessible to everyone but typically at the moment, collaboration is not available for everyone in an organisation, so this will be a key driver of  enhancing teamwork.

“There is not a lot more that individuals can give, so it’s vital that we do everything to make teamwork much more natural. For me, I believe it’s all about creating applications that make everything else work better.”

www.cisco.com

Veerle De Clerck, Steelcase Brand Communication Manager UK

“One of the major business issues that troubles managers all around the globe is loss of productivity. It’s the level of engagement that determines if people are productive, or less productive or even plain contra-productive. As you can see in the infographic (inset), all around the globe employee engagement is low.

“Businesses count on their workforce to be creative, communicative, collaborative, to produce great output and generate innovation. Compared to 20 years ago, more people are needed to deliver output, not the processing of input. That has been taken over by computers. The output has become more complex, too, in a globalised world.

“But when you look at offices, they have not changed. Many office floor plans still look the same, even in new buildings, driven by cost effectiveness. Space matters.  It is for sure not the only factor influencing engagement and productivity, but it is a first step.

“Leading organisations capitalise on that. They make sure they create the right kind of work environments for their people. First rule, create diversity so people can choose where and how they work, depending on the task at hand or the work modus (individual work, team work, learning, socialising, rejuvenation).

“Essentially, the office needs to become an ecosystem of interconnected and interdependent spaces that support the physical, cognitive and emotional wellbeing of people, and that’s how place can help to improve engagement and organisational performance.”

www.steelcase.com

Martyn Anwyl, Head of Operations, Corporate Solutions, Buck Consultants at Xerox

“More and more employers are looking to increase employee engagement in order to improve productivity and maximise the return on human capital investment.

“The benefits of a more engaged workforce are clear. A study from Engage for Success states that organisations in the top quartile of employee engagement scores report twice the profit of those in the lowest quartile. Limeade conducted a study last year that showed the biggest factor driving employee engagement was the ability to manage stress. No wonder, then, that in Buck Consultants’ recent Global Wellness Survey, the number one factor driving wellness strategies is stress.

“How organisations tackle stress as part of their wellness programmes can manifest itself in several ways. Most will think of wellness programmes as including some sort of physical activity that will help with stress, but there also needs to be a focus on the mental resilience side. In addition, organisations need to implement policies that help with the ability to manage stress, such as flexible working.

“Encompassing all of this should be the support of leadership. Business leaders who demonstrate a sincere interest in the health and wellbeing of their employees are also the most effective at engaging their employees.

“Communication is also key to engagement. In the future, using technology to communicate and engage with employees of all types and ages will be essential. Social media, the use of personalised information as well as easing access to data will all assist communication. Single portals that house all data for an employee in terms of total rewards and the support and services provided by the company are available now and help enable companies to increase engagement.”

www.xerox.co.uk/Human-Resources