What’s the productivity in your business like? Do you look back with longing to the days when every quarter saw a new high, or are you enjoying your own productivity bonanza with your people working hard to deliver more every quarter?
If the latter answer is true then according to a report from the Office for National statistics (ONS) you are ahead of the national game. After a period of steady growth, Q1 2017 saw productivity slip back by 0.5%, putting it behind the peak reached prior to the recession. Perhaps more worryingly the figures reveal that although productivity in recent times has in general been rising, the growth in productivity has been far below that which is ideal.
In fact, had the upward trend seen before the recession continued, productivity should now be some 20% higher than current levels being experienced. To put that another way, had the earlier trend continued we would now be producing in four days what it currently takes us five days to deliver.
It is a puzzle, particularly given the fact that we are now generally acknowledged to be in the 4th industrial age, one which starting to reap the benefits of technology and the internet of things. Technology should be freeing us up to deliver more rather than acting as a brake on output. However, read any number of reports and discussion pieces and you’ll quickly come to the conclusion that low productivity can be laid door of a whole range of factors including Brexit, the lingering effects of the recession, international trading conditions, climate change, and so and so forth. And as the ONS points out, a fall in high productivity sectors such as mining and oil will naturally affect the overall picture.
But whilst governments and economists look to national and international factors, it’s easy to forget that the bigger picture is made up of a vast interconnecting network of smaller pictures; each one of which represents an individual company. And it is no good those companies looking to the prevailing business climate to deliver solutions. Quite simply it’s up to every company to play their part and the question therefore has to be asked:
As a company director, what are you doing to improve the productivity of your organisation?
One of the key duties of a director is to promote the success of the company and you aren’t going to manage that if productivity is low. Like it or not, when productivity levels are less than ideal then every aspect of the company can be negatively impacted. Low productivity tends to lead to suboptimal profit levels which not only delivers a less than ideal result for investors, it tends to hamper the ability to invest in the future.
Low productivity has also been shown to interact with employee engagement levels resulting in employees who are less than satisfied with current conditions and their prospects for the future. And when employees are unhappy then mistakes creep in leading to further falls in productivity levels and increased wastage. This in turn leads to higher levels of employee churn and a consequent detriment in service to customers.
In fact, wherever you look, productivity and the success of the company are intertwined. As, Ian Brinkley, acting chief economist at the Chartered Institute of Personnel and Development, told the BBC in response to the ONS report; "Unless more is done to tackle the nation's low productivity, people's wages and living standards will continue to fall and the UK will be ill-equipped to compete once we do leave the EU." Whilst some of the answers may undoubtedly rest with the government and international factors, at the end of the day if we are truly to address the productivity puzzle then it’s up to every director in every organisation to play their part.