UK workers are working harder and longer hours than ever before. Yet our output still lags behind that of Western competitors. The Office of Budget Responsibility expects UK productivity to grow 2 per cent by 2020. In Europe, it will hover around 15 per cent. To put that in context, Germany could take Fridays off and still match the UK’s output per hour.
Do the British not care about efficiency and getting more for less? Or are we just lazy? The reality is that there are many reasons for our productivity gap. Economists have wrestled for years to pinpoint a cause. Some cite lifeless innovation. Some think it’s a failure to invest in machines. Other say employees are in the wrong jobs. Finding answers has become critical.
Looking ahead, the UK’s exit from the EU will lead to more productivity losses. We’re already seeing firms begin to tread more carefully. Amid the uncertainty, decision making has become less courageous. Strategic delivery could falter further as the country’s Brexit terms materialise over the next 18 months.
Closing the gap
For many middle market businesses, investment in new and existing talent is a quick route to productivity gains.
Those that enable and upskill their employees will find that they soon enhance the quantity and quality output.
But management needs to act fast if they are to lead in changing and uncertain times. There are three key areas to think about.
Employee engagement. In a competitive market, workers will be looking for security. Management must keep on top of their practices to motivate and engage their people. They must give clarity on where the business is headed and reassure staff that they are in control, despite external volatility.
Talent pipelines. Post-Brexit, it could become harder to access the right skills and experience. High-potential talent will become a highly valued asset, and securing it will become a priority. Recruitment and onboarding processes will need to be robust and performance management more salient.
Succession plans. Organisations need to think about whether they have the right balance of people throughout their structure. With the number of job applications highest for lower level jobs (CIPD), firms must find ways to promote career paths and high-potential employees in different areas of the business.
Looking forward, there is a lot of space for the UK to improve. It might be that Brexit ends up coming the much-needed catalyst to create more from the same resources.
Those that integrate robust people plans will reap the biggest benefits when Brexit eventually ends. Ensuring that the right people are in the right jobs doing the right things, the middle market has a fantastic opportunity to prosper in the coming years.