Epiphanies LLP
The Home of Profitable Thinking
  • Home
  • Services
  • Clients
  • People
  • Blog
  • News
Productively_lazy
January 7 2015

Productively Lazy?

epiphanieswp Performance

First published in HR Bullets on 7th January 2015.

Productively lazy?

You could be forgiven for thinking that we in the UK are a lazy bunch.

The bank-run on Northern Rock in 2007 heralded the start of the Great Recession and since then labour productivity in the United Kingdom has been remarkably weak. Whole economy output per hour stands some 16% below the pre-crisis trend and productivity is still some 4% below its pre-crisis peak, according to the Bank of England. For a trading nation we should be alarmed that output per hour worked is 30% higher in the USA and 29% greater in Germany. Moreover, although there is a lot written about the challenging economic conditions in France, it is still 28% better than the UK.

So what is causing these poor levels of performance? Economists don’t fully understand the reasons and call this the productivity puzzle, for which they have a number of hypotheses. Firstly, part of this may be due to measurement criteria which considered R&D expenditure as consumption rather than investment. Secondly, self-employment has risen by 600,000 and many of these may be underemployed. Another reason is that some companies may have been unable to cut staffing levels below a minimum threshold in order to keep their businesses ticking over. Firms may also have kept staff on in the hope of a recovery in the economy. Also, low productivity levels may be explained by cyclical forces which decline during economic downturns.

Yet another explanation is that the UK’s investment in capital stock has declined during the past six or seven years due to economic uncertainty. The level of capital stock available to each unit of labour/employee significantly influences labour productivity which may partly explain higher production levels in the USA, Germany and France. It would appear that some organisations consider employing people to be a cheaper alternative than investing in capital equipment, which may be true in the short-term but is hugely damaging in the longer term.

What does this mean for managers?

So what does all this discussion of the dismal science of economics mean for managers? We don’t think it’s that people are lazy.

(1) It is possible that many of your employees are underemployed and there is scope for increasing their productivity. Identifying where improvements can be made is a joint responsibility for managers and employees.

(2) Financial managers should be aware that short-term cost savings through reduced investment, while perhaps necessary, will not benefit the organisation in the longer term.

(3) Productivity per person can only be squeezed so far and increasing pressure too much on employees may result in increased stress, fatigue and absenteeism. With a growing economy and more jobs available, employees who have been biding their time may decide that now is the time to jump ship.

(4) One of the most powerful means for increasing productivity is to invest in organisational design so that inefficiencies can be culled from the production process. This is true whatever the industry, whether it be primary, manufacturing or services.

(5) Finally, increased organisational productivity will grow real earnings and enable you to boost dividends and wages.

A practical solution to increase productivity

So here’s one practical step you might consider. We think some of the greatest opportunities for an increase in organisational productivity stem from removing the system and process heavy performance management systems that have come to dominate business over the last couple of decades. They are the Emperor’s new clothes. They have created an illusion of progress where none exists. To this day, the evidence that performance management systems contribute to profitability is at best weak. Organisations need good goals. They need managers working on these rather than filling in forms about working on the goals. Imagine the cost saving if organisations stopped requiring managers to complete performance management records – each manager would save days per year – time that could be spent on doing business. IT costs would be lower and quite possibly engagement scores (highly correlated with productivity) would increase.

Whether you like this idea or not, what is abundantly clear is that we cannot continue the way we are going. We need to do things differently and that means challenging assumptions.

Dr John Wilson & Dominic Irvine © 2015 All rights asserted

If you would like to read more on performance management, click here.

Herding cats Tell someone

Related Posts

Habits

Engagement, Performance, Resilience, Team

Tips for Working at Home

Resilience (1)

Performance, Resilience

The business of surviving the coronavirus

Video conference

Engagement, Management, Performance, Team

Virtual Working

Search

Categories

  • Clients past (5)
  • Engagement (24)
  • Innovation (20)
  • Leadership (9)
  • Management (16)
  • Networking (5)
  • News (30)
  • Performance (54)
  • Resilience (9)
  • Sports (19)
  • Tandem record (2)
  • Team (20)
  • Uncategorized (1)

Archives

  • October 2020 (1)
  • April 2020 (2)
  • March 2020 (8)
  • December 2019 (1)
  • November 2019 (1)
  • October 2019 (1)
  • August 2019 (1)
  • July 2019 (1)
  • June 2019 (2)
  • May 2019 (2)
  • April 2019 (1)
  • February 2019 (1)
  • January 2019 (2)
  • December 2018 (3)
  • November 2018 (4)
  • September 2018 (1)
  • August 2018 (1)
  • May 2018 (1)
  • April 2018 (1)
  • March 2018 (1)
  • January 2018 (5)
  • October 2017 (1)
  • June 2017 (2)
  • May 2017 (2)
  • April 2017 (1)
  • February 2017 (1)
  • January 2017 (1)
  • September 2016 (1)
  • July 2016 (1)
  • June 2016 (1)
  • May 2016 (2)
  • April 2016 (1)
  • March 2016 (1)
  • February 2016 (1)
  • January 2016 (1)
  • December 2015 (2)
  • November 2015 (1)
  • October 2015 (2)
  • September 2015 (1)
  • August 2015 (1)
  • July 2015 (1)
  • May 2015 (4)
  • April 2015 (3)
  • March 2015 (6)
  • February 2015 (3)
  • January 2015 (8)
  • December 2014 (5)
  • November 2014 (3)
  • October 2014 (6)
  • September 2014 (1)
  • August 2014 (4)
  • July 2014 (8)
  • May 2014 (3)
  • March 2014 (2)
  • February 2014 (1)
  • January 2014 (2)
  • December 2013 (2)
  • November 2013 (1)
  • August 2013 (4)
  • July 2013 (3)
  • June 2013 (3)
  • April 2013 (1)
  • March 2013 (1)
  • February 2013 (2)
  • December 2012 (2)
  • October 2012 (1)
  • July 2012 (2)
Epiphanies LLP
© Epiphanies LLP 2023
Powered by Themify WordPress Themes