Like many other business owners, since the 2008 financial crash, you may have asked your employees to ‘do more with less’. An obvious solution, you would think, to clawing back some of the profit and growth lost during this period of economic instability. However, statistics from the ONS show a 16% productivity gap between the UK and other G7 nations, which means something isn’t working. With Brexit looming, some commentators are predicting a slow-down in economic growth and further uncertainty. So, if more with less hasn’t driven the business results you want, it’s time to find another way to solve the productivity puzzle.
Why is Productivity Important?
Good productivity rates mean your business can produce or do more with fewer inputs. Fewer inputs means reduced cost per unit of output. (If this sounds like more with less, hang on a second.) This makes your business more profit and creates the conditions for real wage growth. Which in turn means more spending, a stronger economy and greater economic stability. This allows you to feel more confident in pursuing strategic product or service developments, improving business processes and developing employees. All of which feed employees’ ability to work smarter. More with less becomes working smarter supported by investment.
Identifying Productivity Problems
Research from the CIPD shows that, although productivity is central to business success, a third of businesses don’t measure it directly tending to measure general business performance instead.
It was also revealed that business’ understanding of the term ‘productivity’ is “patchy, to say the least”. Yet the research found that such gaps in understanding aren’t necessarily a barrier to improving output. What matters is holding widespread discussions about how to improve, identifying key outcomes and assessing business performance on the basis of measurements.
To measure your organisation’s productivity, you need to establish how effectively your inputs (people, equipment, energy etc.) produce out value (or output). This will differ from business to business depending on your product, service and business model.
Of course, no-one expects employees to be productive 100% of the time. As Ric Brookes, Operations Director at Tunafish Media explains, “there’s enough research into the number of hours worked and the effect on people’s cognitive ability and wellbeing to show that over-working has a negative impact on people and their health.”
How to Improve Your Business’ Productivity
Your employees are often far better placed than leaders to understand what works, what doesn’t and how to improve output. However, strong strategic direction and positive cultural frameworks are often helpful in establishing the conditions for good productivity.
The CIPD’s research found that service delivery strategies based on premium quality are associated with higher productivity as is investment in training and a positive employment culture. This article from Avensure HR shows how the personal development element within performance appraisals can be used to improve productivity.Interestingly, the smart or agile working practises that many firms turn to for improved efficiency, didn’t always deliver and could even have negative effects on performance. This means that firms need to think carefully before implementing new working practices.
The ACAS Productivity Tool identifies seven cultural elements that combine to create the best environment for employees to do their work. It’s free to use and helps identify any potential productivity gaps across the following areas:
- Well-designed workGood job design can improve efficiency, innovation, customer care and flexibility in the way work is carried out.
- Skilled managersEnsure the technical expertise and people management skills are available to help employees deliver their best work on time and budget.
- Conflict managementPositive conflict management can result in innovation, constructive change and progress.
- Rights and responsibilitiesEmployee induction processes and a clear understanding of how people should work together and treat one another help people pull together as a team. Clarity within contracts sets clear expectations from the outset, reduces distractions and allows everyone to focus on their work.
- FairnessWorkplaces that ensure employee wellbeing and fair treatment are often more productive than those that don’t.
- Employee VoiceGiving employees the opportunity to make their voice heard, contribute to decision making and share knowledge and ideas can improve productivity.
- High trustEnables positive and productive working relationships.
Productivity is certainly one of the keys to business success. However you choose to improve your productivity, consider whether your changes are addressing the biggest business and employee concerns. You also need to ensure you have the capacity to implement them effectively and whether they are a good fit for your business in terms of culture, people management and wider business practises.
When the pressure is on, it can be tempting to ask your people to do more with less. But as the research shows, this isn’t always the right option. A final word from Brookes sums this up nicely as he reminds us that, “the number of hours worked and productivity are not always inextricably linked.”