Crushed by the Wheels of Industry – the Truth about low UK Productivity and what it’ll take to get Sustainable Growth

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For too long now, the national debate about productivity has been shallow and lacking insight. It’s time employers, the government and the UK workforce had a real debate to understand the issues and what will really make a difference. Without this we will be confined to the ‘slow lane’ of productivity growth and lag behind those who innovate. In this paper, we explore some of underlying myths and insights to ask if productivity is really that much of a puzzle.

Right on cue, the General Election and subsequent Budget brought out a raft of statements about our general level of competitiveness, productivity and the health of our economy. Dutifully the same topics came up that have been repeated and suggested for over a decade – Education, Training, Skills, Uptake of Technological Advancements, Capital Investment and Talent Acquisition & Retention. Let be clear, it’s not that this well-known list or the great and the good who espouse them are absolutely wrong, it’s just that they are too shallow and poorly understood by most to be of any practical use. Let’s take a look at them in turn:

Capital Investment:

Investment and speculating (taking risks) to accumulate (reap the rewards) is as old as time itself. It would seem obvious that companies would rush out to invest wisely when they have access to the capital – right? Research by Duesterberg & Norman published in the Wall Street Journal suggests otherwise. (1) They discovered that far from this, companies often sit on their hands instead of investing. Looking at GDP and access to capital pre and post-recession, they found no correlation in investment pick up. They site a strong connection to investment incentives such as taxation levels and other incentives that reduce risk and increase return. Investment is also down to human behaviour (sentiment), not economics and logic alone. There is the notion here that organisations can lack ambition or even reward those who are risk averse.

Technology Advancements:

A bright spot for the UK, especially in London and Cambridge is the adoption of new technology. We’ve been told for years that we would do well to rebalance our economy towards the S.T.E.M. sectors (science, technology, engineering and manufacturing). This is a no brainer and is also linked to capital investment. But compared to other advanced nations, the UK still has, at best, a patchy record around big technology investment and adoption. This is especially true where IT is concerned. One of the worst offenders is the UK Government who have a host of IT initiatives that have failed, costing £millions and taking productivity into reverse gear. There is an impasse here; many are so fearful of the risks they choose not to act. Unless we improve, learn and build more skill and capability here we will continue to fall behind. The disciplines of change management, project management and managing complex supplier relationships need to be far more central.

People:

When you strip out these two big considerations which can be prone to political and global influence, you are left with the human capital factors (yes people).

Again, the major commentators are not wrong in suggesting that we need to improve our education, training, skills & talent pools. But that’s where the debate generally stops.

Lots has been written about the performance of our education system and negative feedback from employers about the actual quality and value of school leavers and graduates has been consistent. Interpersonal skills, business acumen and other functional skills are often absent. One can only hope that with universities now charging tuition fees and fewer caps on the number of places available, there may be a useful adjustment over time. A stronger correlation between the investment of education (time and money) and the value and usefulness to the economy would be a welcome outcome. So with the usual suspects referenced what else is really going on with our productivity gap?

Dan was a successful senior manager in the marketing division. Promoted 18 months ago, he’d been through a tough time and was forced to restructure his team because of the financial losses uncovered due to fraud. He now reported to two new executives who really didn’t get him and what he was trying to achieve. Politics at the Board level took hold which was an ongoing distraction. Over time, the fight went out of him and he stopped trying as hard. Instead of worrying at the weekend and coming up with new ideas and strategies, he sat further back, kept his head down and took low risk options where he was personally on safe territory. Churn went up in his area by 40% and the quality of work output came into question for the first time.

Just a Job – The Big Switch off

The hard truth is that the UK has a poor record at knowing how to manage, use and nurture its workforce to full potential. The extensive Engaging for Success – Nailing the Evidence research by the University of Bath (2) found that only a third of the UK workforce say they are ‘engaged’ – the UK ranks 9th of the 12th most developed countries. Alongside this the UK tracked 20% lower on productivity against its G7 peer group.

The correlation has been proved. When a colleague is switched off or an entire team or workforce is demotivated it automatically damages productivity and competitiveness.

What is most worrying is the apparent lack of action in many cases to act on this agenda, with many organisations appearing to be stuck in the slow lane. In our 9 year history, working with dozens of organisations from all sectors there are some disturbing trends and insights emerging as to why this is the case.

Corporate Politics: We are seeing a growing flight of talent away from organisational life because of their dislike to the norms they are expected to conform to. Negative politics have crept into all sectors, including charities, government and the all-important SME sector. Many are allowed to exert influence for personal gain and are losing sight of what’s right for the organisation or its customer group. Self-interest and greed human frailties, but when they becomes endemic to a culture, trust can evaporate and inhibit genuine collaboration, team working and innovation. These are vital loses in the productivity game.

Lost in the Maze: As our working lives and the organisations we work for get more and more complex they are becoming more difficult to understand and so people are getting lost. This means that rather than trying to understand the whole thing, people are retreating to the apparent safety of their personal work or comfort zone. Behaviourally this means focusing on personal targets and agendas to ensure the protection of personal reward and little else. When the strategic narrative or collective purpose is lost, other departments become a nuisance at best to be avoided or worked around.

Catch me if you can: A progression from simply being lost is active resistance to collective or shared organisational goals and targets. We have seen people disengaged for long periods. At best they turn into the most resistant people to change and at worst become active terrorists inside your organisation. This is a zero sum game where employee and organisation both lose – often heavily.

Freefall – Feeling Unsupported: In far too many instances we are seeing people actively disengaging, quite literally giving up on their boss, their team or the whole organisation. The worst outcome is that they don’t leave, instead they hold on, do the bear minimum and eat up a lot of management time because of their disruptive behaviours. In organisations where there is no management intervention, these people can act as ‘mood hovers’ – bringing infectious negativity or stress to the overall culture.

In it for myself – A different manifestation of disengagement is the truly selfish employee. On the surface they may seem OK, or even high performing at times. What can change is their intent; their primary concern is no longer the best organisational outcome but instead a self-interested outcome. This is one of the most common symptoms we witness and one of the most dangerous because it hides in plain sight. Innovation, problem solving and breakthrough ideas are all casualties here.

Taking back control

There is a significant proportion of UK management who are simply not up to the job. They lazily hide behind readymade excused for poor performance, “The board aren’t investing as much as our competitors.” “Our systems mean we are always struggling with quality issues and have to rework too many products.” In truth, many just don’t have their people on side. But is this really a big deal in terms of real world performance?

Simply put yes. You lose your ‘A’ game. Attitude, absence, access to key information, accidents, accuracy of reporting and agility all turn negative, fast eating away at productivity in real terms. Where poor engagement exists, change implementations will typically fail to deliver or where they do they run over time and budget.

Productivity Trio

There are three clear strategies that most organisations can apply and virtually guarantee an element of positive change and improvement to the bottom line.

1. Job Enrichment / Engagement – Employers need to go back to the drawing board in some instances and redesign elements of work. The more interesting and rewarding elements of work are the better. Whether it’s the work environment, the specific elements of jobs or the structure of how a team or department works. At Connectwell we have identified x6 key areas that each play a major role in engagement and job satisfaction leading directly to better job performance. Creating more interesting work is achievable in 99% of work settings at all career levels.

2. Employees as Problem Solvers – Every organisation faces its challenges over time. These may be internal or external, based on market forces, funding changes or other outside shocks. Every organisation carries a wealth of knowledge, skill and experience that is a major resource if tapped in to in the right way. Smart managers invite their teams to talk about problems, share thoughts, create ideas and collaborate on new solutions. If the culture isn’t right, managers will either show an air of arrogance about their own perceived abilities or will lack the ability to work with staff to gain the benefit of their insights.

3. Implementation – Doing it Right – Another major problem is the ability to change. Many senior manager we work with take for granted or assume they have the necessary skills and experience to make successful change happen. In truth at least 50% are in post because of their technical or functional skills and not their people skills. Change management is often forgotten, poorly executed or treated as an unnecessary luxury. It typically takes 6 months into a major initiative for the results of poor implementation to show up. Managers often go back to the drawing board believing the idea or concept was wrong. They often don’t even consider it was right idea poorly implemented.

Reina was the Head of the Learning Academy at an International broadcaster. Her whole division went through a restructuring including a major relocation about 150 miles away out of the city. The new HR Director made no effort to learn from Reina or understand what came before. Instead over time he simply imposed his own ideas regardless and dealt with the mess of redundancies, compromise agreements and resignations as if it was inevitable. Reina eventually left along with a host of other organisational talent and knowledge. The HR organisation and change capability was severely weakened for the next two year as a direct result.

The UK has a lot going for it. It has a resilient nature and is blessed with some great talent (home grown and imported) and is renowned globally for its design, innovation and creativity. But these can no longer make up for poor general management and in particular a lack of professional people management skills. A major overhaul rather than dealing with the fallout would have a dramatic effect on overall productivity. Rather than feeling crushed by the experience of work, our workers and workplace relationships would be held up by other nations as examples of best practice and how to gain valuable competitive edge.

 

By Steve Bernard

 

(1)   http://www.wsj.com/articles/behind-the-chronic-weakness-of-capital-investment-1431300140(2)       http://www.engageforsuccess.org/wp-content/uploads/2012/09/The-Evidence.pdf

 

 

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