The Puzzle that is Productivity

We still don’t have the answers to the UK’s ‘productivity puzzle’. Why the UK falls behind other developed economies – the productivity gap – is still somewhat of a mystery.   

While it’s perhaps easy to blame the country’s economy, the reality is that businesses can, and need to, address productivity at a company level. Evidence clearly indicates the value of good leadership and structured management practices in helping to raise productivity.  

Interestingly, the productivity of an engaged workforce compared to a disengaged workforce is 18% higher. But with the same research stating that 79% of workers, a whopping 20 million people, are disengaged, a cultural revolution is needed. So, perhaps this provides a second pointer to leaders to create conditions in the workplace to engage staff more.  

By supporting leaders and managers to develop the appropriate skills that they need to enhance employee engagement, businesses can make significant improvements in productivity. We’ve seen this first-hand – delegates demonstrate a 42% increase in productivity after completing our LEAD™ programme, so it is possible to close the gap. 

When comparing the UK to Germany, we fall 35% behind in terms of productivity.  Benchmarking sales per employee throws up some interesting statistics. In the UK, average output per person is £147,000. How does that compare against your company’s performance? In Germany, the output per person soars to £335,000.  

Measuring against similar companies in Germany provides an insight into how many millions of pounds of profit can be generated by small and medium-sized enterprises (SMEs) without recruiting more people. A 10-person service firm can increase sales by almost £3m and increase profits by £2m and a 25-person firm can increase sales by almost £5m without employing anyone else. Corporation tax generated from more productive SMEs could raise £75billion per annum, enough to pay for almost three quarters of the annual NHS budget. 

Business can be a force for good, making a difference to society by becoming more productive. So, what will you do differently to help solve the productivity puzzle? 

This article first appeared in Business & Innovation Magazine, September 2019 issue in Spotlight on Leaders. 

 

 

 

 

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