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How can the UK solve its productivity crisis?

The latest Office for National Statistics (ONS) findings for labour output for January to March show that productivity has decreased for the third consecutive quarter in the UK; amounting to over £5,000 in lost wages for workers. In fact, according to the ONS, productivity over the last decade is lower than at any time during the 20th century. The UK has a productivity crisis on its hands, that fact is unavoidable – but who is being impacted the most and what is causing it?

The UK’s engine room is stalling

The ONS statistics on labour productivity confirmed what we already knew: The UK is working inefficiently. That is a useful top-level summary but it doesn’t examine the minutiae of the problem. And if the UK is to put an end to this cycle of wasteful work, we need to delve deeper into which segments of the business world are having the toughest time.

Our own research has found that managers in mid-market organisations are wasting over a fifth of their year on non-core activities. In other words, UK mid-market managers might as well not be working for two months of the year. And with mid-market businesses making up two thirds of the UK’s private sector workers, it’s easy to see why the UK has a productivity puzzle to solve. If people in management roles are spending valuable time on admin that could be automated rather than on the day-to-day tasks that need to get done, that’s going to have a knock-on effect on the people they manage and the customers they serve.

Unsurprisingly, the outlook doesn’t look much brighter further down the pecking order. While managers are increasingly spending time on non-core tasks, the picture is only marginally less serious for employees as a whole, with 16 per cent of their time also being spent on tasks not central to their role. Across the board, organisations are not getting the most out of their employees, owing to staff having to spend valuable time dealing with non-essential tasks.

Scaling is making productivity even tougher

Companies are suffering even more with the productivity challenge as the business grows. For example, small business employees are spending an average of 26 days a year on non-core tasks; this jumps up the bigger the business, as growing SMEs (with between 300-500 employees) spend nearly twice as much time on unproductive tasks, at 43 days a year. Organisations want to grow to increase their output, but the reality is, if the underlying issues and causes aren’t addressed, they’re building on unstable foundations.

The fact that productivity challenges expand as businesses scale, appears to be a symptom of the growing complexity in teams and the need to share more information within and between them. As businesses get larger, they’re more likely to request data more frequently (for example, daily as opposed to weekly). The problem is that just a third of mid-market employees said they have access to the information they need directly from a shared folder or system, with nearly half instead having to request the documents and information they need from others.

Is technology the solution?

While technology should provide a solution to this challenge, having a vast number of systems in growing businesses appear to actually be contributing to the problem. Over two thirds of mid-level firms are using more than five software systems, and a fifth are using over ten. Worryingly, the majority of software systems used by mid-sized organisations are on separate platforms, and 30 per cent aren’t integrated at all, meaning information is not easily shared. With employees losing valuable time solving problems that are not directly related to their job, finding time-savings wherever possible is crucial to addressing the productivity crisis. Technology should be the answer, but it won’t have the desired impact if the infrastructure in place is inherently inefficient.

It’s evident Britain needs a new way of thinking about productivity. This means casting aside siloed initiatives, and adopting a more holistic, people plus technology approach. Businesses must solve current problems and empower workers with integrated, intelligent solutions that give them the freedom to do more of the work that creates value – whether that’s spending more time in the classroom in education, creating greater emphasis on patient care in health, or increased output in manufacturing. That’s how the UK will start to see real, tangible improvement in labour performance.

Source: Business Chief