A wizard solution to the productivity gap

With a cinematic visit to Hogwarts closely following Halloween once again,
late autumn is officially the season of witches and warlocks. How fitting,
therefore, that Patricia Hewitt has chosen this time of year to ask a business
wizard to break the spell that seems to curse every attempt to solve the UK’s
productivity problem.

Michael Porter might not have the magical powers of Harry Potter, but the
Government clearly hopes he will find something in the chamber of
organisational secrets to transform the performance of UK management.

If the Harvard professor’s wizardry matches that of Hogwarts’ Professor
Dumbledore, he will find the key lies in unlocking the power of so-called
high-performance work practices.

As CIPD-supported research shows, productive, high-performance organisations
operate flat, goal-oriented management structures, with investment in people at
every level of the workforce set out as a strategic priority.

Everyone in such organisations are made aware of who their customers are and
what they want – and there is continual innovation in product and service
quality. Above all, these organisations recognise that people make the
difference and strive to ensure effective use of the full array of people
management practices.

However, the UK’s fundamental problem is not so much failure to recognise
the core ingredients of high-performance working – the CIPD has been
highlighting these for years – but how to mix them into a potent brew. Despite
a plethora of research which demonstrates a clear pay off from job design,
continuous appraisal, the use of autonomous team working, ongoing learning and
performance-related pay, fewer than one in five workplaces in the UK combine
such practices effectively.

Sceptics argue that this indicates an active rejection of the strategic
importance of the HR function, but this is a far too simplistic view. Usually,
senior management is ill informed rather than indifferent when confronted with
the challenge of high-performance working.

Interviews with senior executives in the CIPD’s Voices from the Boardroom
shows that most are, at best, only dimly aware of recent research on people
management. And, organisations that appreciate the need for change often don’t
know what can be done or how to manage the process. This serious management
implementation gap underlies the UK’s productivity gap.

Over the next year, the CIPD will be placing increasing emphasis on turning
knowledge into practice. Porter’s benchmarking study will provide an important
backdrop to CIPD’s endeavour to place HR at the centre of the conversation on
productivity and performance. The result may not be a wizard wheeze – but the outcome
could prove to be pure magic for the UK economy.

By John Philpott, Chief economist, CIPD

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