£70bn: the cost of poor productivity

UK employers have been urged to radically overhaul their training processes after it emerged that poor productivity cost them £70bn last year.

Employers in England alone spent a record £33.3bn on training last year to boost the performance of their workforces, according to statistics from the Learning and Skills Council.

But the effectiveness of this training has been called into question by separate research from Proudfoot Consulting, which revealed that poor productivity cost UK employers £70bn in 2005 – equivalent to 36 days per worker, per year.

The Proudfoot Productivity Report showed that UK companies waste more time than those of any other nation in the West.

It is based on more than 800 responses from executives in 19 countries and 1,900 in-depth business reviews of companies in 30 countries.

Simon Glynn, chief operating officer at Proudfoot, said most of the training provision in firms was mis-directed. “Much of UK learning is classroom-based, where it needs to be hands-on training in the field,” he said.

Joanne Francom, head of HR at housing group WP Homes, said huge training spend in itself would not improve productivity.

“Employers need to consider the relevance of the training they are providing, which should be individually matched to an employee’s competence against the requirements of their role,” she said.

Debbie Whitaker, group head of people product management at Standard Chartered bank, said many companies saw training as a panacea for improving productivity, but didn’t measure its impact on performance.

“Worse, many companies focus training spend on problem areas, rather than leveraging their skills for high performance,” she said.

HR departments should provide follow-up help to ensure employees apply what they have learned to their jobs, said Judith Coslett, head of HR at Guildford Borough Council. “But HR has a battle on its hands to try and convince managers to prioritise time for this,” she warned.

Feedback from the profession

Cara Davani, group director corporate services, Genesis Housing Group – “Organisations have a bad habit of throwing large sums of money at training in the hope they are deemed to be a good employer, but this is not always the solution. Productivity is improved by more robust performance management primarily, but supported by good employment and development practices.”

Joanne Francom, head of HR, WP Homes – “HR teams should focus on delivering personal development planning tools for managers. They may also need training on conducting one-to-one development reviews. Inappropriate training leads to high turnover and low morale.”

Paul Kearns, director, HR consultancy PWL – Most organisations do not get to grips with performance issues, and they measure training very badly or not at all. They also do not design training to have a measurable business impact. And of course, HR has not done anything to improve the situation. I have been saying this for years.”

Judith Coslett, head of HR, Guildford Borough Council – “Line managers should know what their staff will be learning and how it is relevant to their role. They can then support the employees in applying their learning. In practice, few line managers are willing to do this because of the time it takes.”

How to conduct a training needs analysis


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