Boosting productivity

In the midst of the productivity debate, HR is taking action and playing a
major role in pushing up the output levels of some of the UK’s largest
companies. By Elaine Essery

UK productivity lags behind many of our competitors. The facts are well
documented, the reasons why, much deliberated. Low skill levels, inadequate
training, lack of staff involvement, poor management and leadership, and
marginalisation of the HR function have all been cited as contributory factors.

But as the productivity debate rages on, some major UK companies are bucking
the trend. They show how HR professionals can be key players in boosting
productivity by putting people practices centre stage.


Nissan Manufacturing UK’s (NMUK) Sunderland plant is the most productive car
plant in Europe, producing 94 cars per employee each year according to the WMRC
European Automotive Productivity Index. With a workforce of 4,600, it has been
top of the league for the past five years, outperforming some of Nissan’s
Japanese plants. And in some ways, Sunderland has become the company’s
international benchmark. But how did this situation arise?

"There are probably 50 different things that we do," says NMUK
personnel director, Philip Ashmore. "The only word I can think of which
pulls it together, is culture."

Ashmore draws a distinction between HR policies, and getting results through
people. He insists there is nothing fancy about NMUK’s HR practices – they are
commonsense and straightforward. "They’re about our culture, which
encompasses the feel of the place, what our values are, and what we believe
in," says Ashmore.

Training is an important part of Nissan’s culture. NMUK takes time and
effort recruiting the best people it can get and trains them comprehensively
from day one. It defines training as ‘expanding people’s contribution’, and
invests heavily in it – to the tune of 4 per cent of payroll, and more than £6m
in 2001.

"Great training and commitment to training right at the top of the
organisation gets results," says Ashmore. "We’ve proved that is the

Training in standard operations is the key to productivity in mass
production, ensuring that operators carry out the same process in the same,
correct, way every time for maximum efficiency.

"There’s nothing whatsoever contradictory about high output and high
quality," Ashmore stresses. "If you’ve got people producing high
levels of output efficiently, you can almost guarantee their quality will be
high as well."

Nissan believes in continuous improvement. It trains its production workers
to eliminate waste and teaches a range of basic improvement and problem-solving

"You should never be in a position where employees think the way they
do their job is the best way. They should always think ‘there’s a better way of
doing this – what is it?’," Ashmore says. "Anyone can make
improvements, provided they’re given the confidence and training."

Genba Kanri, a collection of Japanese techniques designed to expand
individuals’ capabilities, is applied at the Sunderland plant. The name belies
the simplicity of the approach. "It’s about saying to people ‘you are so
capable – if only you knew what you could do’," he says.

Employees are encouraged to implement changes, review them and look for
further improvements. Even the smallest changes are applauded in the knowledge
that a continuous flow of improved results emerges.

"Everybody wants to get the holy grail, to pick from the tree of
productivity, take a big bite and merrily go off and be more productive,"
Ashmore says. "But it isn’t like that. What counts is the environment you
create to enable people to give of their best."


BT has found that letting people choose where, how and when they work boosts

"We wanted to be an organisation focused on quality, timeliness and
appropriateness. We also knew we needed to widen the talent pool," says
Caroline Waters, head of employment policy. "So we started to develop
flexible working methods to allow global timescale coverage and give
individuals choice over when they worked, and how they balanced their career
with their personal life."

The organisation experimented with homeworking and now has 6,200 homeworkers
out of a workforce of 103,000 and the number is growing. Homeworking extends
across all jobs, from managing directors, to engineers and secretaries. It has
led to sustained increases in productivity ranging from 15 to 31 per cent, with
an average of 21 per cent, and annual cost savings of £45m.

"We used existing business metrics to measure performance before,
during and after introducing the policy, so we were able to track productivity increases
using consistent measures," Waters explains.

Homeworkers take an average three days sick leave compared with 10 to 12
days for office-based staff, and a recent survey shows they are also 7 per cent
happier. There was also a direct correlation between the happiness of the
employee, and the satisfaction of the customer.

Around 60,000 of BT’s employees – more than half the workforce – now opt for
a range of flexible working patterns, including part-time work, job sharing,
term-time hours and annualised hours. It has helped the company widen the
talent pool by making it attractive and accessible to people such as carers,
people with disabilities and women returning to work.

"One of the brilliant things about this is that I’ve been able to
prove, as an HR professional, that great people practice is good for
business," Waters enthuses.

‘Freedom to work’ is another innovative option, which embraces the concept
of measuring and rewarding output, not attendance. Individuals agree outputs
with their line manager in terms of quality, quantity and delivery. When they
work, where they work and how they work is left completely up to them.

‘Freedom to work’ was trialled at BT’s software engineering centre in
Cardiff, which was not the most productive unit, and suffered from high staff
turnover and poor attendance. The trial was a leap of faith for the manager,
but within three months the centre had completely turned around.

One outcome the company could not have predicted after the Cardiff team was
freed from time patterns, was the relationship it struck with BT’s software
engineering centre in Calcutta. Between them, they solved a major problem and
the exchange of skills and partnership continues. Waters says: "If you
empower people they will find the solutions which are not only right for them,
but right for the customer and the business. You can see from the productivity
that people don’t take this approach for granted – it’s enabling them to
contribute more, and they want to contribute more."

Perkins Engines

Engines is a global leader in the manufacture of diesel and natural gas
engines, and its main production site is in Peterborough. Active trade union
membership on the site is high, and in November 2002 the company signed a
formal partnership agreement with engineering trade union Amicus.  It underlined a significant commitment to
giving both the trade union and employees early involvement in business
decisions and issues which could affect their future.  

Partnership working is proving to be a great way of
contributing to increased productivity, helping Perkins Engines achieve its
target of a 4-5 per cent productivity gain year on year.

"The agreement was quite a monumental step for this
site," says HR manager Amanda Rawlings. "But the formal signing was
just the icing on the cake – the detail had been put together over more than
two years.  During that time, we’ve
succeeded in gaining company-wide commitment to ongoing productivity
improvements, with everybody seeing the need for it and keeping it on their
radar screen."

In practice, partnership working involves informal meetings
between the union and HR every other day, and formal meetings fortnightly.
Members of the management team and union negotiating committee meet once a
month with the operations director, and once a quarter for a fuller business update.
Considerable effort goes into measuring the performance of the partnership, and
participants rate the conduct and outcomes of each meeting to ensure objectives
are being met. Outside the meetings, they are asked to rate the development of
the relationship and overall progress.

Working with the union has made Perkins Engines able to respond
quickly to customer needs and fluctuating production demands.   With full union backing, the company has
cut the notice period for shift-pattern changes from 12 to two weeks, and
established the use of temporary outside labour – issues that both impact on

When considering outsourcing work in two areas at the end of
last year, the company asked its staff how the areas might be better run.
Significant changes identified by employees prevented some of the work being

"That’s proof of the partnership," says Rawlings.
"Union members don’t feel threatened, but see their involvement as an
important part of making the business successful. Engaging the union gives us
the potential to work hand in hand with employees, and they’re responding
superbly.  They have greater motivation
and a sense of commitment and belonging that makes them want to contribute.
That has led to increased productivity."

Productivity boosters

Foster a culture of continuous improvement

Invest heavily in training

Get trade unions on your side

Involve the workforce in business issues

Allow individuals to choose the right work-life balance

Empower employees to find their own solutions

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