The latest figures on productivity must have made grim reading for Gordon Brown who, since he took up the mantle of chancellor in 1997, has striven to improve efficiency among the UK’s workforce.
New data from the Office of National Statistics however, shows the growth in output per hour worked fell to zero in the year up to the third quarter 2005.
And compared with other major economies, UK productivity in 2004 was found wanting.
The US continues to be the productivity leader, 27% ahead of the UK. France has a productivity rate about 10% higher, and Germany’s productivity performance was the same as that of the UK.
Experts have offered many explanations for why the UK continues to lag behind its peers in the productivity stakes.
An increased regulatory burden on firms, deficiencies in the education system, a congested transport infrastructure and pension deficits holding back investment in skills and equipment have all been put forward as possible reasons for the shortfall.
However, for many, inadequate people management practices are the root cause of the UK’s lack of efficiency.
At management consultancy the Hay Group, associate director Russell Hobby points to a widespread inability to deal with underperformers as major obstacle to improving productivity.
A recent report from the firm revealed that more than half (52%) of respondents felt their organisations failed to deal with the ‘dead wood’.
An even greater proportion (58%) said their companies failed to measure performance fairly.
“This induces feelings of mediocrity. Productivity is a management issue and should be top of the boardroom agenda,” he said.
At the CBI, head of the business performance group Mindy Wilson said companies must look at the whole cycle of recruitment and training to find where productivity issues can be addressed.
Rather than recruiting someone for a particular task, companies should start to regard people as important resources who are able to work across a range of activities, she said.
More organisations must also learn to encourage people “to take responsibility and a level of risk in their jobs”.
Employees will then feel more valued, according to Wilson. “The old command and control style of management does not generally motivate people,” she added.
John Philpott, chief economist at the Chartered Institute of Personnel and Development, said ineffective management practices are responsible for up to half of the productivity deficit between UK and other major western countries.
To close this gap, the government must make improved people management and working practices central to its agenda, rather than treating it as subsidiary to what the Treasury and DTI consider the main drivers of productivity growth, such as investment, innovation and skills.
“The government pushes a skills agenda, not a management one,” he said.
“While it is up to companies to improve management practices, the government must support them.”
If the government is serious about closing the productivity gap, it must also improve its national and international benchmarking of people management procedures.
“At the moment, hardly anything on comparative management practices exists,” he said.
Philpott would also like to see an increased emphasis on work-related training and work-based learning, the introduction of a minimum standard of external reporting by organisations of their management practices and a model to measure the impact of these.
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