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Addressing the Productivity Gap

Posted on Thu, 2018-02-15 10:30 by Martin Dempsey

This week, official labour statistics in Scotland showed a decline in productivity in the economy of 3.2% in the year to September 2017.  In the UK, we already lag behind other developed nations when it comes to productivity – lagging 15.4% compared to the rest of the G7 nations in 2016 – so we can ill afford to lose further ground in a global economy.

So, how do we address the productivity gap?  As with all complex problems, the solution is equally complex and they revolve around the three pillars of people, technology and place.

HR departments have become more important than ever in recent years.  In an economy with low unemployment, attracting staff becomes a greater challenge, particularly with younger Millennials and Gen Z workers joining the workforce who place more emphasis on working in the right environment than simply chasing the highest salary.  Some studies suggest 4-day weeks improve productivity and performance, talent retention has become critical, and fostering and motivating collaboration is a core responsibility for management and leaders.

Technology is typically the focal point of innovation.  Too often we place all hope in new systems or tools to deliver a leaner, more effective business.  In reality, many businesses don’t take the time to fully assess the outcomes that they’re trying to realise, and then compound this by failing to fully train the people who will use the new system. 

Conversely, many businesses don’t recognise the influence that getting the workplace right can have.  Creating an efficient workplace opens space up to provide flexible space for people to collaborate, to communicate and to express themselves.  The right environment can’t create culture but it can foster it and enable it.

The reality is that productivity will come from bringing all three together.  Aligning the technology strategy with the physical environment to maximise the impact of IT investment, while HR are driving the communication, change management and training of the people who are tasked with modernising and taking their organisation forward.

Right now, we need to recognise that as a nation, we’re simply not doing as good a job as we could be.  We need to place more trust in the value of each of these aspects instead of treating them as a cost in the P&L account.  Investing in people can raise your top line rather than hitting your bottom line.  The same is true of investing in the workplace.  Getting it right will drive productivity, loyalty and commitment – and that will dwarf the cost of the investment.

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