The UK lags behind the G7 by 13% in terms of productivity. Elizabeth Gooch says in order to bridge this gap, accepted ways of measuring productivity need improving
The government's central long-term economic objective is to achieve high and stable rates of economic growth and employment. Increasing productivity is the driving force behind this, and the route to higher prosperity.
The UK has begun to make progress in narrowing the long-standing productivity gap with its key competitors; however, it still lags behind the G7 as a whole by around 13%, and the US by around 27%, in terms of the amount of output produced, on average, by each worker. To achieve a sustained increase in the rate of economic growth, therefore, the UK needs to continue to improve its productivity performance.
Recent figures suggest the French - despite 35-hour weeks and long holidays - are much more efficient. The UK and Greece may put the hours in but are they working effectively enough? Luxembourg employees work three hours fewer per week (40.7) than full-time workers in the UK (43.8), yet in terms of gross domestic product per head, they generate the equivalent of EUR20,000 (£13 810) more.
Naturally, these findings provoke a hostile reaction: UK firms are quick to produce figures and statistics demonstrating apparently excellent levels of productivity; employees are similarly likely to react badly to such media criticism.
So where is the discrepancy between the negative productivity comparisons and companies' productivity statistics? And how can this gap be narrowed?
A productivity overhaul must be driven from the top - companies must be encouraged to view productivity and its improvement as a management issue to achieve the best possible results.
Many companies allow staff to control the process of measuring productivity - employees are responsible for maintaining timesheets or self-recording systems to state what they have been working on, and what they have achieved.
There is an obvious flaw in this system - a significant conflict of interest.
No member of staff wants to highlight that their time has been spent ineffectively.
Consequently, they will always ensure that the records show exactly what management wants to see - that they are generating the optimum levels of productivity.
By abdicating responsibility for performance management, those in charge are getting a subjective and potentially inaccurate view of employee efficiency.
One way that this conflict of interest manifests itself is in blatantly excessive productivity statistics. Efficiency figures over 100% are often the norm within productivity systems, and are sometimes even encouraged.
So what does a result such as 120% or 130% efficiency actually mean?
It suggests that more work is being done in a given period than the current system actually allows.
This raises questions as to how over-performance has been achieved. Has this level of productivity come about by cutting corners and making mistakes?
In which case it can hardly be treated as an accurate representation of genuine productivity. Or is it the case that employees are capable of achieving more than the system believes they can? If so, the system is proving to be an inaccurate reflection of current working practices and is, therefore, an insufficient background from which to measure productivity.
Method in the madness
There are also questions over the methodologies behind current performance management. Productivity is a measure of how effectively resources have been utilised in the production of an output. This is frequently interpreted as how much activity has been completed, expressed as 'tasks-per-hour'.
All too often little consideration is given to whether these tasks were completed correctly or what value they represent.
This approach does not take accuracy or customer requirements into account.
If a task is undertaken in a way that will create a problem or customer complaint in the future, this should correctly be measured as a reduction in overall effectiveness.
Crucially, conventional productivity measurement does not take into account the factors that might be affecting performance. The key area of staff skills is often ignored. Do employees have the requisite knowledge to complete a task effectively? Will a lack of skill or availability of staff with those skills cause bottlenecks?
Many of the current productivity measurement systems offer little or no insight into what areas might be improved to enhance overall performance.
For instance, if a company's workforce is spread over a number of geographic locations, it may be appropriate for a dispersed workforce to think and act more like a single team. That means less time waiting for a response to voicemail; fewer missed replies to urgent e-mails; and a faster way to find files buried in shared folders.
An integrated, collaborative environment is necessary to connect dispersed employees - with partners, customers and each other. A solution could be combining e-mail, instant messaging, online awareness, calendaring and scheduling in a place that is easily accessible for all parties.
So how can management achieve tighter control over productivity management and improvement? Firstly it needs to take full responsibility for performance.
Managers must direct their staff to do the right things, in the right way, at the right time, while measuring and managing individual performance.
Management must provide clearly defined benchmarks of what 'good' performance and productivity look like by working in collaboration with employees and encouraging them to secure ownership and buy-in but retaining control to ensure accuracy.
Management must also be responsible for ensuring that efficiency figures of less than 100% are seen as acceptable. Instead of producing statistics showing 130%, the focus should be on a cycle of continuous improvement; for example, providing an 80% figure, then determining and implementing improvements to bridge the 20% gap. Indeed, management should focus on creating a closed loop cycle of productivity improvement (see diagram).
The measurement of productivity itself must be conducted in a more inclusive way, with improvements the result, not the goal. High levels of productivity will result from managing quality (accuracy and completeness), customer requirements and expectations and understanding staff skills. And measurement must be taken into account.
Only by implementing an integrated system of measurement and training managers and team leaders to use this as the basis for fact-based management, can an organisation take control of its productivity and performance, thereby guaranteeing a genuine and measurable improvement in efficiency and performance.
Elizabeth Gooch is managing director of Eg Solutions.
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