United ef­fort re­quired to bridge pro­duc­tiv­ity gap

Pro­duc­tiv­ity is one of the great­est chal­lenges facing the county and the UK. But what is it and what can busi­nesses and their lead­ers do about it, asks STE­WART BARNES of Quolux

Gloucestershire Echo - - BUSINESS -

NO­BEL Prize win­ner Paul Krug­man fa­mously said: “Pro­duc­tiv­ity isn’t ev­ery­thing but, in the long run, it is al­most ev­ery­thing.”

What does that mean to com­pa­nies in Glouces­ter­shire and how can busi­nesses be­gin to ad­dress the Pro­duc­tiv­ity Puz­zle with its ad­verse ef­fect on the per­for­mance of the UK? Re­search into pro­duc­tiv­ity per­for­mance at county, na­tional and in­ter­na­tional level sug­gests a lot of ef­fort is re­quired to im­prove com­pet­i­tive­ness.

While most busi­ness peo­ple I meet state their busi­nesses are per­form­ing well, they are sur­prised to hear the pro­duc­tiv­ity of Glouces­ter­shire com­pa­nies is six per cent be­low the na­tional av­er­age – which sug­gests we can all do bet­ter.

Of great con­cern is the drop in out­put per worker dur­ing the last decade from when Glouces­ter­shire was four per cent above the UK av­er­age.

Just as sand slips be­tween fin­gers, the data con­firms that bit by bit per­for­mance is ebbing away across the county com­pared to busi­nesses across the coun­try.

But as it is, small amounts, each and ev­ery day, we do not no­tice it.

Per­haps this pro­vides a first pointer to lead­ers to dis­cuss pro­duc­tiv­ity in their board­rooms and in­tro­duce a way of mea­sur­ing it.

The pic­ture is no bet­ter at the na­tional level where the UK’S pro­duc­tiv­ity is 18 per cent be­hind the G7 av­er­age.

In­ter­est­ingly, the pro­duc­tiv­ity of an en­gaged work­force com­pared to a dis­en­gaged work­force is 18 per cent higher.

But with the same re­search stat­ing that 79 per cent of work­ers – a whop­ping 20 mil­lion peo­ple – are dis­en­gaged, a cul­tural revolution is needed.

So per­haps this pro­vides a sec­ond pointer to lead­ers to cre­ate con­di­tions in the work­place to en­gage staff more.

Wor­ry­ingly, the UK is

35 per cent be­hind Ger­many mean­ing an av­er­age com­pany in

Glouces­ter­shire is 41 per cent be­hind its di­rect equiv­a­lent in Ger­many. Del­e­gates on Quolux’s LEAD pro­gramme demon­strate a 42 per cent in­crease in pro­duc­tiv­ity so it is pos­si­ble to close the gap. Bench­mark­ing sales per em­ployee throws up some in­ter­est­ing sta­tis­tics. In the UK, av­er­age out­put per per­son is £147,000. How does that com­pare against your com­pany’s per­for­mance? In Ger­many, the out­put per per­son soars to £335,000. Bench­mark­ing against sim­i­lar com­pa­nies in Ger­many pro­vides an in­sight into how many mil­lions of pounds of prof­its can be gen­er­ated by small and medi­um­sized en­ter­prises with­out re­cruit­ing more peo­ple. A 10-per­son firm can in­crease sales by al­most £3m and in­crease prof­its by £2m and a 25-per­son firm can in­crease sales by al­most £5m with­out em­ploy­ing anyone else. Cor­po­ra­tion tax gen­er­ated from more pro­duc­tive SMES could raise £75 bil­lion per an­num, enough to pay for al­most three-quar­ters of the an­nual NHS bud­get.

Busi­ness can be a force for good, mak­ing a dif­fer­ence to so­ci­ety by becoming more pro­duc­tive.

So, what will you do dif­fer­ently to play your part in clos­ing the pro­duc­tiv­ity gap?

I am a direc­tor of the Cen­tre for In­no­va­tion and Pro­duc­tiv­ity at the Univer­sity of Glouces­ter­shire and we are host­ing a Pro­duc­tiv­ity Round Ta­ble with an in­vited small group of lo­cal busi­ness and pub­lic sec­tor lead­ers to con­sider how Glouces­ter­shire or­gan­i­sa­tions could work to­gether to tackle the pro­duc­tiv­ity is­sue.

This can be a game changer for the county, en­cour­ag­ing com­pa­nies large and small to work to­gether with targeted im­prove­ments in the skills agenda.

All com­pa­nies across the county are en­cour­aged to con­trib­ute to the in­dus­trial strat­egy which lo­cal en­ter­prise part­ner­ship Gfirst LEP is com­pil­ing and sub­mit­ting to the Gov­ern­ment.

Quolux spon­sors the Life­time Achieve­ment Award at the Glouces­ter­shire Busi­ness Awards.

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