Last week’s ONS statistics for labour productivity for the final quarter of 2015 provided proof, if still needed, that the UK’s productivity malaise continues. The strength of job creation meant that output per hour worked fell by over 1% in a single quarter, more than reversing the slight improvement seen in the previous two quarters. As shown in the chart below, our productivity go-slow is close to entering its eighth year.
Think about it: the average value produced from an hour’s work is pretty much the same as it was eight years earlier, which is about as long as the iPhone’s been on the market. Yet this doesn’t seem to be due to a lack of effort. A previous report in our Megatrends series showed that the proportion of employees who think they work very hard is one of the highest in Europe, and has been increasing over time.
However, there’s more to productivity than effort. Working longer hours might increase an employee’s output (and wages, if they are paid by the hour) but it doesn’t have any impact on the output produced in each of those hours – indeed, there’s likely to be a negative effect when hours get excessive. Working harder or faster – through sheer intensity of effort – might raise an employee’s productivity in the short term, but it’s unlikely to be sustainable. The galley slaves in Ben Hur couldn’t maintain ramming speed for more than a few minutes. Remember that elite athletes rarely train flat out. They save their best for when it’s really needed. They spend much of their time with coaching staff searching for those small changes in the way they do things that lead to improved performance. Sustainable improvements in productivity or performance ultimately rely on working smarter, not harder, faster or for longer.
Employees don’t always see it this way. Last month’s Unions21 conference saw the launch of a report prepared by the Smith Institute into employee views on productivity, based on a survey of over 7,000 union members from a range of industries and occupations. The sample isn’t representative of the workforce as a whole, but the results probably mirror those we’d expect to see in other parts of the economy. Employees were asked whether or not they had become more productive, and worked harder, over the previous two years, as shown in the table below.
In total, 68% of employees thought they were working harder than two years ago, although just 41% thought working harder had made them more productive. The proportion of employees working less smartly then two years before (more effort for the same or less productivity) is thus at least 27%. In contrast, the proportion of employees working more smartly than two years before is at least 13% (10% produced more for less, or the same, effort; while another 3% were able to stay as productive while putting in less effort). This leaves a large group in the middle, some of who may actually fall into the working smarter category.
These data help explain why the employees surveyed had mixed feelings about productivity. While 89% of them thought productivity was important or very important to their organisation – perhaps to be expected from a self-completion online survey about productivity! – it was most often associated in their minds with fewer jobs and working harder and least often associated with better pay and conditions. Almost half the sample worked in retail, and employees there pointed to a ratchet effect, whereby management “banked” productivity improvements and then set new and more demanding targets, a dynamic unlikely to release discretionary effort. And if this survey is in any way typical of workplace experience in the UK, it helps explain the persistence of our productivity go-slow.
So what is “smarter working”? In part, it’s about giving workers the right tools to do the job. This can mean capital investment in technology, systems built around the way people do their jobs, rather than systems where the employee has to fit in with a computer-determined process. It could mean investment in workplace design, providing an environment that energises employees, allows for both collaboration and concentration as needed – and doesn’t make employees sick. A CIPD survey of agile working practices found that, for about half of all employees, the workplace isn’t just a desk in an office, so ability to work from multiple locations and on the move becomes important, although the implications for employee health and well-being shouldn’t be forgotten.
Working smarter can be as simple as a greater focus on the tasks that matter most in delivering the organisation’s objectives, with less time and effort being spent on lower priority work. This isn’t something that employees can be expected to achieve unaided. It’s the result of systematic, continuous communication from management on the organisation’s purpose and how that purpose is best achieved. Managers also need to ensure that reward systems, performance management, organisational culture and their own behaviour align with this focus on what’s really important.
Working smarter also arises through doing something differently, maybe by streamlining an existing process or by reorganising the division of work. These are examples of workplace innovation. Last month saw the release of initial results from the 2015 UK Innovation Survey. This is a regular, biennial survey of UK enterprises with 10 or more employees, which collected data about their innovation activity during the period 2012-2014. The chart below shows a reported increase in the proportion of enterprises that were “innovation active”, up from 45% for the period 2010-2012 to 53% for the period 2012-2014.
There was a five percentage point increase in the proportion of enterprises described as “wider innovators”, which in this context refers to various changes in the ways that firms organise themselves internally as well as how they engage externally via marketing or through other external relationships. We see here that the proportion of firms introducing new methods of organising work (20%) is greater than the proportion of firms introducing new or significantly improved products (19%) or processes (13%). These results do not, on their own, provide a guide to the economic value of changes in the way work is organised, but they do suggest they are widespread enough to be considered alongside more “traditional” innovation metrics, such as the introduction of new products and services or technology-driven process improvements, which are the focus of current government policy.
Ideally, workplace innovation is as much a bottom-up as a top-down process. Employees often are the people with the best knowledge of where inefficiencies occur and with the best ideas for how to improve them. The Unions21 survey asked respondents how productivity in their workplace could be improved. Top of the list, beating investment in technology and and investment in training and development, were “listening to employees” and “better management of staff”. Just 14% of employees thought management “always” listened to employee suggestions for improving productivity and 26% thought they “never” listened. In the words of one participant: “Our management do not listen to staff. Very, very simple, inexpensive and quick fixes would make a huge difference to productivity but they just don't seem to care.” And how much does it cost to listen?
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"So what is “smarter working”? In part, it’s about giving workers the right tools to do the job. This can mean capital investment in technology, systems built around the way people do their jobs, rather than systems where the employee has to fit in with a computer-determined process."
Well said. In my experience, the greatest leaps in productivity occur with the implementation of new technology. But the technology - even more than being 'right' for the employee - has to work seamlessly with the business elements around it. A great new IT system can create efficiency that's easily lost if the new system doesn't talk to the next part of the chain of production. New tech needs to be properly integrated to maximise its productive value.
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