According to the National Institute of Economic and Social Research (NIESR), UK productivity has risen quite slowly since the 2008/09 recession. Previously, labour productivity increased by around 2% per annum but Q1 23 was -0.6% lower than Q1 22 and -1.4% lower than Q4 22, returning us to pre-pandemic levels. Worse still, for the last full year of data, UK productivity ranks -19% lower than the US, according to the Office for National Statistics (ONS). Anecdotally, we are witnessing withering productivity in back-office functions too, something that is notoriously hard to measure.
There is also momentum behind the 4 Day Week Campaign following a successful experiment with 2,900 staff at 61 organisations. What was the outcome? The majority say that they will continue with it. Add to this the fact that nearly 1 in 5 of the UK population aged 16 to 64 are not in work and not looking, according to the ONS, it seems that work is no longer working for everyone. So, read on as we discuss withering productivity.
Withering productivity
The economically inactive group stands at 1.2% higher than before the pandemic. There are also another half a million more people out of work than before the pandemic. Despite the slowdown in job vacancies for a 10th consecutive quarter, employers still can’t find the ‘talent’ they need. Is this because the talent does not exist, does not fit your exact requirements, isn’t looking or can’t find you? Given the enthusiasm behind a 4-day working week, benefitting mental health, fewer sick days, less burnout and lower intention to quit, it seems that employers need to do more to attract talent and maintain or improve productivity. Given that you can buy a USB-dongle that ‘wiggles’ your mouse whilst you are away from your laptop, it seems that some workers have already checked out. Employees are also resistant to changes focused on productivity.
In our experience, we are noticing employees who no longer work the long hours of old. Given the lack of available talent, many candidates have worked out that it is a candidate’s market. Extra responsibilities? No, thank you. Business travel? A video call is fine, thanks. Working through lunch? No, see you in an hour. Unused holiday entitlement? No chance, how do I get an extra week’s leave? Additionally, you may notice that your colleagues no longer have back-to-back meetings, in some meetings nobody takes actions or volunteers to take responsibility. If this sounds like a ‘Teflon culture’, you wouldn’t be far wrong. Businesses that try to force productivity, either through coercion or monitoring, are losing people in their droves. One client told us that, “since the pandemic, no-one wants to work hard anymore”.
Back-office withering productivity?
Typically, back-office, white-collar or headquarter roles tend to not be essential to operating a business. If you look at the Chinese approach, they provide a robust management platform of tools, resources and connections to support frontline employees with new ventures. This makes for a dynamic, entrepreneurial approach and a relatively thin management layer versus their Western competitors. Of course, there are roles required for legal, compliance, safety and security reasons, where risks are high. There are other roles with a high degree of specialism. Other knowledge worker roles have gone the way of the dodo and have moved to shared service providers.
In future, AI-based applications will automate routine work such as writing blogs (like this one, which we assure you was written by a human) and creating presentations. Given the scale of pay disputes and industrial action, it is perhaps making things even worse. Take the example of BT, who gave workers between 6% and 16% pay rises in November 2022 (backdated to April 2022), only to then announce a future 55,000 job cuts by 2030 in May 2023.
How managers spend their time
Recent research into how managers and supervisors spend their time found that 75% is spent on administration. Approximately ¾ of the time is spent attending meetings, organising meetings, following up from meetings, e-mail, holiday bookings, expense claims etc. We also know that only around 2 in 10 managers are right for the role. This level of inefficiency and administration distracts staff from getting on with the job. It also holds back employee engagement, personal development, value-add and wider organisational improvement. Whilst we are staunch advocates of true transformation in business, we can see why some leaders perform ‘random acts of violence’ and just make redundancies. They know in their gut that only a small proportion of some roles are spent doing the actual job, which may or may not be to the expected standard. Withering productivity makes these kinds of decisions that bit easier.
Slowing transformation
If we recap on productivity, one definition is the amount of value generated per hour worked. Another definition for back-office roles, is getting people to deliver as much work as they can to the best level possible. Knowing that only 1 hour in every 4 hours worked delivers an output of some sort, from a report to giving feedback to a team member, means that little is available for transformation. Most employees are hired to pick up the tasks and responsibilities of someone who leaves. A lucky few are hired into a brand-new role with a not-as-yet fully defined scope. This means that the majority of hires are not geared towards transformational work and improving the organisation. Now overlay the decline in productivity and the increase in the economically inactive. Does the issue solely lie with employees or are organisations hiring only what they feel is necessary to survive?
Additionally, we know that only 22% of transformations are successful. This could be for many reasons. We hypothesise that the percentage of successful projects is in decline from here, with fewer employees willing to invest more of their time in work. This pushes more transformational work onto the back burner or to not act at all. Ultimately, the consequences of slower transformation may be low business growth or loss of competitive advantage. Similarly, changes in the digital landscape are coming thick and fast but most workers are not rushing towards it. One study suggests that digital could grow the UK economy by £413bn by 2030, or around 19%. Unfortunately, we are lagging behind in the transformation of digital technology due to speed, legacy systems and underestimating the cost.
A partner for management support and transformation
Think Beyond is a multi-award-winning management consultancy working with senior leaders to achieve their targets. We offer value-add solutions to find new opportunities and accelerate your business performance. We support organisations on their change journey to higher productivity, higher performance and higher growth. Also, we offer an advisory service to identify areas for improvement and change.
If you would like to discuss your productivity concerns with us, simply drop us a short email, which we will treat confidentially. Alternatively, please complete a few details online for us to arrange a free initial introduction.
Finally, why not read a related article about change and innovation in business.