Exacerbated by dismal figures, the UK’s productivity crisis is only compounding. The labour output for January to March as reported by the Office for National Statistics (ONS) shows that productivity has decreased for the third consecutive quarter in the UK; resulting in over £5,000 in lost wages for workers. The ONS’ findings for labour output for January to March also highlight productivity over the last decade is at its lowest ever, lower than any time during the 20th century. While many want to lay blame on Brexit or skills deficits, our recent research into the UK mid-market business productivity shows a very different picture.
The UK’s economic engine room is falling behind
The ONS figures confirmed what is already common knowledge: The UK is not working efficiently. If the UK is to end this cycle of uneconomical work, we need to investigate and identify the segments of the business world that are impacted most.
Through our own research mid-market organisations are actually wasting valuable time. On average they are losing over a fifth of their year on non-core activities. This is the equivalent of UK mid-market managers not working for just over two months out of the year. Mid-market companies make up two thirds of the UK’s private sector workers, so it’s easy to understand why the UK has a productivity issue in the first place. Admin tasks that could be automated are still eating up into managers’ time, ultimately having a knock-on effect on the people they manage and the customers they serve.
Predictably, the outlook doesn’t look much better further down the ladder. While managers are increasingly spending time on non-core tasks, the picture is only slightly less serious for employees as a whole, with 16 per cent of their time also being spent on tasks not central to their role. Businesses are not getting the most out of their employees, owing to staff having to spend valuable time dealing with non-essential tasks.
It’s not all that surprising that employees as a whole are wasting time that could be utilised better.
Rapid growth creates productivity challenges
Productivity becomes a bigger issue as an organisation experiences rapid growth. For instance, small business employees are spending an average of 26 days a year on non-core tasks; this number increases the bigger the organisation, as growing businesses (with between 300-500 employees) spend nearly twice as much time on unproductive tasks, at 43 days a year. For the most part, organisations want to grow to increase their output, but the reality is, if the underlying issues and root causes aren’t addressed, they’re building on unbalanced foundations.
The fact that there’s a strong correlation between productivity challenges worsening and business expansion, appears to be a symptom of the growing complexity in teams and the need to share more information unilaterally between teams. As businesses get larger, they’re more likely to request data more frequently (62 per cent, versus the average 53 per cent), for example, daily as opposed to weekly. The problem is that just a third of mid-market employees said they have access to the information they need directly from a shared folder or system, with nearly half instead having to request the documents and information they need from others, further slowing down the process.
What innovative solution is required?
While innovative technology should provide a solution to this challenge, having a disparate number of systems in growing businesses appear to actually be contributing to the problem. Over two thirds of mid-level firms are using more than five software systems, and a fifth are using over ten. Worryingly, the majority of software systems used by mid-sized organisations are on separate platforms, and 30 per cent aren’t integrated at all, meaning information can’t be easily shared. Employees are left to battle it out and problem solve when the technology they’re using is no longer fit for purpose. With employees losing valuable time solving issues that are not directly related to their job, minimising that wherever possible is crucial to addressing the productivity crisis. Technology should be the answer, but it won’t have the desired impact if the infrastructure in place is inherently inefficient.
Britain is in desperate need of a new way of thinking about productivity. A more holistic, people plus technology approach is the way forward, in order for the UK to start seeing real improvement in labour performance. There must be a requirement for businesses to address existing problems. They should empower workers with cohesive, clever solutions that give them the freedom to do more of the work that creates value as opposed to the work that could be automated. That could mean spending more time with patients, improving accuracy of manufacturing orders or more accurate invoicing, as opposed to doing reams and reams of paperwork, losing valuable time in the process. Time is of the essence, especially when the UK workforce is at a crucial productivity point. So in order for businesses to make the most of theirs they must act now.
Chris Marjara, CMO, The Access Group