People are the key to plugging the productivity gap


Britain’s managers are either eternal optimists or a sea-change in how organisations manage their people may be on the way.

A study by the Future Foundation for Investors in People week, which starts today, has found that senior managers believe they will see huge increases in their organisations’ productivity over the next five years.

The 700 managers polled predicted average productivity would improve within their own organisations by almost a quarter - 23 per cent – over the next half decade.

The key to this improvement, argued the vast majority – 90 per cent – is more effective use of employees.

If achieved, this would lead to an increase in output of £257.5bn by 2009, said the Future Foundation.

Yet, worryingly, managers appear at odds about how to achieve this better use of employees.

More than half – 56 per cent – pinpointed substandard management skills as a major contributory factor to the UK’s productivity gap.

More than three quarters said effective development of employees will was vital or important to the future productivity of their organisations.

But just one in three put it at the top of their list when faced with competing priorities such as development of new technology, knowledge of competitors and research and development.

This indicated, said the foundation, that commitment to employees gets diluted in the face of day-to-day priorities and investment choices. Ruth Spellman, chief executive of Investors in People, said the problem was not identifying the problem, which most managers had done, but converting that understanding into action.

"It seems that senior managers still see productivity as someone else's problem, which is disturbing and potentially damaging, not just to their organisations but to Britain as a whole. "Failing to apply a critical eye to their own organisations means senior managers risk undermining their ability to deliver the growth they are predicting.

"Britain's boardrooms must take action now to prioritise employee development in the face of other demands if they are to achieve their business goals and help the country rise to its productivity challenge," she added. And Paul Flatters, chief executive of the Future Foundation warned that, without real boardroom commitment, the optimism of managers could prove “illusory”.