A new approach to productivity

Nov 06 2003 by Brian Amble Print This Article

The Work Foundation today called for the Government to adopt a new business-led

approach to measuring productivity and high performance in the UK, claiming that the UK compensates for low productivity by ‘sweating’ its assets, and particularly by taking people to, and increasingly beyond, their limit.

The call came as The Work Foundation launched the results of its Work and Enterprise Panel of Inquiry, a year-long study into high performance working and productivity. This business-led initiative is run in partnership with six companies, Tesco, Lloyds TSB, AstraZeneca, Microsoft, Eversheds and Manpower, and trade union Unison.

The Panel’s findings show that traditional measures of productivity are meaningless to business and send firms down blind alleys. Instead, the panel has developed a new productivity model, the High Performance Index, that defines and measures five core areas of business and can be used to track productivity performance.

Customers and markets, shareholders and governance systems, stakeholders (including community and CSR objectives), human resources practices and creativity and innovation management can all be benchmarked to improve performance.

The Index offers a rating to companies based on both their management across these five areas and their financial performance.

But according to The Work Foundation’s chief economist, Rebecca Harding, business also needs to take on board the fact that enabling people to work smarter will pay far more dividends than increased capital investment.

"The magic bullet solution to understanding how to improve performance is to realise that there is no magic bullet," she said. "A focus on performance rather than just productivity will help us to create better work rather than just more work, to work smarter not just harder."

Research carried out as part of the Inquiry suggests that firms in the top half of the Index were 42 per cent more productive than those in the bottom. The Work Foundation also claims that by increasing the effectiveness of their workforce through the High Performance Index, organisations gain 2.5 per cent extra growth, 2. 5 per cent more sales per employee, 1 per cent more profitability and 17. 5 per cent growth in terms of exports as a percentage of sales. Further, there is a 6 per cent increase in a company’s ability to perform at the technological frontier of its industry.

Companies which share a passion for growth, and are risk takers, compound their chances of success.

But the Government still needs to place more emphasis on boosting skills development at all levels, The Work Foundation argues while a what it describes as “a re-energised and re-imagined social partnership” is required as a matter of urgency.

"Our ingrained adversarial culture works directly against the identified drivers of performance," it asserts.

Government should also foster a system of corporate governance, and incentives for investor/company relationships that prevent shareholder value maximisation from becoming the overriding strategic goal.

"We can’t employ an Atkins diet approach to performance and productivity," said Rebecca Harding. "Only by managing well across the five core areas we’ve identified will organisations become high performers."