The UK productivity puzzle

November 29, 2017 Sam Dawson 0 Comment

As founder of a company that puts engagement and culture at the front and centre of business, I waited for the UK budget and growth announcements this week with interest.

The UK budget forecast was released yesterday, and as part of that there were downgrades in the forecast for growth going forward in the UK. We can now expect the economy to grow by 1.5% this year, down from the estimate of 2% it made in March.

Lower growth, while challenging for business, also means that by 2021 government tax receipts will be £20bn lower than the previous forecast. So, that’s a lot of numbers that point to a tricky business environment and fewer funds available to the government to reinvest into UK Plc.

On the BBC national news last night, Carolyn Fairburn, the CEO of the CBI (Confederation of British Industry) said that “Productivity is the biggest issue the UK is facing today, alongside Brexit”. That’s a big and scary statement.

It’s not all doom and gloom, and there are a number ways in which the UK government are looking to push productivity levels, including investment in Research & Development, tax credits for business and financing growth in innovative firms.

Now, I’m sure those are all very well researched and thought out strategies, but the one thing that jumps right off the page to me is there is nothing about people in the productivity equation here. The energy that people bring (or not) to the workplace defines the levels of output in most industries.

That’s not just about how many widgets someone can put in a box per hour. It’s about the great ideas for improvement that motivated people bring. It’s about a supportive culture that enables the onboarding new recruits in an efficient way. It’s about having that sense of pride in front of customers that ultimately wants them to keep being a customer and buy more.

This stuff is not ‘fluffy’ Human Resources speak.

There are people changes that each business in the UK and companies globally can use to develop their success. The Chancellor and UK businesses are missing a big trick if they don’t drop the following into solving the productivity puzzle:

1. Improve employee retention

A study carried out by Oxford Economics tells us that the cost of each employee leaving a business is over £30,000. The overall impact to the UK economy (and this was in 2014) is £4.13bn per year. That’s more than the Chancellor has just set aside in the budget for dealing with Brexit!

2. Support employee mental health

Here’s the big one. 91 million days are lost each year in the UK due to mental health problems according to That is equivalent to £1,035 for every employee in the UK workforce. The total cost to employers is estimated at nearly £26 billion each year.

3. Know your business

Ok, so this might not give you an instant return in billions, but according to Sage almost half of UK workers (46%) have never been asked by their employer what will improve their experiences and impact their productivity. So, let’s talk to our people to know how to keep them engaged with our businesses, help them maintain a healthy mind and body and from there great things will flow. You might even find you have happy and productive people. It’s a puzzle we all need to solve, and it’s not rocket science.

Let’s make work a better place.

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