Written by
Tony Bailey

Published
16 May 2017

Does HR hold the keys to unlocking business productivity?

16 May 2017 • by Tony Bailey

The UK lags behind its European and US G7 counterparts on productivity– the extra value created for every hour worked. HR professionals and business leaders should be concerned: this gap has an impact on our ability to compete and resilience in times of economic uncertainty.

Solving this productivity gap has exercised successive governments for nearly two decades. However, a new report commissioned by Vodafone UK and written by Dr Alexander Grous at the London School of Economics (LSE) brings together 10 years of business research and the results of 20,000 interviews with business leaders in 35 countries.

The report, ‘The Power of Productivity’, identifies three keys which need to work together to unlock productivity gains for businesses: good management practice; flexible working; and modern IT systems. These keys can be accessed by any business, no matter what size, sector or location. Where they are deployed effectively, together productivity gains of 20% can be achieved: in isolation the gains will be much more modest.

The importance of good management

The most crucial to success is good management practice. “The best performing firms are simply better-run,” according to Dr Grous. And there’s actually considerable consensus about the basics of good management, an area where HR has a key role to play.

Some of those basics concern operations management, but equally important is directing, supporting and developing staff. Performance monitoring is key: at well-run firms, individuals will be explicitly aware of their roles and responsibilities. Their managers, equally, will be aware of the extent to which those individuals are performing, and will be engaged in an ongoing dialogue to offer constructive feedback and coaching.

However, the success of performance monitoring is based on the target-setting which has been put in place. Businesses need meaningful targets as whole organisations; and these then need to be divided into targets for each section of the business, and down to individual members of staff. Goals need to be short- and long-term, with the short-term goals adding together to form a ‘staircase’ towards what’s needed in the longer term. Where individual goals are missed, they may need to be rethought, or the individuals concerned may need more training or moving to tasks for which they have more aptitude.

Talent management was also a top priority for the best-performing businesses, with managers evaluated on the strength of the talent pool they actively build. Appraisals and other reviews rewarded high performance so it was abundantly clear there was a meritocracy to the company structure. Companies must also actively work towards attracting the best talent, then make sure they are engaged and always developing to reduce the danger of them leaving.

Flexible working can positively impact productivity

Dr Grous also points towards flexible working practices as a means of both improving productivity and staff morale. Those companies which have adopted such practices have enjoyed both.

In Vodafone research from 2015, covering 8,000 firms in 10 countries which practised flexible working, 61% said profits increased and 83% reported an improvement in productivity.

Employees also say that flexible working made them more productive (78%); work longer (85% – often because it also means they have no commute) and attain a better work/life balance (95%). Absenteeism was also reduced and retention was improved.

Impact of technology

The third lever is modern information technology, introduced wherever it is aligned with the business’s goals. This might take the form of new production technology, but it might be considerably simpler. Dr Grous points to mobile broadband, connectivity and collaborative applications as “the most disruptive” new technologies, allowing staff to remain connected, to grasp new opportunities and continue to contribute when they’re away from the workplace.

The findings of the report highlight the importance of having the right people and the right structures to perform effectively if organisations are to make faster gains. It also stresses the need for business leaders to review current practices and assess where there is an opportunity to improve, and that this should be done on a regular basis. 

Is your business ready for anything?

UK businesses will face opportunity and uncertainty over the coming years. With the need to support the wellbeing and productivity of the workforce, the HR community is central to ensuring the UK is ‘ready for anything.’  

So what steps can your organisation take to improve and boost its performance? A good first step is to step back and do some thinking about how your organisation works (or doesn’t). Online tools can also help to benchmark your firm against others that are integrating technology to support their people, processes and workspaces.