Written by
Changeboard Team

08 Sep 2016

Is ineffective mid-level management affecting UK productivity?

08 Sep 2016 • by Changeboard Team

A new report has revealed that management and leadership practices in the UK are leading to a lack of productivity in the country’s workforce.

A consortium of researchers, led by the Institute for Employment Studies and SQW economic development consultancy found that ‘mid-level’ management in the UK lags behind the US, Germany, Sweden, Canada and Japan. 

While the very best UK organisations are on par with other country’s top performers, as a country we have fewer organisations with good management practices. It is suggested by the report that companies must benchmark their own practices while networking with other higher performing businesses to improve.

Penny Tamkin, director of employer research and consultancy at the Institute for Employment Studies said: “When we looked at the evidence, the striking issue was how can organisations improve if they don’t realise that their manages and leaders are under-performing?
“We would recommend that organisations take a good look at their own practices and how they compare when it comes to the nitty gritty of managing people and processes.”

By simply appraising processes, businesses can improve productivity by assuring their methods are optimised.

Dr Pietro Micheli, associate professor of Organisation Performance at Warwick Business School said: “As all organisations engaged in quality management and ‘lean’ implementations know, the elimination of ‘waste’ in the form of over processing, re-work and unnecessary inventory, for example, can help reduce inputs while increasing outputs – and enhance quality too.” 


What practices can the UK adopt from Germany to improve productivity?

Dr Achim Krausert, assistant professor at Warwick Business School:

Productivity differences between the UK and Germany have been argued to be due to differences in investments in automation.  German firms have also been investing heavily in lean production techniques (e.g., just-in-time inventory control procedures, TQM, EFQM, Six Sigma, 5S, etc.).  Such techniques seek to reduce waste of materials, time and money, so that a given level of production output can be achieved by a smaller number of (more flexible, more skilled) employees.  

Lean production techniques need to be supported by certain human resource management practices, including job rotation, investments in training, team-based forms of work organization, information sharing and financial rewards linked to team (rather than individual) performance.  Because employee fluctuation is particularly disruptive in such systems, they also need to be supported by retention-enhancing HRM practices (e.g., grievance procedures, socialization practices). 

It is sometimes argued that this approach is supported by the German institutional system, with its heavily regulated apprenticeships, relatively patient capital and industrial relations system that minimizes conflict at the workplace (Germany has one of the lowest strike rates in Europe). 

The effectiveness of investments in automation, lean production and said HRM practices varies across industries and industry segments.  There is some debate about this in the research literature.  However, it is generally believed that the effects tend to be largest in manufacturing industries where products are more differentiated and where product quality is more critical.  

By contrast, given low product differentiation and given competition is mainly about costs, traditional “batch work” methods are deemed more effective.