Make sure you dont overlook your best asset
When it comes to improving the bottom line, it is becoming increasingly commonplace for businesses to focus on cutting costs. Many hours can be spent scrutinising overheads in search of savings and pinching pennies wherever possible. However, what many businesses tend to overlook is that growth can be unlocked by simply maximising their most valuable asset, namely, their people.
So, how can businesses reap the benefits of people management? Our study found six key factors had proven links to higher performance through improved efficiency:
The six principles
1. Having strong and inspiring leaders
Bad leadership alone costs UK businesses £39 billion a year, so making sure you have an inspirational management team is paramount. As role models, leaders that demonstrate a passion for their organisation will empower and encourage others to do the same. Leading by example is the most effective way to get the best out of your employees. A strong leader can motivate people to achieve results above and beyond what is expected of them, ultimately driving business performance.
2. Having a strong set of values
Mission statements are a common way for a business to define its values. However, the true worth of values exists only if they are lived within your organisation day-to-day. Employees within such organisations have an increased sense of pride in their place of work which directly impacts on their productivity. According to our research, small businesses in the UK have the most to gain from clearly communicating values to their employees, with the potential to increase efficiency by 8%.
3. Recognising and rewarding performance
Creating a culture of appreciation motivates people to work at their best. Rewards may or may not be financial and recognition can either be formal or informal. Whatever method you choose, acknowledging good work builds confidence and performance – it’s a virtuous circle that contributes to growth and productivity. Again, this offers the biggest opportunity for small businesses across the UK that stand to gain a huge £38bn in efficiency gains from adopting this management approach – over double the potential of large firms.
4. Structuring work
It’s important that roles are designed in a way that create interesting work for employees but also help them develop the skills and capabilities needed for progression. Implementing a structured approach encourages employees to work towards organisational objectives more effectively. We found the benefits of this to be particularly significant within certain industries. Health and Social Care, for example, saw more efficiency gains than any other sector from adopting this approach. Organisations within this sector could benefit from a 15% increase in productivity by improving how work is structured for employees.
5. Delivering continuous improvement
Encouraging employees to come up with new ideas and approaches is a great way to ensure continuous improvement. Fresh ideas can be generated at every level but it’s important that these are supported by management. Our research found that organisations that nurture innovation benefit from enhanced employee engagement and reduced rates of staff turnover.
6. Creating sustainable success
Truly sustainable organisations are not only responsive to change, they embrace it. Successful businesses maintain a focus on the future and value mistakes and an opportunity for learning and improvement. This optimism serves to promote a positive working environment where employees feel committed to the future success of their organisation.
Our research indicates that UK businesses are underperforming by an average of 8% due to poor people management, a financial opportunity that would be foolish to ignore. As the study demonstrates, if an organisation fully realises the potential of its employees, the payback is significant. Not only will investing in your people boost your bottom line, it will make for a more dedicated workforce, fundamental to maintaining a strong and sustainable business.