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Productivity is the Key to Success

November 24, 2016

 

The objective was clear from the Chancellor’s Autumn Statement that productivity is the key to success as we enter a prolonged spell of austerity. It was suggested over the next five years that we must boost skills and productivity by 30 per cent.

 

Based on a recent National Audit Office report ‘Delivering the value through apprenticeship reform’, it also estimates that Germany, France and the USA are each about a third more productive than the UK”.

 

With the news that the UK lags behind in productivity and that we need to boost productivity by 30 per cent, it would be easy to shake our heads with a cry of “impossible!”

 

Given that this response seems as unproductive as our economy, let’s look for a better one.

 

Ann Francke, CEO at the Chartered Management Institute (CMI) offered one solution. CMI had concluded from their own productivity research that one major barrier to increasing productivity is poor management practice and poorly trained leadership. A recent report from IIP calculated that poor people management is costing the UK £84 billion a year and bad management is the number one cause of business failure and the biggest preventer of SME growth.

 

Ann Francke continued that all was not lost. “The good news is that this can be addressed. We’ve seen that organisations that introduce effective leadership and management behaviours increase their productivity by 32%.”

 

She further praised the government’s commitment to higher-level apprenticeships and the levy fund that will help businesses invest in these apprenticeships, which include Management qualifications up to degree level.

 

Ann Francke concluded, however, that it would not be enough. “We need 2 million more new managers by 2024 to compete in the post-Brext business world, which means that, as well as addressing better practices in our businesses now, we need to embed leaderships skills into our education system now for the next generation too.”

 

Apprenticeships at every level can and will play a vital role in improving productivity but should not be the only focus. Whilst levy paying employers might be tempted to reduce their training budgets and only use their levy monies to fund any up-skilling, that would still leave skills gaps that cannot be levy funded.

 

High quality training and development is still an urgent requirement and it will be down to employers and training providers to work together to plan for up-skilling the existing workforce and clarify career pathways for those entering the logistics industry.

 

Chancellor Philip Hammond vowed to make the country ‘match fit’ after Brexit. However, the announcements from the government are yet to address the need to have a post Brexit plan if it does end up with a ceasing of free movement. If the UK currently lags behind in productivity and our focus should be improving that productivity, we need to prioritise up-skilling the UK workforce and have a clear Industrial Strategy to meet this need over the coming months. 

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