If employers managed their people better, they could solve productivity problems and add £110bn to Britain’s economy, a new report has found.
The UK’s productivity growth lags 16% behind G7 countries.
This long-standing puzzle could be solved through better people management, a new CBI report claims.
Produced with support from McKinsey & Co, it explores the business, economic and reputational benefits of more firms using improved people practices.
It shows that if firms were to upgrade these, a huge £110bn could be added to the UK economy.
People raise the Barr
83% of firms say that not having access to the right skills is the primary threat to the competitiveness of Britain’s labour market.
But, if businesses developed their people to the right skill level and were able to retain them, this could mean they aren’t short of crucial skills.
“We have so many people who have progressed here from entry positions to production managers. There is a great career path for those here that want it and are willing to work hard,” says Trevor Newman, factory manager at AG Barr’s Milton Keynes site.
AG Barr is a Scottish soft drinks manufacturer that makes leading brands including IRN-BRU, Rubicon and the Barr family.
“All of our operators have monthly one to ones and this has happened since the factory opened six years ago. It has value added to it for our workforce, because people get bonuses against their performance,” Newman tells TM.
“People have driven growth here as they have always been listened to, there is a strong focus on relationships. If you look here no one has an office, it is all open plan. That breathes a good culture, with the vision and values of the business clear.”
The workforce sticks at BDK
Another example of a positive and progressive skills environment is at BDK. “A lot of the staff have been with the company for many years. We engage and invest in them,” Nick Falconer, managing director at BDK says to The Manufacturer.
The firm is the UK’s largest adhesive parts manufacturer and supplies to a broad range of industries including aerospace, automotive, space and med-tech.
“People are very important. With our industry, it takes time and money to bring people up to the level of knowledge and experience they need to work efficiently.
“But once they are trained, they stay and feel valued and they are valuable to us. The more complex projects we take on, the more important it is to have an experienced team that can handle numerous projects,” he says.
Given the economic prize at stake, business and the government should work together to speed up productivity progress.
However, the report also says that UK firms tend to overestimate how well they lead, engage and develop their people. This is often as they do not have an effective way to measure performance.
People now actively choose to work for companies where they can make a difference and have opportunities to develop. Businesses need to create the right incentives to enable more staff to share the success of their company.
A business’ most important source of value is its people because they are the ones that will drive productivity, generate ideas and push companies forward. Great people practices make business sense.