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Boosting Business Productivity

Productivity is the backbone of a thriving economy and directly impacts living standards and wages. However, the UK has faced a productivity slump since the financial crash, lagging behind countries like France, Germany, and the US. Why is this happening, and how can businesses turn it around?

The Productivity Puzzle

Several factors have been identified as culprits for the UK's productivity slowdown:

  • Measurement inaccuracies.

  • Industry-specific slowdowns.

  • Challenges in adopting new technologies.

  • Insufficient management capabilities.

Interestingly, the last point has garnered significant attention. Andy Haldane, the former chief economist at the Bank of England, pinpointed poor management quality as a key reason for many UK companies' low productivity. The Office for National Statistics (ONS) further supports this, highlighting that effective management practices, especially in people management, have a strong positive correlation with productivity.

The Untapped Potential

There's a golden opportunity for businesses to enhance productivity by elevating people management standards across all sectors. While the government has primarily focused on broader policy measures like infrastructure and skills development, there's a need to zoom in on the micro-level drivers of productivity within individual firms.

Small businesses, often lacking dedicated HR support, require special attention. Assisting these owner-managers in honing their people management skills can unlock significant growth.

Actionable Tips for Employers

  1. Align Business and People Strategies: Ensure your business goals and people strategies are in sync.

  2. Strategic Workforce Planning: Regularly assess business risks and opportunities and determine their implications for recruitment, training, and overall people development.

  3. Leverage Data Analytics: Invest in high-quality human capital data analytics. Use this data to drive insights, underscore the importance of investing in people, and guide managerial decisions.

  4. Champion Diversity and Inclusion: Harness workforce data to enhance diversity. A diverse workforce fosters innovation and caters to a varied customer base.

  5. Empower Line Managers: Equip line managers with the skills to boost employee engagement, well-being, and diversity.

  6. Motivate Your Staff: Implement policies that motivate employees, such as promoting open communication, managing conflicts, ensuring work-life balance, and offering training and career development opportunities.

The key to unlocking the UK's productivity potential lies in effective people management. By focusing on these actionable steps, businesses can pave the way for a brighter, more productive future.


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