The pre-Budget deluge of advice for the Chancellor continues.

According to productivity improvement consultancy Proudfoot Consulting, economic growth will rely on unlocking hidden productivity reserves and an end to unambitious improvement targets. Their research points to the crucial importance of basic employee efficiency. The firm says its recent study on the subject provides strong evidence that firms have hidden productivity reserves of up to thirty percent and that British chief executives significantly underestimate the extent by which matters could be improved.

Proudfoot Consulting’s UK executive vice president Edward Cory says: “In his pre-budget speech, chancellor Gordon Brown said that the challenge for Britain is to accelerate the productivity improvements that will increase output, jobs and wealth, and that we must achieve faster productivity growth than our main economic rivals of France, Germany and the US. Our study has shown that British productivity is not only lower than these nations but also that many British firms have up to thirty percent of untapped productivity reserves. The big challenge for company management and the government is how to unlock those reserves so that British firms can be more ambitious in setting their productivity improvement targets. Too often, we are finding that responsibility for this issue is delegated below boardroom level where it belongs. What’s needed is a strong CEO focus on a ‘back-to-basics’ approach to efficiency. Without this, the government’s wider economic goals will be placed in jeopardy.”

Proudfoot Consulting identified five basic areas that, for minimal investment, will achieve substantial increases in productivity:
1. Planning (% Loss 10 – 40)
Emphasis needs to be on pre-empting problems downstream. Many companies reviewed spend a disproportionate amount of time on administration and manual tasks rather than managerial and problem solving. The balance needs to shift.

2. Management information systems (% Loss 3 – 27)
Management needs to ensure the effective use of information systems. The priority for productivity improvement is the setting of goals. Goals will only be realised by establishing a proper management operating system, ensuring the effective use of resources and the proper management and supervision of staff

3. Processes (% Loss 5 – 25)
All processes need to be reviewed – even the most basic level – to identify areas where productivity might be improved. Having identified the optimal level of productivity, existing process deficiencies need to be found and eliminated.

4. Training and education (% Loss 0 – 10)
Training and education needs to take place across the board on the practical implementation of any new processes as well as training on the implementation of change. All too often companies provide one-off training sessions believing this is sufficient. More follow up or practical hands-on training on the ground is often necessary.

5. Communication (% Loss 0 – 4 )
Effective communication is key and its absence affects productivity. Companies frequently implement new plans but are not always effective at communicating them. Internal communication needs to be reviewed so that everyone is clear what is expected of them.

This statement follows on from Proudfoot’s research in November, which suggested that poor productivity costs UK businesses the equivalent of 117 working days of lost time annually. This means over half, 52 percent, of work time, is spent unproductively in the UK, compared to an average of 43 percent amongst the countries surveyed. Worryingly, a complementary survey found that CEOs don’t seem to realise the potential for productivity growth. They believe the maximum potential for productivity increase is only 10 percent.

UK specific findings
– Over half, 52 percent, of work time is spent unproductively in the UK, a total of 117 working days lost *
– The single biggest reason for lost productivity in the UK is inadequate management, including planning and supervision (62 percent)
– Poor working morale accounts for 17 percent of lost productivity in the UK, higher than any other country in the study
– 10 percent of poor productivity is attributable to inappropriately qualified staff
– In the areas of communication (4 percent) and IT (7 percent), the UK is more effective than any of its counterparts across the globe
* given that the average threshold for any company is 225 working days