There’s something satisfying about the recovery from a recession. Not simply in the fact that the recession is over; but also seeing each milestone reached as a cause for celebration. Whether it be a return to pre-recession levels or even exceeding ‘where we would have been,’ as the ticks on the recovery wall chart get ever more numerous the satisfaction levels grow.
However, amidst all of the positivity one measure has remained stubbornly low; wilfully refusing to show any sign of improvement. So much so that the productivity puzzle has been the subject of numerous Government and Bank of England investigations and commentaries. For example, at the end of 2014 MPC external member Martin Weale gave a wide ranging speech in which he explored a number of potential causes of low productivity including labour hoarding, capital allocation, investment and educational attainment. Despite all these factors, his conclusion was that there was still no clear explanation as to why productivity remained low.
More worryingly still, in the first half of 2017 at a time in which nearly all the recovery boxes have been ticked, productivity was seen to fall. Now however there may be light at the end of the tunnel. The ONS labour productivity bulletin* for the second half of 2017 has revealed an increase in productivity levels. Admittedly the picture is somewhat mixed. Whilst productivity per hour is estimated to have grown by 0.7% between Q3 and Q4, output per worker and per job rose by just 0.1% in the same period. According to the ONS this discrepancy ‘reflects a fall in average hours per job and per worker.’
Key to productivity success
Nevertheless, if the UK is to deliver the sort of levels of strong growth which will not only finally close the recession box but also make a success out of Brexit then we cannot afford to get carried away by small improvements in productivity. And the key to success rests firmly in the hands of business leaders. They are the people who can work to empower and engage employees in delivering the strategy. They are the people who can ensure that their employees have the personal skills and tools which will enable them to make most of their own individual talents. And they are the people who can deliver not simply a clear vision but also a defined pathway to ongoing success.
Now I know that when it comes to productivity there is no one simple straightforward answer. If there were, then the puzzle wouldn’t have challenged the minds of leading economists across the globe over a number of years. However, when it comes to productivity then as leaders you won’t go far wrong by helping your people to achieve. When the culture and the training and engagement levels are on the right pathway then you have employees who are working for the business rather than in the business. Only then can you start to look to tick all the boxes that lead to ongoing success.
*https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/octobertodecember2017#
