The UK economy is growing faster than any advanced nation, but the latest official figures show that productivity is a problem. Output per hour worked is currently two per cent below its pre-crisis level according to the Office of National Statistics, and the fact that labour quality continued rising after the financial crisis – even though the value of the work done per hour declined – is part of what has become to be known as the productivity puzzle.

I’m sure that the reasons for this dip in productivity are complex, with low investment, monopolies on industry and higher employment levels among the less-experienced under-25’s all cited as contributing factors by various analysts. However HR professionals must consider how people management – specifically training and development – impacts national productivity.   

According to new research from Warwick Business School, many small and medium-sized businesses in the UK are being held back by current levels of management and leadership skills. The report, entitled Leadership and Management Skills in SMEs: Measuring Associations with Management Practices and Performance identified a number of reasons the UK SME sector is currently underperforming, most notably a ‘long tail’ of SMEs not employing management best practice.

More worryingly still, is data which shows that the UK is one of only three OECD (Organisation for Economic Co-operation and Development) countries where the skill levels of those aged 16-24 are no better than those who are aged 55-65. Something is certainly not right. The productivity puzzle may be complex, but it would be foolish to assume that the level of investment in training and development had no impact on overall output levels.  

Training has long been identified as one of the key influencers in effective employee engagement and staff retention strategy. According to employee engagement guru David McLeod, engaged employees deliver 50 per cent higher customer loyalty, 50 per cent higher sales, and 27 per cent higher profits – all figures any business owner would find attractive. In spite of this, Gallup’s State of the Global Workplace 2014 report found that only 13% of employees worldwide are engaged at work. However, at a time when work units in the top quartile in employee engagement outperformed bottom-quartile units by 10% on customer ratings, 22% in profitability, and 21% in productivity, engagement levels have never been more critical.

If HR takes responsibility in up-skilling its own teams, the impact on the nation’s output can only be a favourable one. Each generation of employees should build on the skills and experience of their predecessors to drive innovation, growth and profitability. Together we can solve the productivity puzzle. Could you do more to develop your people?