The UK has seen an unprecedented stall in productivity growth in recent years. Productivity – a measure of economic output per worker or hour worked – is only just higher than it was in 2007. Had productivity continued growing at pre-crash levels, it would now be 15% higher than it is today.
The stall in productivity should be a real cause for concern.
It has led to a growing gap between the UK and other countries in terms of productivity; the average worker in France and Germany now produces more in four days than the average UK worker does in five.
We’re falling behind in what the Prime Minister has called ‘the global race’. Productivity matters for living standards. Strong and sustained growth in wages requires strong and sustained growth in productivity.
"Squeeze on pay."
The stall in productivity has coincided with an squeeze on pay, with the average worker earning less in real terms today than they did in 2007.
It matters to for employers. In the private sector, boosting productivity is essential to maintaining competitiveness and boosting performance.
In the public sector, boosting productivity will be vital if we are to mitigate the worst impacts of austerity. Yet nobody seems to quite understand why productivity has stalled for so long, leading some to dub it the ‘productivity puzzle’.
Can we solve the 'productivity puzzle?'
In a report released last week by the Involvement and Participation Association (IPA), we argue that effective employee involvement at work is essential to solving the productivity puzzle. With contributions from CIPD, TUC, Acas, EEF, UKCES, employers, academics and others, the report demonstrates the extensive evidence linking employee involvement to productivity.
This includes large nationwide and international surveys, behavioural experiments, academic studies, and evidence from employers themselves; all demonstrate that when employees have a voice in decisions over their job and the wider organisation, productivity is higher.
While the findings are instructive, in a way they are also unsurprising.
It is the employees on the front line of an organisation who understand its processes and customers, its products and services. Employees can be an immense source of innovation and ideas that can improve how an organisation operates and drive up productivity. Sadly, this source is all-too often under-used.
There’s also a link to employee engagement; when employees are given a say, they are more engaged and more motivated to contribute and drive performance.
Why does the UK score poorly on employee involvement?
It is therefore a worry that the UK tends to score relatively poorly on employee involvement. As Peter Cheese of CIPD argues shows in his contribution, UK employers are less likely to demonstrate the High Performance Working or High Involvement Management techniques that promote voice and involvement at work.
This is about welcoming, encouraging and valuing employee concerns, views and suggestions.
The decline in collective bargaining has left employee voice too weak in too many workplaces, and given our traditionally liberal approach to employment legislation, there is very little by way of statutory rights for voice at work.
It is clear that employers who involve and engage their staff, who give them a say over both how they do their day job and over wider organisational decision-making tend to be more productive and more successful.
Despite the national picture, many employers in the UK are well aware of these links and they involve their staff effectively at work. Take the resurgent and now world-beating UK automotive industry; it is characterised by high levels of employee involvement in continuous improvement and high levels of union membership and partnership working.
It is exactly the sort of high skill, high involvement, high productivity and high pay industry that we need to compete in the global race.
What can we do to solve the UK 'involvement issue?'
So, if involvement is a missing piece in the productivity puzzle, what are we to do about it?
On an organisational level, senior managers should really think about how they are involving their employees, giving them a say in decision-making, and allowing them identify problems and innovations.
In the private sector, boosting productivity is essential to maintaining competitiveness and boosting performance.
This is in part about structures and processes. Organisations need to ensure that they have a variety of channels for employee voice in place, whether that be staff forums; regular team meetings and wider organisational meetings; effective staff surveys; or partnership working with trade unions.
They need also to ensure that managers and indeed employee representatives are equipped, trained and encouraged to engage with employees and support involvement, consultation and voice.
Employers also need to ensure that the culture is right.
This is about welcoming, encouraging and valuing employee concerns, views and suggestions.
It’s about acting on them when they are expressed and feeding back to staff. It’s about giving staff a genuine voice in decision-making, rather than half-hearted consultation when the decision has already been made.
There appears to be some way to go here – just one employee in three says that their managers are good at allowing them to influence decision-making.
On an industry level, we need to help the rest learn from the best. As Aoife Ni Luanaigh of UKCES argues in her contribution to the report, there needs to be ‘business-led initiatives that support the scaling up of good practice across business communities [in order to] drive sustained change and improvement in UK working and management practices.’
Engage for Success has been successful in promoting the importance of employee engagement and indeed employee voice – identified by MacLeod and Clarke in their original report as one of the enablers of engagement.
One employee in three says that their managers are good at allowing them to influence decision-making.
On a national level, the Government needs to recognise the importance of employee involvement for productivity.
Last year they released ‘Fixing the foundations’, their plan to boost productivity and create a more prosperous nation. It is welcome that after many years of stalled productivity growth, the subject is finally receiving much-deserved attention.
However, there is very little on the workplace, on employee involvement, or indeed on employees at all in the plan.
Any attempt to tackle the productivity puzzle – by employers and by the government – must recognise the importance of employee involvement and voice at work. We hope that this report can help contribute to taking this debate forwards.
