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Unlock the power of people to boost productivity

2nd July 2019

New research from CBI shows that the UK could add £110 billion to the UK economy by improving people management practices within British firms.

Supported by McKinsey & Company the new report and toolkit entitled, Great Job: Solving the productivity puzzle through the power of people, reveals that UK companies know that effectively leading, engaging and developing their staff matters. It highlights the practical actions businesses can take to collectively improve further.

Over the last decade, labour productivity growth is lower than at any time in the 20th Century. The reasons for this are complex and deep-seated, but one factor is that UK business has not kept pace with international peers on people management. Indeed, the CBI report finds that UK businesses perform at or below the average for other companies in the EMEA region (Europe, Middle East and Africa) on nearly 80% of good people practice indicators.

Unlocking the power of its people could give the UK a much-needed productivity boost – and the change needed is well within reach. The CBI’s research shows that making even small improvements can yield sizeable productivity increases. Businesses that improve their management practices from the lowest levels to the UK median can increase their productivity by 19%. Even more importantly, better people practices would lead to better jobs across the UK.

CBI Director-General, Carolyn Fairbairn, said: “It’s no secret that UK productivity has been stubbornly flat since the financial crisis. If we want to breathe new life into the economy, then investing time, effort and resource in people is a great opportunity for business.

“Many are already doing this successfully, but it’s clear that firms should continue to up the game. The size of the prize from improving the management practices could be a massive £110 billion injected into our economy.”

Great Job highlights the hurdles that can hold back a firm’s progress. These include a lack of awareness of what good looks like, difficulties in getting all parts of the business to pull in the same direction, and leaders underestimating the importance of their words and actions.

The key habits which can help firms improve their people management practices include:

• Setting people management targets and placing them on a par with company commercial targets.

• Making the Board accountable for these targets and communicating openly with employees and the public about their firm’s performance.

• Linking a company’s reward strategy for line managers with their performance on people management.

Carolyn continued: “Many firms understand the value of good people practices but struggle to put them into practice every day. Sometimes there is a group of senior managers who think they are managing staff better than they are. Leaders can underestimate the value of establishing good people practices as a priority right across their organisations.

“Improving productivity is not about people working harder or longer. It’s about ingraining the kind of management practices that raise performance across the business. Putting people management targets on an equal footing with commercial targets, for example, is a powerful means of concentrating minds.

“Technology advances are creating new ways to improve business performance. As vital as new tech and R&D are to improving productivity, firms should not lose sight of the human dimension. The reality is that many UK businesses have the chance to enhance their working and management practices to enable their people to perform at their very best.”

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