The Great Productivity Conundrum

November 12, 2018

What’s keeping UK business leaders awake at night? Productivity. Or more accurately, a lack of productivity. The UK has been facing a productivity crisis since the 2008 global financial crash and there are no signs of the problem going away.

Figures released by the Office for National Statistics show that productivity (classed as output per hour worked) grew by 1.4% in April to June 2018, compared to the same quarter the previous year. This compares to the pre-2008 long term trend of productivity growth of nearly 2% per year.

Strong productivity levels lead to economic growth, which is why business leaders are so concerned about the ongoing slump. But business leaders aren’t the only ones losing sleep over this problem – L&D leaders are also deeply concerned about the productivity levels of the UK workforce.

As part of our recent independent research across L&D and wider business leadership, we asked specifically about the productivity problem. What we discovered is that for many, the issue is making a more frequent appearance across business-wide discussion than ever before.

There are many factors that can cause a downturn in productivity and many factors that can then enable productivity levels to recover. The 2008 financial meltdown may have precipitated the downturn, but why was the UK hit so hard? And why has the slump continued for so long when other Western countries have shown stronger signs of recovery?

A lack of key skills is likely to be a big contributory factor in the UK’s continued productivity problems. Organisations need to have people with the right skills in order to grow and innovate and succeed in a very competitive business landscape. Yet skills shortages are an ever-present concern in the rapidly-shifting business landscape. The financial services organisation PricewaterhouseCoopers’ annual survey of almost 1,300 CEOs said the same thing. Over a third (38%) of the CEOs surveyed said they were extremely concerned about the availability of key skills, particularly given the speed of digital transformation and the continued emergence of technologies such as AI.

Let’s think about skills for a minute. Skills date very quickly now and new skills are needed all the time, so L&D needs to be constantly horizon scanning so it knows what skills are hot and what skills will be needed in the future. L&D and employees need to be prepared to let go of yesterday’s skills, focusing their attention on skills regeneration so that they have the skills that are required today and tomorrow. The onus is on L&D to upskill employees more quickly than ever before and to engender the right mindset and an agile organisational culture.

So the question is: does this mean L&D has a pivotal role to play in driving up the UK’s productivity levels?

Our research found that just 5% of business managers and L&D professionals think the L&D department currently has ultimate responsibility for productivity in their organisation. Instead, a quarter of business managers say IT directors own productivity, with many of them thinking organisations need to take a technology-driven approach to increase output. Only 10% of L&D professionals are in agreement. Most L&D professionals think the CEO and senior leadership team have ultimate responsibility for productivity and say a top-down cultural shift is required in order to boost productivity – but how far does this ring true?

What is interesting about these findings and the perceptions expressed is that looking forward, both line managers and L&D professionals appear to think that L&D will play an increasingly important role in organisational productivity.

Can we break productivity down to a skills agenda? Is our understanding of the productivity problem aligned to current organisational challenges? And do L&D professionals feel ready to take on a more leading role in solving this problem? We will endeavor to explore these questions and more at our upcoming Breakfast Seminar: L&D – Agents of Productivity. For first access to the full industry report, and keynote from British Airways CLO, Nigel Jeremy, join us for breakfast on Wednesday 28th November at The Ivy, Covent Garden. Reserve your space here.

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