The New Year is a time for planning, and many business leaders will also be relishing the opportunity of a fresh start after a tumultuous 2016. And boosting productivity should be part of that plan.
The growth of populism, the vote to leave the EU, not to mention rapidly changing economic conditions, has affected business from all angles. Rapid economic and political change created fear among business leaders and, as a result, paralysis of thinking.
Against this backdrop, it is no surprise that productivity has not bounced back. In fact, the latest ONS data shows productivity remains at the level seen before the economic downturn of 2008.
The importance of boosting productivity cannot be overstated, and it has a huge prize. If business raised productivity by one per cent every year, within a decade it would add £240bn to the size of the economy – equivalent to £9,000 per household in Britain.
The government is clear on the role productivity plays in a successful economy, and is supporting the “Open for Business” review by Charlie Mayfield, CEO of John Lewis, and the Productivity Leadership Group.
Mayfield’s proposal to improve management skills across Britain asks “How Good Is Your Business… Really?” He makes the point that the term “productivity” holds connotations of job losses and cost reductions for many.
To engage people, it needs to be positive and aspirational, speaking to the entrepreneurial and competitive spirit of businesspeople.
Strategy does not change businesses by itself; people do, by being effective and productive when led well.
Worryingly only one in five businesses invest in management skills, and this needs to change to create world class organisations.
Chancellor Philip Hammond has moved to address this with £13m funding in the Autumn Statement to boost management and leadership skills, which will in turn improve productivity.
Identifying and making the necessary behavioural changes, however, can be daunting. It takes disciplined leadership to critically analyse and openly learn to change business.
Productivity is often constrained by micromanagement and the lack of role models. Asking simple but tough questions to challenge failures in leadership in an open way creates trust and the stronger the trust the stronger the challenge. Only with challenge can change be made effectively.
As Mayfield says, these changes are about understanding what good business practice looks like and then adjusting one thing at a time to get the movement underway.
By having a strong network, and continually developing, businesses put themselves in good stead for strong multi-faceted support.
Creating a movement, a phrase commonly used currently, will turn around some of the poor performance figures and shift away from 43 per cent of managers rating their own line manager as ineffective.
Success can be measured, although few leaders have a clear view of the measures of their organisation beyond financial KPIs. As we embark on a new year, it is vital for business leaders to have a clear ambition and goal for their organisation.
This leads the way for change and keeps both the external audience and client at the forefront of everything.
There are three practical steps for boosting productivity that can be adopted by your business on the next page.