When George Osborne gives his first Budget address of the new parliament on 8 July, we will discover more on his take when it comes to the issue of productivity – with a new plan to be unveiled.
In a speech on 20 May, Osborne declared: “Frankly nobody knows the whole answer. But what I do know is that I’d much rather have the productivity challenge than the challenge of mass unemployment.”
While he may not have the whole answer, one at least part-complete is urgently required. The most recent figures from the Office for National Statistics (ONS) suggests that the output per hour from UK workers in 2013 fell to 17 percentage points below the average of other “leading” industrialised countries.
There are a number of policy-led changes that can be integrated to help arrest the slide. In a Real Business feature dating back to March 2015, we suggested the likes of: incentivising business investment and making fast broadband more accessible.
But, away from Westminster, what can be done by the captains of industry at the helm of British SMEs? What macro-level tactics can be employed to make small, but vital, contributions. From handling order dockets at car valeting business Motorclean to making management more connected at student rental platform StuRents, we’ve uncovered some.
For Strahan Wilson, FD at sandwich and soup chain EAT, productivity is a key driver of both profitability and customer satisfaction. Ensuring the business gets the right people working at the right time to give customers the “best possible experience” is central, he believes, to who the company is and what it does to succeed.
“We’ve long known that our best managers intuitively realise how best to deploy their team to deliver great customer service – but that new managers often struggle,” he explained. “We wanted to discover if it was possible to find a solution to help those new managers become better.”
Having done some research, Wilson and EAT arrived at two key areas needing to be addressed to solve the productivity issue – forecasting sales more accurately and helping managers schedule the right people at the right time to meet demand.
In both cases, it was determined that software services would be the right way to go. Utilising a sales forecasting service spun out of the work done at CERN to discover the Higgs Boson, Wilson and the team are now able to better manage a business that has many one-day shelf life products.
“Technology enables you to capture best practice and use it to raise the average standard of the business. Improvements are like standing on the shoulder of giants,” he explained. “Each time best practice is rolled out the best managers will identify new ways to become more efficient, which we will capture and standardise for the benefit of all.”
Looking at the wider trends associated with productivity, almost a third of UK SME/SoHo owners believe paperwork and admin are key challenges. With employers spending 25 minutes every day searching for documents, digitising paper documents seems to be a key early win.
Mark Robinson, market business developer at Canon, believes a good start to increasing the productivity of a business is to look at its engine room, “embodied by every single employee”.
“We can’t deny having fallen into a do-more-with-less habit, which puts pressure on staff to do more work with the same amount of time and with less resources and support,” he commented. “This is of course reflective of standard cost-cutting mergers, but also due to tougher competition in the small business market. In the digital age, your competitors – which could be two doors or continents away – will eat you for lunch if you don’t move quickly and efficiently.”
Canon’s research of British businesses, which found the bottleneck associated with administrative tasks, shows how technology can allow owners to spend more time on business development, Robinson believes. The technology business has created a range of products and services that cater to business leaders in the SME and SoHo space – showing what can be done to ramp up productivity when margins are slim.
If organisations implement a solid information management strategy that includes storing mission-critical documents in the cloud or a central service rather than a dusty file cabinet, Robinson believes, staff will be able to access the information they need more quickly.
A business Inspired by technology as a way to increase productivity is StuRents, a student-exclusive property platform. Now listing 50,000 student properties, the company has an all-too-common issue involving a C-level management member who is located in a different city to the firm’s headquarters.
Needing to be in direct contact with him at all times of the day, the business has installed a heads-up display at the end of the office’s main desk with a real-time video feed to CTO Mike Lehan.
“Having the two teams work alongside each other over video allows live collaboration at a distance, whilst allowing the company to tap into a more diverse range of technical talent across both bustling British business hubs,” Lehan explained.
Not content with simply using video communication technology, StuRents is considering taking inspiration from a company it met in the US by investing in a robot which would allow Lehan to move around the office – having conversations as and when he needs to through video technology.
EAT’s Wilson sees different sectors as having better productivity than others. Viewing it as “unfortunate” that sectors that can deliver high profits with limited labour investment, such as banking, have been making limited contributions to growth, Wilson points to industries like the one EAT identifies with as where big improvements can be made.
“This has been very good for employment as they are highly labour intensive sectors, but that inevitably has come at the expense of overall productivity as we simply can’t generate the same profit per head as banking and other service sectors.”
Another more unusual sector which is doing its bit to contribute on the productivity front is car dealership valeting business Motorclean, which has doubled its turnover in the last four years.
Steve McBrierty, CEO at Motorclean, explained that with 75 cars a day at an average-sized dealership needing attention, the industry standard use of paper dockets to allocate jobs and record their completion is problematic for productivity from both sides of the fence.
“It was not uncommon for dockets to be mislaid which meant cars were mistakenly valeted again or not valeted at all. Such duplications or omissions costed dealerships and us money respectively and had the potential to disappoint customers,” he said.
The solution to the problem was a workflow management software service. Rather than simply buying off the shelf, Motorclean decided to bring in a software expert to build in-house. Even though Motorclean Management System (MMS) is free to use for dealerships, McBrierty “immediately” saw a competitive advantage being found.
“In our particular case we have found that deploying an inherently adaptable piece of technology has enabled us to take it in new directions to improve how we and clients, or prospective clients, work,” he commented.
Solving the productivity, which McBrierty sees as very complex and not going to be done with a quick fix, will involve a joined-up effort between the government, businesses and consumers.
The government, led by prime minister David Cameron and Osborne’s soon to be revealed productivity plan, must provide tax breaks for investment in productivity, ensure super-fast broadband reaches very corner of the UK and help foster a future generation of highly-skilled and tech-savvy youngsters.
Businesses must not be afraid to make lay-offs in accordance with productivity initiatives, change decade-old administrative processes or build in incentive targets for staff. Technology has already provided the tools for productivity, it simply needs the right guardians for execution.
The UK already has an exceptionally talent entrepreneurial culture and, as we’ve found out, many are building a productive and streamlined business operation to turn great ideas into big profit.
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