Moving Forward

Fairly recently, the UK government issued a draft Industrial Strategy.  Any discussion on this seems to have been drowned out by the Brexit rhetoric.  Yet it is too important to ignore. UK productivity is low - wages are low - living standards are low. We need a kick up the backside, to shock us into action ... or we need a sensible, long-term strategy.

Instead what we get is Brexit posturing - and all the media attention is fixed on that (and Trump, of course).

When I advise companies, I tell them to beware of concentrating on the urgent at the risk of ignoring the important.  Well, productivity improvement is both urgent and important - it is the only way out of the low wage, low living standards cycle.

Put the industrial strategy back on the table, please.

Rise of the robots - fall in productivity

week we talked about productivity levels - and the conundrum about unemployment and wage levels.

I suggested, as I have done several times lately, that we might need to reconsider how we measure productivity - since the measure used to compare nations uses labour productivity.

But the growth of robots and other automation devices has distorted this figure.  The cost of the robots is not part of labour cost - and their hours are not part of labour hours.

So, nations that have automated the most lose in the productivity figures.  This does not seem right.
This investment goes unrewarded and we are no longer comparing like with like.

Another productivity puzzle

Most of the old economic certainties have gone.

For many years, the 'rule' was the as unemployment levels dropped, wages would rise (to entice workers away from others to your organisation).  Since the great 2008 financial crisis, this has not proved true.  Unemployment has dropped to the point where the UK is close to full employment - but wages have not risen correspondingly (though they have risen).

This position is mirrored throughout the developed world.

The experts don't seem to know why this is so or whether this is a temporary phenomenon.

We seem to be in a position where all we can do is 'watch this space', 'wait and see'.

Or, as I have been suggesting in this blog lately, do  we need to change the way in which we measure productivity - to reflect the changed nature of industry.

The power of benchmarking

The UK government recently established the Productivity Leadership Group (PLG)  to try and boost the nation's productivity.

The PLG says that if all except our most competitive businesses were able to improve their productivity to match the companies ranked 10 per cent above them, an additional £130bn Gross Value Added (GVA) would be unlocked every year – certainly a boost to business confidence and national productivity.

The power of benchmarking of this kind is that when organisations see that others (and especially others in the same sector) are already achieving such results, it shows the 'art of the possible'. "If they can do it, we can too."

This is why we always suggest that governments should carry out sector benchmarking - and show organisations what is achievable - preferably against a number of productivity variables.... so that any one organisation might find its performs well against some of these variables but poorly against others.  If it could raise performance to be among the top performers against all variables, it gains a significant productivity increase.