Equalling U.S. productivity levels could add £13,000 to the
average UK household, according to new Grant Thornton research
Equalling current US productivity
levels would result in UK GDP improvements large enough to offer an
extra £13,000 per annum to the average UK household*, according to
new research released today in Grant Thornton's UK Workplace
Productivity Report.
But despite the potential for such
a significant economic impact, the research also found that while
almost all medium and large-sized businesses will be using some
measure to gauge workplace productivity by the end of 2008,
including a sizeable proportion introducing measures this year for
the first time, most are still failing to capture meaningful
information or use it to drive improvements.
The research canvassed the decision
makers behind 200 medium and large-sized UK businesses, and found
two thirds (66%) of companies reported using workplace productivity
measurement to improve performance, with another quarter (26%)
intending to introduce these measures for the first time in the
coming year.
Alysoun Stewart, Partner and Head
of Entrepreneurial Advisory at Grant Thornton, said that although
the research indicated businesses are striving to find appropriate
means to measure productivity, most suffer from a lack of
sophistication in the tools used, particularly a lack of clarity
about the key performance indicators (KPIs) that will drive
growth.
"Current economic conditions have
become a major catalyst for productivity improvement, both in terms
of strategic capital investment and in improving staff efficiency.
We need to see businesses embracing practical, organisation-wide
measurement and reward mechanisms that will create real
productivity improvements, which in turn will offer a genuine boost
to the UK economy."
Of those companies measuring
employee productivity within their businesses, the majority (65%)
were now measuring all staff, although a fifth (21%) still avoided
measuring the efficiency of their management team. A combination of
measures were very often in place, including 51% monitoring output
per employee, while 53% examined team output, 37% used management
reviews and 27% used peer reviews.
The use of performance related pay
is also a missed opportunity. While 96% of businesses had some form
of performance pay initiative, just 10% offered it with each pay
check, with the largest group (31%) still offering only an annual
bonus, leaving many workers feeling a disconnect between their
performance and their reward. Just 7% of businesses were currently
aligning their business to a specific set of targets.
There are also very few companies
willing to base more than a fraction of total pay on performance,
with more than three quarters (76%) of businesses offering 15% of
pay or less based on performance.
"It is a fundamental principle that
reward must be clearly linked with productivity - every employee
needs to understand what is expected of them and how they will be
rewarded for achievement," Stewart continued. "The most powerful
tool available to any management team is the proper use of
performance measurement linked to reward structures that drives
behaviour towards improved productivity, delivering growth and
enhancing enterprise value."
The research also looked at the factors inhibiting productivity
and found meeting overload to be number one on the list. In fact
unproductive meetings even figured larger than a lack of technology
and poor research and development as the issue currently having the
greatest impact on productivity improvement.
"The importance of workplace
productivity cannot be overstated. When taking into account the
improvements in average household income that can be derived
through growing productivity, the quest for workplace efficiency
should be the number one goal for UK businesses in 2008," Stewart
concluded.
*The figure was based on (a) that UK GDP in 2008 will be c
£1.45trn (October 2007 PBR), (b) there are c 25m UK households
(ONS), (c) that UK productivity is currently at an index base of 82
of the US at 100 (London School of Economics, 2007).