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Productivity in the UK

September 28, 2016

 

I’ve always had a keen interest in productivity in the UK. It probably comes from my days of working as an Accountant if I’m honest. But it’s something that I keep a close eye on. So this report from the ICAEW (Institute Of Chartered Accountants In England And Wales) of which I’m a member, was an interesting read.

It’s pretty obvious that productivity in the UK needs to be increased and the ICAEW’s recommendations are summed up as follows:

1. Adopt a national target of 2-3% growth to transform the Government’s productivity plan into a clear plan of action;

2. Improve the UK’s international and infrastructure connectivity to boost global competitiveness;

3. Close the skills gap through a national skills strategy which is underpinned by employer engagement;

4. Create a proportionate and balanced regulatory environment to encourage productivity-led growth.

Whilst there are macro-economic and national aspects to these recommendations I want to focus on what a business owner of an SME could do themselves to improve their own business’ productivity. Over the next 4 posts I’ll use the 4 recommendations as my prompt :

Productivity Target And Plan

I love a plan and some way of measuring progress. Unfortunately most SME’s do not do much planning. They may have a financial budget for the year ahead or there might be a written business plan, probably used to get extra funding. In my experience there is rarely a plan to improve productivity, maybe because of the following perceptions:

· There’s never enough time to plan and anyway plans go out of date before you finish them;

· Productivity improvement is simply a case of working harder, faster and motivating people, maybe with incentives;

· Changing staff, getting rid of bad ones and getting new better ones, is the way to get more productivity;

· Looking for the next generation machine or IT system is the way to be more productive.

I would challenge all those perceptions and suggest the route to productivity increases will come from:

Understanding your processes, how work gets done…

From receipt of an order through to receiving payment. Everybody involved in those processes needs to understand how the work gets done and where they fit into it. A few half day workshops on work processes will trigger the start of many productivity improvement ideas – that’s your plan.

productivity

Having a few measures in place and tracking how they change when you start putting those improvement ideas into practice…

Those measures could include: the time from order receipt to delivery; the work hours to make the product; the amount of rework. Plot those measures over time, the frequency will depend on your business. Monitor trends as you do relevant productivity improvements.

One final piece of advice…doing productivity planning and improvement work is a hands-on job that involves getting the workforce engaged in doing the actual improvements. So expect discussions in meeting rooms AND on the shop floor. To make those discussions more productive (!) it’s best to use visual displays, for process maps, lists of improvement ideas, progress checking of ideas being put into action, trend graphs of productivity measures. Those displays need to be close to where the work gets done.

Part two will be coming soon but if you’ve found this article of use there’s plenty more where they came from here.