For more than a decade, the UK has been mired in a “productivity puzzle”. Ever since the so-called credit crunch and the financial crisis which followed in 2008, businesses have struggled to become more efficient.
As you might expect, economic growth, employment levels and total hours worked all slumped during the recession; but within a few years they returned to near-trend levels. Productivity got left behind.
According to the latest official figures, UK output per hour fell 0.1pc in the final quarter of 2018 compared with the same three-month period in 2017. It was the second consecutive decline and further evidence of an unprecedented stagnation.
That’s despite all the astonishing office technology advances that have taken place in recent times, including software as a service (saas) and cloud computing, plus ever-more sophisticated smartphones, tablets, laptops and desktops, not to mention the constellation of new online services designed to power businesses forward.
“UK small businesses are not as productive as they could be,” says Shaun Shirazian, UK head of product at Intuit QuickBooks. “The gap in productivity between the top and bottom 10pc of firms is 80pc larger in the UK than it is in the US, France and Germany.
“However, the UK also ranks among the top five countries with the highest number of registered new businesses and attracts more venture capital investment than any other European country.
“With this in mind, it is crucial that the UK improves its productivity output. One of the main factors in achieving this is the wider adoption of digital-led strategies which have the potential to transform small businesses across the UK.”
Why UK productivity has fallen
Experts have long-debated the reasons why organisations aren’t able to forge ahead. One theory is that cheap labour from the European Union has offset investment in better equipment and tools. But, with Brexit on the horizon, this could all change.
At time of writing, the UK is enjoying its highest ever level of employment. That’s good news for job seekers but less so for organisations looking for talent, especially with mounting evidence that EU immigration is slowing dramatically.
Without easy access to recruits, bosses must equip their existing workforce with the tools, training and direction to get more done during the average working day.
Andrew Moyser, partner at chartered accountants MHA MacIntyre Hudson, says government help is at hand. “Tight labour markets will force businesses to invest to boost productivity. They should develop a strategy now,” he suggests.
“We’ve already seen the government assisting in recent years through the introduction of R&D tax reliefs and the increase in the annual investment allowance to £1 million. In the coming years, I would expect even more incentives to encourage businesses to change.”
Together with complementary legislation – such as the Enterprise Investment Scheme, which encourages investment in fast-growing technological start-ups — these fiscal incentives provide a handy war chest for businesses looking to upgrade.
Government help for SME investment
On the other side of the coin, there is an ever-growing array of technological wonders designed to aid communication, business development, financial management, marketing and HR. Many offer a subscription model of payment, which means businesses no longer have to fork out lump sums for new office technology.
According to Mathias Mikkelsen, the founder of AI-based productivity suite Memory, it’s not the availability of technology nor the means to pay that’s the problem; it’s many businesses’ failure to plan that trips them up.
He explains: “There is significant lack of strategy on how to adequately use the technology that is available to us all, which collectively slows us down and wastes a considerable amount of valuable time.
“Specifically, a lot of SMEs invest in technologies but do not have the right strategy in place to implement it correctly, and this potentially highlights an important deficiency in terms of management and leadership skills.”
If leaders lack the skills to plan effectively, it’s perhaps not surprising that people across the workforce feel underequipped to take full advantage of technology.
How can I learn new digital skills?
Research by the Open University found that 94pc of SMEs are struggling to find workers with the right skills, while a study by Lloyds Bank found that nearly a quarter of small businesses lacked even basic digital skills.
According to Accenture, the digital skills gap is responsible for a £141 billion shortfall in UK GDP growth. Henry Stewart of IT training firm Happy says upgrading IT is only half the equation. The other half is an implementation strategy and training, which ensures staff understand what’s in front of them and how it can benefit them individually, as part of a team and business-wide.
“When we come into a company, often they’re aware of the digital skills gap,” he says. “We do a productivity audit, explaining how much more they could be getting out of the software. This technology should be enabling, empowering, helping them to do their jobs better but even three decades into the personal computing revolution, staff still find it frustrating.”
Mikkelsen at Memory agrees: “It’s vital that businesses spend their time and resources on putting the necessary policies in place to develop their existing staff, ensuring they have enough options available to reach their full potential.
“The best means of doing this is to implement a programme of training and education, as well as other policies targeted at improving workplace culture such as mentorship schemes and career development.”
Making your technology work for you means a lot more than just buying the latest kit; it means understanding the benefits to your business, conveying these to your people and investing time in helping them drive up efficiency.
This is where a rounded office technology strategy comes into play. Businesses taking a scatter-gun approach won’t feel the full benefits, while those that plan upgrades and assess the outcomes honestly will see the difference clearly.
ActiveInbox founder Andy Mitchell thinks organisations should be realistic about tech migrations and get the basics sorted first before reinventing the wheel. His business helps email users plan their working day more effectively.
“For small businesses, every second you’re paying people to be unproductive affects your bottom line. Question the need for every meeting. Don’t be tempted to jump on the latest communication tool bandwagon.
“There are businesses out there whose communication is increasingly fragmented across multiple platforms and then they have the responsibility of tracking it all in yet another tool. Forget that.
“Email is still number one for business as it’s platform-agnostic, so it’s used by everyone. Instead of adopting multiple apps I’d recommend some simple plugins that work within your email, so you’re communicating in a consistent environment. “
But his overriding message is that “tech doesn’t trump people”, meaning IT should work for humans and not the other way around.
Three questions you must ask
So, if you’re planning a major tech migration, or you’re simply worried that business output isn’t where it should be, when it comes to office technology consider three key messages:
- Plan your upgrade, asking honest questions about where technology is needed and why.
- Create a strategy for implementation. Communicate with staff and ensure they receive the right training.
- Assess the new system and work out if it has achieved your goals. If not, investigate the reasons why.
When it comes to office technology, a little thought goes a long way. By taking time to get it right, your business could help the UK edge closer to a long-overdue solution to the productivity puzzle.
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