United Kingdom: Report identifies key levers for improving workplace productivity
Amid the extensive debate about the UK’s relatively poor productivity record, a recent report from Acas identifies seven key factors for improving workplace productivity: well-designed work; skilled managers; effective conflict management; clarity about rights and responsibilities; fairness; employee voice; and high trust. The report includes contributions from leading practitioner and policymaking bodies, including employer and trade union organisations.
In June 2015, the Advisory, Conciliation and Arbitration Service (Acas) published a major report on building productivity in the UK. Its aim is to stimulate debate among policymakers and those with an interest in UK productivity about the workplace aspects of boosting productivity.
About the report
Acas is a state-funded body that provides free and impartial information and advice to employers and employees on workplace relations and employment law. The report is based on Acas's experience of providing practical solutions to workplace issues through its advisory work; it also draws on recent research and contains contributions by senior officials from a number of leading practitioner and policymaking bodies. These include the Chartered Institute of Personnel and Development (CIPD), the Confederation of British Industry (CBI), the UK Commission for Employment and Skills (UKCES), the Federation of Small Businesses (FSB), the Employee Engagement Task Force, and the Trades Union Congress (TUC).
UK productivity levels lag behind those of other leading economies. Since the onset of the 2007–2008 financial crisis, labour productivity in the UK has been exceptionally weak and, despite some modest improvements in 2013, the UK whole economy output per hour is around 16% below where it would have been had the pre-crisis trend continued. Furthermore, UK productivity in 2013 was an estimated 17% lower than the G7 average. Bank of England statistics show a dramatic change in the factors contributing to productivity before and after the recession: compared with the fourth quarter of 2007, the majority of growth in the fourth quarter of 2014 was derived from hours worked rather than from greater efficiency. The government and other policymakers have offered a range of macro solutions including investment in infrastructure, improving skills and technological innovation. However, the Acas report argues that the way workplaces are organised, management competence, and the role and involvement of employees are also vital for delivering better productivity outcomes.
Key points of the report
In the foreword to the report, Acas chair Brendan Barber stresses that Acas believes that there is ‘real benefit to be gained from addressing productivity through the prism of the workplace: to identify opportunities for workplaces to become more effective and, in turn, contribute to the bigger productivity challenge'. He goes on to argue that ‘workplaces are key to productivity’ and that the 'long-term success of high-level solutions such as better physical infrastructure or capital investment and investment in skills depends on workplaces being efficient, responsive and innovative'.
The report identifies seven ‘levers’ for improving workplace productivity. These are:
- well-designed work;
- skilled managers;
- effective conflict management;
- clarity about rights and responsibilities;
- employee voice;
- high trust.
According to Acas, jobs and work should be organised in ways that increase efficiency and make the most of people's skills. The report argues that giving employees discretion about how they organise their work leads to better use of technical skills and tacit knowledge, as well as more creativity in problem-solving. Allowing employees discretion can also lead to greater job satisfaction and commitment and, ultimately, improved workplace productivity.
Skilled line managers
The report highlights the aspects of people management associated with being an effective line manager. These include having the confidence and training to:
- motivate and lead by understanding what makes each individual tick and how teams can work independently and efficiently;
- act as a ‘translator’, making organisational messages clear for all employees and feeding back employees’ views to senior managers;
- handle difficult conversations with staff on anything from performance and conduct to mental health and work–life balance.
Managing conflict effectively
The report emphasises the importance of having systems in place to reduce the likelihood of problems arising and to deal with problems at every stage. It advises organisations to encourage a climate of informal and early conflict resolution. It highlights the value of regularly revisiting the organisation's overall approach to reducing the likelihood of conflict, while having fair and transparent procedures for handling conflict when it does occur. It stresses that employee representatives can play an important role as facilitators in resolving conflict.
Clarity about rights and responsibilities
According to the report, achieving a working environment in which everyone understands their rights and responsibilities will have a positive effect on employee motivation and morale, and on productive workplace relations. Organisations should have clear and accessible written statements of rights and responsibilities for managers and employees, such as contracts of employment and workplace policies, but should also be clear about ‘unwritten expectations and values, particularly relating to behaviours’.
The report argues that fair treatment at work is inextricably linked with employees’ sense of well-being and that recent research demonstrates that well-being can have an important impact on organisational productivity. For Acas, the key elements of a fair workplace are that:
- employees feel safe and valued at work, and employers recognise and support their well-being;
- employers promote a culture that recognises diversity, addresses equality and tackles discrimination;
- pay levels and systems are transparent, comply with the law and reward employees fairly.
Strong employee voice
Acas says that employee voice, expressed either directly (through communication with individual employees one-to-one or in team meetings) or indirectly (through consultation with employee representatives or recognised trade unions) enables employees to ‘have their say and be involved in the decision making process’. It also enables employers to ‘[benefit] from the technical and tacit knowledge of their employees to improve productivity and contribute to innovation’. The report notes that Eurofound’s most recent European Company Survey found a clear relationship between involving employees in day-to-day decision-making, participative working practices and better business outcomes.
The report notes that values and behaviours highlighted by the previous levers – including effective communication, employee participation, fair treatment and competent line managers – both promote trust and are themselves reinforced by trusting relationships. Key characteristics of high-trust relationships that the Acas report highlights are:
- employers being as open and honest as they can be and sharing information with employees at an early stage;
- senior managers ‘walking the floor’ and delivering regular face-to-face, future-focused briefings to employees;
- joint problem-solving that takes on board staff ideas and suggestions.
Input from practitioner bodies
Contributions to the report from practitioner bodies reflect their differing perspectives on the productivity challenge.
The CIPD and UKCES both emphasise skills policy as a key element in addressing the productivity deficit. FSB also identifies skill shortages as a major issue for small businesses, alongside a need to strengthen business-support mechanisms and provide existing small businesses and start-ups with access to leadership and management capabilities and training so that they can get the most out of their workforce.
For the CBI, investment and innovation are crucial factors affecting productivity growth, while the TUC contribution argues that increasing the employee voice at work, particularly collective forms of employee representation such as union recognition and joint consultation, is essential for achieving higher productivity and higher growth business models. The links between employee engagement more generally and productivity, at both individual and organisational level, are emphasised in the contribution by David MacLeod and Nita Clarke, co-chairs of the Employee Engagement Task Force.
A key aim of the Acas report is to facilitate a broader discussion on ‘how to activate the potential for greater productivity in UK workplaces’. Government, policymakers, research bodies, employer organisations and trade unions have increasingly focused their attention on identifying solutions to mediocre productivity. But as the previous paragraph illustrates, a range of differing emphases and policy prescriptions has emerged, reflecting the particular organisational interests of the bodies concerned.
The report says that Acas will explore the potential for greater collaboration on the issue of productivity among the social partners and other relevant bodies. This is an important objective. Acas, with its tripartite governing council that includes employer and union representatives and independent industrial relations experts, is well placed to make a significant contribution to it.
Eurofound welcomes feedback and updates on this regulation