Productivity, working hours and health – time for a new approach?

happiness and workers' productivityProductivity, and how to improve it, is a perennial concern for the UK’s SME managers.

The country’s woeful productivity when compared with other countries has long been an issue for businesses, albeit it improved in the first six months of this year according to ONS (Office for National Statistics) figures.

Productivity is traditionally measured by the amount of work produced per worker, per working hour, but new thinking suggests that we are measuring it all wrongly.

In an article in Businessleader.co.uk entitled Are we measuring productivity all wrong the economics and productivity expert at UWE, Professor Don Webber is quoted as arguing that productivity is measured by dividing gross value added (GVA) by the number of hours of work but that until the financial crash of 2008 GVA had been disproportionately boosted by the financial services sector.

There are three components to increasing productivity, he says. They are the ability to push down costs, push up prices and sell more units.

But he says the calculation is far more complex in a consumer economy like the UK, where austerity has had an impact on the ability to buy goods and services, and not enough attention is paid to such elements as investment in more efficient systems, tools and working conditions.

Indeed, I would argue that national productivity measurement based on macro data masks the huge productivity gains made by many firms and especially those who have invested in automation, robotics, AI and new machinery. Consider the comparison of two measures of productivity and how they might show significant improvement; the first is sales by square feet in a Lidl or Aldi, both shops that stock the shop floor with pallets of goods; and the second is car manufacturers who might measure sales per worker where their factories are automated. It can be seen how the gig economy masks these productivity gain figures.

The Businessleader article also mentions some HSBC research, which found that workplace culture is a key factor to increasing productivity.

It found that businesses that offer employees the opportunity to work flexibly are more productive and that workers place flexibility ahead of financial incentives when asked about what motivates them the most.

Innovative solutions to improving productivity

In November, Shadow Chancellor John McDonnell suggested that businesses that operated a four-day week without cutting pay could see improvements in staff morale, health and revenue. It may seem counter-intuitive but there is evidence from a number of bosses whose businesses have tried it that they are reaping rewards. The economist, Lord Skidelsky, has been asked to investigate the issue further.

The Health and Safety Executive (HSE) recently announced that, for the first time, work-related stress, anxiety and depression account for over half of all working days lost due to ill health in Great Britain. In total, 15.4m working days were lost in 2017-18 as a result, up from 12.5m the previous year.

The issue of businesses paying attention to their employees’ mental wellbeing as well as their physical health has consequently attained a higher profile. A growing number of major employers, including the bosses of Royal Mail, WH Smith, Thames Water and Ford of Britain have called on the Government to give mental health the same status as physical health in HSE legislation.

Clearly, it makes sense for businesses to review their policies and practices on working hours, mental and physical health support and training, where there are now so many options for using AI and smart technology to improve working practices and where it is becoming clearer that a happy, healthy and motivated workforce is a key to improved productivity.

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