Staff costs, efficiency and productivity

business core valuesIn this month, when our blog theme is about monitoring and measuring performance and putting appropriate systems in place, today’s blog topic is about applying this to employees, efficiency and productivity.

Of course, all businesses want to maximise profits and minimise overheads and one of the biggest overheads can be employment costs.

However, as the recent employment tribunal ruling against Uber’s conditions of employment and now potential action by people working for Deliveroo suggest, a ruthless strategy of keeping employment costs to a minimum above all else can backfire.

Staff productivity is achieved by investing in people and job security

As the above examples illustrate classifying people as self-employed or issuing zero hours contracts may minimise the wage bill, but it may also be myopic if a business wants to protect both its longevity and its growth.

Clearly, people want job security and at least a fair return for their efforts, but many studies have shown that offering additional cash incentives for improving efficiency or productivity is not effective.

What works better is for employees to feel valued, included, respected, listened to and engaged in any changes being contemplated.

This starts from the moment a new member of staff joins a company, when employment contracts, terms and conditions should be clearly stated and fair.

They should be settled in with an induction programme that makes them feel valued and welcome, one that introduces the culture and values as well as training them to use equipment and the company’s procedures.

It may seem like a revolutionary idea but when change is being considered, consult those people “at the sharp end” who will be doing the job.  Indeed, they often have ideas that management have not considered and a much better idea of what will work and what will not.

While setting targets and goals that can be measured is essential for productivity and growth, recent research by the Centre for Business Research in Cambridge and the Global Development Institute in Manchester has shown that employees’ productivity is directly related to their personal development and security of employment.

Investment in employees as well as equipment is more likely to ensure long term prosperity for a business than keeping them living with the fear of job and financial insecurity.

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