Productivity: It isn’t just what economists say it is…

Featured image © Seventyfour / Adobe Stock

Productivity and the UK’s problem with it compared to other economies is becoming a favourite subject for politicians, economists and commentators. But there’s little evidence of it becoming a hot topic in boardrooms or a key focus of management and workforce meetings in the workplace.

Although Productivity issues for UK manufacturing were highlighted by Make UK (previously EEF), in their 2018 report “Unpacking the puzzle: Getting UK Manufacturing Productivity back on track”, there remains a limited amount of information from UK manufacturers themselves about how productivity is discussed and assessed within firms, and the factors that contribute to productivity success and failure.

We are addressing this deficit in a project that explores the productivity realities in UK manufacturers: “Unlocking the productivity narrative in manufacturing organisations”  This is a collaborative project with colleagues at the Universities of Aston (Professor Ben Clegg), Bristol (Professor Palie Smart) and York (Professor Peter Ball), funded by the ESRC via the Productivity Insights Network We are examining what (if any) ‘productivity narratives’ are shaping ideas in UK manufacturers at workforce, management and boardroom levels today.

What do UK manufacturers really think about productivity? Do employees understand what productivity means and how they might affect it? Are people within manufacturing firms actually talking about in their boardrooms and shop floors? And, if they are, are they talking about the same thing as the economists and politicians? These are the questions we are seeking answers to.

We also want to give a voice to manufacturing companies – to let them tell us not just what they think about productivity but their experiences of it. What has helped or hindered? Where do the future challenges lie and what support is needed to address these?

All of our team are founding members of the EPSRC Manufacturing Futures group and have spent years working with UK manufacturers to improve their operations.  Much of the focus that we have seen over the last 20-plus years has been around efficiency – reducing waste by using approaches such as lean, six sigma, re-engineering – rather than productivity. Efficiency and productivity are often confused – but they are not the same.  This was highlighted by Mankins, in his 2017 Harvard Business Review article “Great companies obsess over productivity, not efficiency” , which suggests that in the current economic climate, it is not enough to focus on shrinking the input (and doing the same with less). He argues:

“At a time when so many companies are starved for growth, senior leaders must bring a productivity mindset to their business and remove organizational obstacles to workforce productivity. This view differs substantially from the relentless focus on efficiency that has characterized management thinking for most of the last three decades, but it is absolutely essential if companies are going to spur innovation and reignite profitable growth.”

This limited information about how productivity is viewed and discussed within the firm constrains our understanding about what is really happening in firms and, in turn, limits how we might improve productivity success.

We have the opportunity to explore these issues and address this lack of firm-level perspective by asking employees to tell us their views. We are finding out how different levels of the firm hierarchy perceive productivity and view their role in its improvement. The voices of those actually doing the work are key, something emphasised recently in Jonathan Boys’ blog about the CIPD Winter 2018 Labour Market Outlook report, where he highlights the variation in awareness and perception of productivity, and calls for us to “continue research into firms attitudes and awareness  of the issue”

So what are we doing in our project to make this happen?

We are speaking to employees from the shop floor to the boardroom in four key UK manufacturing sectors: food & drink, automotive, aerospace and pharmaceuticals, hearing what they really think about productivity – how is it viewed, does it matter and what factors influence its success and failure?  As part of this, we are giving manufacturers the opportunity to:

• Highlight their key concerns to policymakers.

• Suggest what is needed to identify future challenges.

• Discover what other companies are doing to improve productivity.

• Learn about what support is available to support productivity.

• Participate in forums for industry and Government to inform Government policy

We are also engaging with a number of stakeholders from industry and economic development organisations such as Make UK, Be The Business, CBI, IET and Scottish Enterprise, and hosting a series of round table workshops bringing together industry and policymakers.

By the end of the project, we want to provide a much-needed firm-level perspective about how productivity is viewed and measured, the factors that drive, constrain and enable it, and the future challenges that UK manufacturers face.

We will share our findings with industry and policymakers with the aim of influencing the productivity conversation by recommending how we can more accurately reflect productivity in UK manufacturing, leading to a broader consideration of productivity and alternative measurement metrics. We also want to highlight the challenges faced by companies and the improvements needed to the support provision

If you are interested in finding out more about the project, or in sharing your views with our team, please contact us.

Professor Jillian MacBryde and Dr Helen Mullen
The University of Strathclyde