UK businesses leak profits due to under-investment in people

08 Oct

Productivity in UK business continues to lag behind international competitors including the US, France, Germany and Japan, according to a recent spate of research reports (CIPD Megatrends, Acas, Building Productivity in the UK (see links below).

As with any research commentary based on the national picture, it’s very easy for entrepreneurs to conclude that the data doesn’t apply at the individual firm level, and toss it aside. The two reports cited here ought not to be tossed aside so easily.  They contain really important nuggets that can assist all businesses raise their game. 

Here are a few gems that caught my eye and made me pause for thought:

  • Companies, especially larger ones, increasingly regard employee engagement as central to their business strategy. The impact of employee engagement on the dynamic growth of businesses has become significantly more pronounced over the past five years.


  •  We often hear that SMEs are the engines of the UK economy, yet whether through lack of vision or capability (likely to be both) they consistently under invest in skills; fear of losing employees to ‘poachers’ is a real barrier


  • Consistent under investment in skills erodes productivity over time.


  • 66% of employees are satisfied with how they are line managed; 33% feel they are poorly managed.


  • Whilst it is well known that the quality of managers is key to effective company performance, UK managers still receive proportionally less development than managers in our competitor nations.  In fact, over the last decade there has been little change in the perception that UK managers are not trained as well as our competitors.


  • The report by CIPD notes that on average UK managers are spending a mere 4.2 minutes per week on quality supervision (i.e. formal supervision). There is significant room for improvement in one-to-one supervision, coaching and development of their team members.


Based on our experience, we fully endorse the comment in CIPD’s report which states, “The relationship between an employee and the person directly responsible for them – the line management relationship – is one of the crucial ‘hygiene’ variables affecting job satisfaction and, if it breaks down, is one of the most commonly cited ‘push’ factors causing people to change employer”. 


Enlightened CEOs appreciate the importance of retaining and growing talent; this is a bedrock for achieving future business goals. Hardly a month goes by without some new publication extolling the virtues of effective leadership development.  The weight of turning business goals into tangible tasks rests on the shoulders of line managers.  Yet our front line managers are seldom well prepared with the people management skills so crucial to getting the best from the people they manage.


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Research reports: