Collective action to help solve the productivity puzzle
In the context of widespread economic uncertainty, the need to improve UK productivity looms large. Much has been written about the UK ‘productivity puzzle’ of low relative productivity (lagging all other G7 countries excluding Japan) and slow productivity growth since the global financial crisis, with its damaging impact on living standards. As US economist Paul Krugman noted: “Productivity isn’t everything, but in the long run it is almost everything.”
Competing explanations are given for Britain’s productivity performance. The Bank of Eng- land points to lower relative investment in physical and intangible capital (including a slow uptake of digital technologies), the impact of less productive firms surviving recession and to barriers in allocating capital and labour to their most productive uses. One such barrier relates to the quality of management and its decision making.
Improving productivity requires addressing managerial capability and capacity, particularly in SMEs and in lower productivity sectors. There is no shortage of robust evidence available on the management practices that might enhance productivity improvement. Some of this evidence focuses on performance-oriented practices.
Other evidence – such as that of my own research team at the University of Strathclyde – focuses on job quality-improving practices that drive work engagement, innovation and employee wellbeing that then drives productive behaviours and outcomes. But available evidence, no matter how robust or convincing, doesn’t by itself influence day-to-day business practice. It is increasingly recognised that businesses, especially smaller businesses, benefit greatly by learning from other businesses and through trusted intermediaries.
This requires arenas where businesses can come together to share challenges, ideas and progress; learn from the success and (often as helpfully) the failure of other businesses’ efforts; access insights from well beyond their own immediate context and establish a network of contacts and support in ad- dressing staff or skill shortages, technology adoption problems, supply chain obstacles, agile working challenges and many more.
SCDI’s Productivity Clubs provide an important example of how a trusted intermediary can bring together businesses locally, regionally and nationally with a shared priority of peer-to-peer learning to help drive innovation in productivity that can benefit not just businesses but also living standards.
Patricia Findlay is Distinguished Professor of Work and Employment Relations and Director, Scottish Centre for Employment Research Department of Work, Employment and Organisation at the University of Strathclyde Business School.