Trumped

As i write this, Donald Trump has just accepted the nomination as Republican candidate for the US presidency.

Now Trump is certainly a controversial figure and i am not going to give my  view on his suitability to be president – if for no other reason that, here from the U K, making any judgement is difficult

I am though interested in whether he will have any effect on US productivity – positive or negative.

He seems to appeal to a disaffected and disillusioned working class.

If they feel they are are at last being listened to, will they respond with greater engagement, greater enthusiasm for their work roles – ands greater productivity. Or will they soon find they have been sold a false promise and be ‘turned off”.

O f course all of this assumes he is elected – and that is far from certain.

i will be watching with interest – as will most of the world!

 

Scaling Up

The Confederation of British Industry (CBI)together with Lloyds Banking Group, the ScaleUp Institute & Aston Business School, has launched a new report, Lifting the Trophy, profiling scale-up insights into raising productivity within firms.

  • In 2013, 4% of firms contributed 17% to total UK productivity
  • Between 2012 – 2015, over 18,500 businesses rapidly scaled-up their turnover – 650 of these were mid-market firms
  • Within the scale-up community, highly productive firms are twice as common
  • 8 out of 10 of the UK’s most productive businesses are located outside London

The report highlights that a small number of entrepreneurial firms make a large contribution to UK productivity. Scale-up firms, in particular those rapidly increasing sales, have higher productivity rates.

For more details, see http://bit.ly/29MPYAE.

Friday Freedom

Many people are not at their most productive on Friday afternoons. They procrastinate, prolong and prevaricate – picking issues up on Monday when they are (hopefully) refreshed and revitalised. 

So, why not use this fact to your advantage.

Give your staff Friday freedom. Not the freedom to take time off – but the freedom to be non-productive: the freedom to ‘play’, explore, investigate.

Get them to investigate:

  • What is happening to the market, to technology, to competitors, to suppliers, to society or subsets of it?
  • How can your company exploit any of these changes?

They will learn stuff to your advantage – and to theirs.  They will become better informed, better skilled employees – and almost certainly more engaged, more loyal, more satisfied employees.

You might lose a little in the short term but gain a lot in the longer term.

Of course this doesn’t work for all types of employee/role so you have to choose who you give such freedom to.  And to be ‘fair’ (ands be seen to be fair), you may have to select other freedoms to give to other employees. 

But freedom is a valuable commodity – use it to create value for your organisation.

It is not Goodbye

The UK public has voted to leave the EU.  There are numerous reasons given – but they don’t matter anymore … except inso far as the EU learns what the public don’t like about the EU and attempts to reform itself.

What matters for the UK is what happens now to the EU economy – and to UK productivity.

The answer, of course, is that no-one knows.

Generally speaking, lowering trade barriers helps improve an economy – so any move to create barriers between the EU and the UK could harm the UK economy – but would possibly have more impact on the EU economy.

Surely sense will prevail – and a new trade deal will be negotiated quickly.  Any attempt by the UE to ‘punish’ the UK would be disastrous for both sides.

And remember, we haven’t left Europe … just the EU.  I am proud to be European … but I had my misgivings about an unaccountable organisation whose accounts have not been signed off for many years.

So, this is not goodbye.  Our relationship has changed – but we’re still here, just over the Channel, ready to trade.

Are investors the problem?

Over the last 5 years – in fact since the great recession hit – many companies seem to have concentrated on short term gains – and have rewarded their CEOs with generous bonuses  for producing them.   This is in response to a real or imagined investor need for quick results and dividends – to offset money they might previously have received in interest payments on part of their capital.

So, the CEO gets his/her bonus; the company makes profits; the investor receives dividends.  What’s not to like?

Well, this is a recipe for declining productivity – or at least non-rising productivity.  Money is going out in these term payments instead of being invested in infrastructure, new capital equipment and new technologies.  It is those kinds of investment that replace labour with capital and drive up labour productivity.  It is those kinds of investment that have not been made in recent years.

Now, as I said earlier, I am not sure whether the investor pressure for short term gains and immediate dividends is real or imagined – but perhaps we should find out.  If investors would accept a longer term view, we could start to make those transformational investments and all would gain in that longer term.

Ask your employees.

Does your boss enhance, or detract from, your productivity?

If you ask this question of employees, you might expect them to answer ‘enhance’ – but they rarely do.

Too many people see their boss as ‘interfering’ or ‘meddling’, confusing rather than directing them.

Does this say something about the employees – and their perceptions versus expectations – or about the bosses 

This is not clear.  Probably a bit of both.  It certainly means that most bosses need to think about how they relate to, and engage with, their employees.  If employees feel their productivity is lowered, it probably is .. indirectly rather than directly, perhaps, but lowered nevertheless.

A new reality?

I ‘ve written quite a few times in the last year about low productivity figures – across all developed nations.  I’ve even offered advice on occasions about what might be done to improve the figures – as have better men – and certainly better thinkers – than me.

But the figures stubbornly refuse to rise.

I’ve also tried to explain this – by suggesting amongst other things that we fail to capture the economic benefit of much i-activity.  If someone writes an app and gives it away for free , does it contribute to economic activity – directly or indirectly?

Perhaps we have to get used to lower productivity growth – and accept it as the new normal. Perhaps we can then start to havre intelligent conversations about employment, about wages, about interest rates and so forth.  Or do we just keep on hoping and praying for a recovery – retaining our old thinking in the face of the overwhelming evidence that things have changed?

Correlation? Causation?

Two recent sets of figures from the USA raise a question of ‘connectivity’/  Labour productivity refuses to rise – and investment in plant and equipment has declined over the last 10 years.  These can probably be correlated but is there a causal relationship? 

Well, I can’t prove anything but let’s just say that labour productivity rises most quickly when capital is substituted for labour.

Work with the new reality

Most developed countries have experienced lower rates of productivity development since the great recession – and nobody seems to know why.

However, it does seem as though these low growth rates might be with us for some time.

For any one country, this means that the key is to simply have a higher growth rate than your near competitors – and stop worrying about the absolute figure.

Low productivity growth can still create a successful economy – and actually helps employment levels.

So, accept the new reality – and work within it.

 

Do you need a long view?

Most of us want to help our organisations be productive – but we also want to be kind to the environment .  Can these aims be reconciled?

Well, yes! – but sometimes it depends on the timeframe you are looking at.

Take agriculture as an example.

Using pesticides and fertilisers can increase yield (increasing productivity) – but over a long period may have a detrimental effect on the soil leading to lower yields in that longer-term.

So, if you have a problem about conflicting aims, try to look at the big picture and look at it over an extended period before tasking your decision as to what to prioritise.