Productivity Report

We created an extensive report into the value of company culture and its impact on the wider SME economy. This is the fourth in a series of espresso versions of the original. Short and sweet but still full of information.

So, if you are having a coffee break, pause the inbox and immerse yourself in what culture really means for businesses.

In business, productivity is the practice of both understanding – and then applying – the skills, tools, and minds at your disposal in the most effective way. In layperson’s terms, the more you produce, the more you can sell. It centers around profit and income. And we all know how powerful those drivers are in business.

It’s typically measured through variable, output and dividing your gains by the effort put in. Thankfully, the data collection tools now at our disposal far surpass the contents of our filing cabinets from years’ past. And, what’s more, by learning how apply digital benefits, such as software and automation, we can confidently guide our people and business towards long-term success.

SME pieces of the puzzle

The current productivity statistics for UK SMEs show a dark side. For example, in comparison to international outputs, the UK has huge problems. Productivity is running 30% below Germany and the USA, which is 17% lower than the G7 average. This means German workers are producing the same output, approximately every 3.5-4 days compared to their UK peers.

There are various theories and reports that hope to explain the drop. One of these covers the rise in UK employment against a stagnant bottom line.

We then dug deeper by asking 2,005 SME owners to share their views. Our survey revealed 75% of SME decision makers agree that productivity is an issue that needs addressing. Why then, are 22% of UK SMEs failing to measure theirs?

Indeed, in a speech by the Bank of England’s Chief Economist, Andy Haldane, he highlights the extremes of Britain’s productivity puzzle – especially in the case of SMEs:

“Small firms are – on average – 7% less productive than large firms and there is a larger and lower tail of small firm laggards.” Haldane argues that many of these long-performance small companies are unaware of their lag and sub-par performance.

Now, when we put this into the same context of our own SME research, it’s interesting to note that only 6% of SME leaders admitted to having any issues with their productivity.

33%. That’s the recorded productivity and performance slump between domestic and global companies. In Haldane’s words, firms who export – so are exposed and open to global competition – have systematically higher levels of productivity than their domestically-stationed peers.

This is shown by foreign-owned UK-based firms too, who currently boast productivity levels of 50% more output per employee than UK born-and-bred SMEs. This demonstrates how openness and engagement is critical for productivity.

Location, clusters and competition

Research by Opus Energy highlights a clear connection between the number of struggling UK SMEs and their business location. In this way, it seems that geography is a key piece of the productivity puzzle.

According to Opus, only 27% of SME businesses purposely consider competitor location and choose to set up camp close to like-minded companies and start-ups. Leaders from such organisations believe this is a key element in helping to spark creativity, promote agility and track/measure change.

Instead, the primary driver of small and medium size business location was convenience – proximity to home.

Research identified that low levels of productivity in some small businesses stem from isolation and exclusion from industry current affairs. But why? Alongside the business’ physical location, an ‘inherent fear of competition’ – i.e. people and idea theft – is the likely culprit.

If we look for the positive impact of business clusters, visibility is a crucial element for attracting investment. That’s perhaps one reason we’ve seen the emergence of London’s Silicon Valley Roundabout receive fanfare for delivering inspiration to the Tech City organisations.

Current global productivity performance is a mixed bag of disparity. Shame aside, by addressing this gap, we’ve reignited interest in the idea of the Universal Basic Income. And it’s encouraging to see businesses that actively build time away from work into their culture.

Part of that is about recognising, acknowledging and then committing to change out-dated pre-AI factory hours and restrictions that simply no longer serve our working life and needs.

Why flexible works

There are a whole host of alternatives to our post-industrial revolution working days. From flexitime, remote working and role sharing to the premise of the 4-day work week and self-managed teams, the message here is that there are other options for collaborative change. And that doesn’t necessarily mean chaining ourselves to our desks or tablets 24/7.

Our friends at Propellernet allow each employee 12 ‘propel days’ a year to build new skills, push personal boundaries and comfort zones. Employees can choose anything from volunteering at a local charity or learning to climb a mountain (blind-folded), to shadowing a barrister or coaching a sports team. These ‘free’ days provide an important platform for skill sharing and problem solving.

Remove fear to bridge the gap

Steve Stark, CEO and founder of And Then Somehow – a vibrant productivity-boosting consultancy that uses psychology and people skills to improve our working lives and reputation – joined us for episode seven of The People Project Podcast on how to improve UK productivity.

“Start anywhere, the important thing is that you begin somewhere” – Steve Stark

He encourages us to seek honest opinions and stories from our people – from all ranks and positions – to gauge the company’s current social reputation, attitudes and productivity. If you want people to be more productive, take away the fear. Give them a tool that helps them to feel in control and able to manage any erroneous tasks.

Evolving technology

Thanks to evolving tech, we now have extensive access to options that help us work, connect and produce smarter than ever before. From location and hours to research and development, strategy and filing to data collection, security and people management; our working world has changed. According to Dr Dweck, our mindset is next on the list.

In a nutshell, productivity is hinged on feelings and our personal beliefs that form from our deep subcon- scious and emotional state. Take email as a case in point. It’s a communication channel that most people and businesses rely on daily. Yet, despite its prevalence, it appears many don’t understand how to use it efficiently.

As far as digital platforms go, email’s still popular. This is most likely the result of improved digital func- tionality – especially over the past 5 years – as well as its continued success with both consumers and b2b marketing. What’s more, email usage is suspected to increase by 2% to 3% every year from 2018 to 2023.

Remove fear to bridge the gap

A supposedly extremely common phenomena that hides in each office, behind each screen and within every employee.

Steve leans on psychology secrets to help understand the drivers for healthy employee engagement, production and output.

We’ve found that most email platforms will automatically encourage you into certain behaviours (because of the settings and the way the software is configured) that aren’t very helpful. And as it’s a software we don’t typically receive training for, it’s hardly surprising that lots of people experience anxiety around their inboxes.

The good news here is that you don’t need to be an expert to instantly change the way you manage, and therefore feel about your inbox and engagement. If we take Inbox Zero, for example, we’re shown how categorise our inbox and take back control of our work.

To quote Steve, ‘Inbox Zero is simply wonderful; look it up’.

• Why is helping someone get more productive around their inbox so important?
• Changes how they feel Changes what they believe
• Changes the whole way they’re framing their experience at work

Ultimately, how can we reduce the feelings of panic around certain workday tasks and manage the variables that block productivity?

Echoing the thoughts of Dan Ariely, it’s all about ‘offloading the menial in order to focus on the meaningful’.

Of course, this is a phrase that is fundamental to our own company vision. We’ve created a software that automates and manages day-to-day people admin and thus saves time, money and HR headaches. By managing their menial tasks, we help small companies focus on building and nurturing their people and business.

But how can you chart employee productivity to gain a better understanding of how your business is performing?

Start by understanding what you need to measure; the variables, such as goods, calls, sales, leads, sessions, attitudes etc. will differ dependent on your company values and goals.

• Software and automation – commit to learning how to make the most of new-age digital tech and apps. For £11 a month per employee, you’ll have access to a more productive way of working that allows you to spend more time developing your people, culture and business
• Measure and calculate – we created a productivity calculator to help understand the baseline
• Data collection and monitoring systems – understand your company’s story, including employee surveys, anonymous feedback and one-to-one reviews.
• Kudos / engagement – learn more about your people and what makes them tick. Encourage line managers, senior leaders and CEOs to allocate time per week to engage and praise. Try giving your team kudos and see their engagement soar
• Health and wellbeing - there’s no point in reinventing the wheel. The health and wellbeing of your company reflects that of your staff. Head back to our Espresso Health and Wellbeing report and discover ways to improve
• Culture and mindset – company culture is the sum of what you and your staff do and say, how you act within a business, how customers, products and services are treated. Poor company culture is proven to lower productivity, produce a higher churn and therefore costs the business on all accounts. Learn how we built our culture and what we do to nurture it by downloading our Espresso Company Culture report. Chances are, you'll fall into one of four culture types: hierarchical, clan, market or adhoc culture.

This is a brief summary of one of the Culture Economy chapters, please click here to download your full copy of the Culture Economy report.

In 2018 we launched the Breathe Culture Pledge so all organisations can commit to putting their people at the heart of their business. To sign up to the pledge, and join the hundreds of other SMEs, please click here.