Employee Productivity – Are You the Reason It’s Declining?

Employee Productivity – Are You the Reason It’s Declining?

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Employee Productivity – Are You the Reason It’s Declining?
Employee Productivity – Are You the Reason It’s Declining?
Calendar13 December 2017

Authors: Jen Saunders and Julia Howes, Mercer

The question of labour productivity has been troubling economists and businesses in recent years. The UK has recently seen a low rate of productivity growth, with ONS analysis finding output per hour falling in early 2017 by 0.5%, whilst over a longer period productivity growth has been lower than before the economic downturn of 2008. We’re now 16% behind our G7 friends, that’s not far off a day a week less work! Labour productivity matters, not only to your business success, but because it is the main determinant of living standards and fuels national GDP growth.

Whilst many organisations are now focusing on the opportunities of automation and digitisation, there are many things we can all be doing better today (see Mercer’s productivity framework below). One important area that can influence productivity is related to employee engagement, and our recent Global Talent Trends research shows that 69% of employees who feel energised at work are in environments that focus on their health and wellness. So how can you better approach these areas?

Source: Mercer, The Workforce Impact of Brexit, Migration and Ageing, 2017.

Don’t Just Focus on Pay and Benefits – Consider Your Employees' Financial Health

In-work poverty is rising. Research from Joseph Rowntree Foundation found 1 in every 8 workers (around 3.8 million people) are now living in poverty. Meanwhile, more than 17 million people in the UK have less than £100 in savings for use in an emergency. And recent surveys have shown an increasing number of workers - particularly in areas such as the public sector and NHS – are turning to payday loan providers to try to make ends meet.

It is estimated that time lost by employees worrying about their financial situation costs businesses more than £57bn a year. Many employees lack a clear and deep understanding of their personal financial situation, particularly their monthly outgoings, savings, and how to change their spending habits to put money aside for emergencies, to manage debt and, eventually, retirement.

Thriving organisations recognise that employees who are financially fit and informed are more present, engaged, and productive at work. In many ways financial fitness is as important as physical fitness. As a start, as their employer you can help employees get a full picture of their income and outgoings and take them through the principles of budgeting and debt management.

Then you can look to use targeted communications that engages them on an individual level, and offer access to solutions that allow them to easily manage their personal finances. Additionally, run workshops and advice sessions, as these can make a big difference to how employees perceive their personal challenges and get them actively engaged. Remember, not everyone will feel comfortable opening up about such personal matters, so there needs to be a ‘safe space’ for people to talk, with an inclusive company culture, offering open and constructive feedback.

Offer the Right Kind of Flexibility

Two thirds of energised employees in our Global Talent Trends research see flexible work options as a differentiating factor, whilst three quarters felt the promotion of collaborative working also helped. Flexibility plays a huge part in workplace wellness, energy and productivity. Today’s technology is helping people to work when, where and how they want, and it is this choice and empowerment which can help improve productivity. Consider the benefits to a parent who can leave the office at 3pm to pick up their children, and then logs back on at home at 8pm once the kids are asleep? If people are comfortable with how and where they work, then they are more likely to be productive.

Our Global Talent Trends research also found one in three employee requests for flexible working arrangements being declined, whilst one in two employees expressed concern that working part-time or remotely would negatively impact their promotion opportunities. Given the range of flexible working options now available (and we have found 5 different types so far) these numbers seem high. In our experience organisations adapting to flexible working require processes and behaviours that drive greater productivity, such as forcing a greater focus on individual KPIs, with measurement, and examining the design of roles for enhancements and alignment with the organisations’ objectives. From the individual’s perspective, productivity will be negatively impacted if employees are denied the means to create the right balance between their work and private life.

Workplace flexibility shouldn’t be seen purely as a tick the box benefit to be offered, but as an opportunity to increase productivity and output as people are enabled to do their best work in a way, and environment, that better suits their needs. It can be a smart way to leverage the talents of all the workforce to help bring about the outcomes and innovation the business needs.

Have Clear Direction and Leadership

Employees will work better when the organisation has a clearly defined purpose and direction. They need a clear understanding of their roles and can see the value of the contribution they make to the overall business. Often these are not clear and companies struggle to communicate a definitive vision. And as shown in our Global Talent Trends research, two of the top 10 differences that energised employees find about their workplace are active support of innovation and the enabling of quick decision making.

Strong leadership and communications can make all the difference. Involving employees in strategic business discussions and helping them understand the ‘why’ of the organisation will help motivate them. Defined priorities and a clear sense of direction from leaders ensure that productivity is focused on the right activities. When employees can understand what needs to be done, by when and why; their efforts increase and productivity is improved. 

Employees also want clear communications around career options and development. Line managers should focus their people leadership skills on this and take the responsibility to get this right. Coaching and development, and an approach to internal mobility that allows individuals to broaden their skills, are all associated with workplaces that bring the best out of their employees.

Recognise Effective Contributions, Not Long Hours 

Do your line managers assume that someone who puts in long hours, logs on from home every evening and works even when they are ill, are top performers? It’s easy to recognise extra effort and reward those that are seen to put in the ‘extra time’, but this leads to the building of a culture that holds long hours as the key to greater productivity and business success.

There is a danger of creating a culture of presenteeism, in which you are at work, but not at full capacity. There are varied reasons why individuals can fall into this trap - perceived lack of support from the team, a feeling of being irreplaceable or a strong sense of loyalty or even issues at home. Ultimately, this approach to work is unhealthy and can lead to stress, which will make the employee less focussed and productive.

The modern HR team must find ways to recognise and reward the correct behaviour and actions that lead to successful project completion and a harmonious and productive team environment. Performance can be viewed as the influence an individual has on their team and the business, and the way they connect internally to form the collaborative partnerships that lead to business success. They should be rewarded accordingly.

Leadership and culture are key. Individuals want to be recognised for good work, and when they are, become happier, more engaged and are driven to perform even better. Making sure employees understand their role and responsibilities, and feel supported by the business, their managers and teams, will lead to increased wellbeing and less presenteeism.


So what do you think? Is there more you can be doing in your organisation to close the productivity gap? Get in touch to let us know your thoughts and let's keep the conversation going.

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This article does not contain advice in respect of actions you should take. No decision should be made based on this information without obtaining prior specific, professional advice relating to your own circumstances.