Red-tape stifles productivity
Interesting views appeared in the Daily Telegraph the other day from Sir John Timpson, chairman of the high-street services provider, Timpson. He was asked what he thought the main issues were when it comes to the UK’s productivity problem – his reply is presented below, en toto
We’re a nation of pessimists, beating ourselves up about a lack of investment, our poor work ethic and the difficulties faced by an older workforce, but none of these often-quoted factors reveals the main influence on poor productivity. It’s modern management that gets in the way by filling businesses full of governance, compliance, best practice and process.
The next time that you’re in a city at commuter time, look at the hordes of office workers who pass you by. What jobs do they all do? How many make a direct contribution to the end product of their employer? The sad thing is that at least half of their roles probably make no difference and some actually put obstacles in the way of colleagues who do the real jobs that make the money.
Twenty years ago, we scrapped the term “head office” and called our support service centre Timpson House. We changed the name to change our culture. Previously, everyone thought that head office was a group of people who ran the business and told everyone else what to do. Now we expect Timpson House to provide support to the customer-facing colleagues who really create our success. We stopped telling key cutters and watch repairers how to run a shop and trusted them to use their initiative to give customers a better service.
In the Sixties, our office was full of clerks using adding machines, Kalamazoo sheets and Kardex records that analysed our stock and sales. In the Sixties, a salesman promised that his new computer would replace our old-fashioned systems within three years.
In truth, it took two decades before all the clerks and adding machines had gone, but they have been replaced by a comprehensive and more expensive crew of compliance officers. Sticking to all the legal requirements and ticking every box is an expensive game.
Our Government and the European Parliament have developed a raft of regulations that now fill central offices with new monitoring departments that make little or no contribution to the main aims of a business.
The General Data Protection Regulation, or GDPR, is leading to the appointment of thousands of data protection officers – some of whom will want to build a new department to monitor performance against the latest guidelines. They will expect to be paid as much as the health and safety controller, the director of risk, the gender pay gap tsar and the compliance controller.
These specialist skills are in such demand that compliance managers, who have little to do with creating commercial success, are paid some of the highest salaries in the business. No doubt some companies have already responded to the plea for a more productive Britain by setting up a productivity department, headed by their first productivity controller, who will be drafting a three-year plan, creating a communications framework and recruiting a team that can cope with the extra workload.
These powerful people not only cost a lot of money, but also get in the way of success. Like many modern HR and finance directors, they believe that they have the authority to control the company. Their obsession with setting rules and regulations isn’t just a business problem; it explains why it’s so difficult to run the NHS, schools and social services.
It’s time to put these do-gooders back in their place. As entrepreneurs, we must be courageous and stand up for common sense.
Sadly, the rigid processes produced by a controlling head office can have unintended consequences. Many measures that are honestly introduced to give customers a better service can have the opposite effect; front-line colleagues, held to account by their line managers, become so terrified of breaking the regulator’s rules that they fail to give customers what they want.
Eventually, following the rules could become the only important measurement – and more important than teaching children, treating patients and giving great customer service.
I’m beginning to understand why some people suggest that the burden of regulation and cost of compliance could be a major cause of the next recession.