Top-level Productivity Inaction!

• In trying to help improve productivity at organisation level, where most effective action happens, we are bound to consider what financial aid, policies, taxes and regulation changes should be forthcoming from national governments and their piggy-banks
• We might also reflect on what Churchill once said: “Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon”
• The fact is we all have a vested interest in the stars our ‘wise ministers’ follow when deciding which animals to shoot, milk or bet on
• And that’s why we take issue with those stood on the national bridge of SS UK
• At present, there’s a plethora of ‘expert’ comment or media headlines about sclerotic national productivity levels which no doubt spur them to ‘do something’
• But what?
• Any action they take is usually predicated on two seriously flawed but seemingly unquestioned statistics:
  • GDP, which claims to represent ‘total national output’:
    • GDP is not total national revenue, nor total taxable profits, nor total national wealth
    • For example, public sector output is also included – but what’s the output value of the civil service, army or navy? 
    • Officials admit GDP includes many assumptions and estimates, suffers omissions and inevitably incurs error margins, yet we are expected to believe horror announcements such as ‘GDP fell by 0.1% last quarter’ 
  • GDP/ Labour (i.e. Total FTEs or hours worked), which represents total national productivity:
    • This ratio is an estimate of labour productivity alone, born from the days when manufacturing dominated developed economies and labour numbers dominated input costs
    • It thus provides a partial, not total, productivity picture
    • It ignores all ‘difficult to measure’ capital inputs which have become a massive input cost for all nowadays

• Hence the great management guru Peter Drucker said: “The absence of good measures of productivity is the biggest gap in our economic statistics and seriously weakens all attempts of economic policy to forecast and fight a business depression”
• Even Richard Hughes, head of the OBR, admits national productivity estimates are “always a significant source of uncertainty”   
• Yet, as all skippers know when navigating a boat from A to B, they first need to know their ‘CURRENT POSITION’ before making any radical speed or course changes, 
• And therein lies the problem
• Government ministers stood on the bridge seeking ‘growth, growth, growth’ are finding themselves fog-bound from the get-go
• The result?
• Their budgets usually comprise:
  • Upfront dealing with political bugbears such as the charity status of UK private schools, despite this producing peanuts for national coffers
  • Major input cost cutting – the UK’s latest ideas include disbanding the ‘wasteful NHS England’, reducing Civil Service numbers and slashing welfare benefits for those off work that can work
  • Blindly pouring billions more into ‘national treasure’ and politically important sectors such as the NHS front-line whilst awarding public sector pay rises to those perpetually on strike
• In other words, their focus is on inputs – cutting costs here, adding to them there
• But what of national outputs?
  • Whence the major growth initiatives that can excite and enthuse everyone?
  • “Lack of imagination, not lack of money, is the most pressing restraint” according to Fraser Nelson writing in The Times
  • Andy Haldane, the former chief economist at the Bank of England, adds more cold water: “The Treasury is staffed by bean counters, not growth drivers”
• And what of the in-between – the processes that employ those inputs to produce those outputs?
  • Why do processes always seem to be ignored, yet that’s precisely where most of any organisation’s or nation’s productivity problems lie, not with their inputs
  • The fact is there’s vast waste and inefficient use of resources already paid for to be found in most processes employed, whether in the public or private sectors
  • Forget targets of 1-2% – usually at least 20% of total costs can be saved, sometimes even 50%!
• Just imagine if internal process measures showed the extra billions more input ‘investment’ in the NHS was unnecessary – but nobody knows!
• And even if such potential was realised, who would make the changes needed?
  • The UK does not have a ‘DOGE equivalent’ to chainsaw waste and boost process efficiency 
  • UK business schools and major consultants? – They offer little on ‘productivity improvement’ itself – just check their websites
  • Academics, economists and bankers? – They seem to prefer complexity to simplicity when considering productivity – and most lack practical front-line experience to temper their ideas
  • Front bench politicians? – They have little business experience at any level
  • Employees? – They often have good ideas for where and how processes could be improved but their managers rarely seek them, so employees don’t offer them, not least because ‘there’s nothing in it for them’
  • And, last of all, Managers? – They have most power to improve productivity levels but not only lack good measures but also training in how to make big improvements happen

CONCLUSION:

• It’s no surprise that national productivity improvement, if any, usually happens at a snail’s pace

• And, when it does, it usually happens because, as someone once said: “It’s millions of acts by thousands of managers that make all the difference to national productivity – not one or two grand ministerial gestures”