Well, I was initially delighted to hear about Philip Hammond’s announcement of a £23bn investment in “Productivity” in today’s Autumn Statement.
I rushed home to look at the detail, only to be disappointed that it was mostly on infrastructure. It is also over 5 years, with only £2.3bn next year, rising to £7bn in the last. Interestingly the £7bn hasn’t even been broken down, it’s just a lump with a great big TBA on it. Well, give me the job Philip, I can make up big numbers and stick them in a table, that’s easy.
Now I do see the link between infrastructure and productivity, and boy, do we need our infrastructure improved. But to quote the treasury, one of the things they reference is resurfacing 80% of our road network. Let’s put aside the fact that roads should be resurfaced regularly as part of normal road maintenance, which fuel duty and vehicle excise duty is raised specifically to pay for. I will accept that better roads, just like more reliable trains and better digital connectivity will improve productivity. Less lost time through delays, better access to job markets etc, etc. But in real productivity, as in people working harder, it’s actually a marginal gain. Let me be clear here, I’m not questioning the infrastructure expenditure itself, I welcome it. I question its link to real productivity changes.
Over 1/3 of the money is on housing. Now as a Patron of a housing charity I welcome this with open arms, but its impact on the productivity gap is tentative at best. Philip, please move all of these to “Essential Infrastructure and Housing” and don’t let’s dress it all up as productivity.
R&D and High Tech investment
There also some good proposals around investment in R&D and high-tech sectors. Now, we are starting to get to the sweet spot but still no cigar. It’s brilliantly simple and sensible to drive the economy by investing in the industries of the future and should be a great return on investment for UK plc. I even think it will actually raise productivity. Not because of the obvious uplift in the way it is calculated in that the higher the GDP, the higher the “productivity”, but actually because these exciting startups usually deliver on actual productivity gains, ie that people deliver more output in their daily tasks than they did before. I’ll elaborate on this later, but the reason for this is not because they start to make loads of cash. It’s also not because it’s a new job they are more into it (although that will have a short-term effect). The truth is they are more productive as the startups usually have a clear purpose that people can identify with. Something that makes them want to get out of bed in the morning and try their very best day in day out.
Now we are getting to the real rub. Mr Hammond has not really addressed the real point here, productivity is actually all about employee engagement for which there are 4 key pillars in my humble opinion;
- Being part of something – being committed to clear corporate or organisational purpose. Read my previous blog on this here.
- Being led by great people, who are highly emotionally intelligent and understand their team members’ individual drivers. Again, I’ve talked about this before.
- Investing in their skills to make them the very best they can be, whether that’s leadership skills, technical skills, interpersonal or anything else that will make them more effective.
- Making sure they are in the thriving wellbeing state. This is the big prize that has been really missed. I’ve written lots about this as it really is my specialist subject.
So how much out of the £23bn goes directly to addressing the above points? Well, as far as I can see from the treasury summary, directly it’s just £13m or just 0.05%. That’s just nowhere near enough, and it looks to be entirely allocated towards my point 1 above (Supporting management skills – The government will provide £13 million to support firms’ plans to improve their management skills by implementing Sir Charlie Mayfield’s review of business productivity). I’m not knocking Sir Charlie’s report, it’s a good report, although note it’s endorsed by all the “Big boys” and there’s no sign of the SME’s that are the powerhouse of our economy.
The Paradox – Missing the Wellbeing
Mr Hammond has actually missed an opportunity to cook the books a bit here as he could have put most the proposed expenditure in the NHS in here. More importantly, he could have also spent it better. Better investment in employer-led workplace preventative health and wellbeing schemes to reduce things like obesity and mental health issues could have a massive return on capital to Treasury. This is because once employers see the benefits of investing in the wellbeing of their employees, they will see the returns, so with a bit of pump priming, Mr Hammond could impact both productivity and the burgeoning demand on NHS in one swoop. Interestingly, a lot of US companies with the high productivity we wish to attain, put health and wellbeing right at the top of the agenda. They do so because in the US it makes even more direct business sense, with No NHS they can drastically reduce one of their biggest expenses – healthcare insurance. In doing so they then noticed the massive upturn in productivity. Note this not all American companies, just the good ones!
Together let’s sort Productivity
Since I started Yellow Brick Road, nearly 3 years ago, I had a simple mission to improve productivity. Indeed a mission I’ve been on most of my life in business. I didn’t quite express it like that at the time, but that’s what it was. Having now helped many leaders and organisations on the four things above, in particular, purpose (1) and wellbeing (4), it’s time to step up that mission.
It’s time to make a major dent in productivity in the UK through better employee engagement. So I’m putting this shout out there, if you want to be involved in that mission as either part of Yellow Brick Road, supporting us with your expertise, or as a client who wants to make a lasting change, please get in touch.
Mr Hammond, if you do get to read this, I look forward to the invitation to discuss further.
Ian Hacon, FCA, FRSA, Founder, Yellow Brick Road, championing Productivity in the UK
PS This blog was written from the heart, in a hurry in response the Chancellor’s Autumn Statement, so please forgive any small typographical errors.