Cost of poor UK productivity put at £80bn, new study shows Companies ‘lose’ average 40 working days a year to inefficiency
21 October 2007, London. Companies in the UK waste around 18% of all working time through inefficient use of labour, the equivalent of 40 working days per employee per year. And the financial cost amounts to a whopping £80bn, or around 7% of GDP, based on current average hourly wages in manufacturing.
These are just two of the many findings published in the latest, international study of workforce efficiency (labour productivity) from Proudfoot Consulting. Academic researchers analysed data collected from almost 2,500 business operational performance reviews carried out by Proudfoot Consulting in 38 countries over the last four years. They also surveyed the opinions of 500 business executives.
The resulting 2007 Proudfoot Productivity Report shows that more than three-quarters of inefficient working in 2006 was the result of three root causes:
• Inadequate workforce supervision (31% of all wasted time)
• Poor management planning and control of work (30%)
• Poor communication (18%)
The remainder of wasted time recorded was the result of IT problems, low morale and a skills absence or mismatch.
An analysis of the entire four years of source data by parent company nationality casts UK-owned companies in a favourable light: they rank 4th out of 11 nations, behind Portugal/US (joint 3rd), Ireland (2nd) and The Netherlands (1st); but ahead of France (5th), Germany (9th) and Japan (11th).
However, a different analysis by business location shows that in the last two years (2005-6) alone, workers in Germany have improved efficiency markedly and are now more productive than those in the UK, US and France.
Commenting on the report’s findings, Proudfoot Consulting’s chief operating officer Simon Glynn said:
“This report undoubtedly shows how value gets lost and how management could re-capture it by acting on the root causes identified. Executives clearly accept the existence of hidden value because 85% percent surveyed said productivity could be increased in their companies.
“What now needs to happen is that companies raise the threshold at which wasted labour time is tolerated; in the UK there’s an 18% gap between what is achievable and what currently exists – even more in others countries. That adds up to a lot of unrealised financial value that could be reinvested in skills and development training or paid to shareholders through higher dividends, or both,” he adds.
Looking ahead to next year, more than three-quarters of executives surveyed for the Report said they expected productivity in their company to rise in 2008. They said the top three actions required to bring about that improvement were: investment in workforce training; management skills development; and better use of technology.
Copies of the full report can be downloaded directly from the Proudfoot Consulting website:
www.proudfootconsulting.com
