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The secrets of productivity

British workers are producing less than those in other countries but there are ways that SMEs can tackle the issue

The secrets of productivity

The next time you sit in front of a James Bond movie or Downton Abbey box-set you may be watching a solution to the well-documented problem with UK productivity. Cumbria Crystal, the nation’s last producer of completely hand-blown and hand-cut luxury English crystal, which is featured in both productions and supplied to all British Embassies worldwide, has recently boosted margins and turnover, and kept its business intact by improving its efficiency.

Cumbria Crystal has been part of a Lancaster University Business Management School pilot scheme called Productivity Through People to find solutions to the nation’s ‘productivity puzzle’. According to the Office for National Statistics1 UK productivity – gross domestic product divided by the number of hours people worked – rose 0.4% in the second quarter. However, it still trails France and Germany where the average worker could leave work early on a Thursday afternoon and still produce the same as a Brit toiling all the way to Friday evening.

Incremental changes

Through the scheme Cumbria Crystal has been given the opportunity to benchmark its performance and operations against its peers, visit major firms such as Siemens, BAE Systems and Rolls-Royce, and take part in masterclass sessions with Siemens senior management. The focus has been on engaging and empowering staff, improving maintenance, getting things right first time in the manufacturing process and understanding how technology and innovation can help.

Cumbria Crystal’s managing director Chris Blade says: “When I took over this firm two years ago its future was at risk, but since taking part in Productivity Through People (P2P) our gross margins have improved from 12.7% to 43% and turnover is up by 90%. It’s mostly been through small incremental improvements.”

Blade says that better communications with the 21 staff has played a big part in this success. “Previously, they didn’t have enough information, such as what our financial situation was so were not fully engaged or empowered. They did their jobs and went home,” he explains. “We have more one-to-one meetings now and introduced bonuses and NVQ courses to help galvanise them.

“We have invested in new technology and engaged in research and development with a number of universities, leading to the innovation of new products and ways of using our resources more effectively. For example we developed a new glass barrier technology to enable us to produce hand blown bottles for super premium cognac makers. We now utilise resources better by offering the public short glass blowing experiences and weekend workshops.”

P2P was the pilot project for a new national scheme, called ‘Be the Business’, run by the Productivity Leadership Group, which includes business titans such as John Lewis chairman Sir Charlie Mayfield. It believes just a small increase in output from UK firms could add £130 billion to the economy2. Be the Business will focus on helping firms improve their processes through benchmarking strengths and weaknesses, collaboration and sharing of best practice, leadership, talent management, future planning and digital maturity. “This has to move from being the preserve of economists to entrepreneurs,” Mayfield said at the scheme’s launch in July. But are entrepreneurs ready?

Communications challenge

“Small business owners only have a limited understanding of productivity,” says Malcolm Prowle, professor of people management at the University of Gloucestershire, who recently completed a study into how to improve productivity in SMEs with between 10 and 250 employees.

“The ONS sees productivity as labour and machines but the SME owner does not see the link between that and their profit and growth. When you talk to them about productivity they say, ‘Oh yes, it is important’ but many don’t have the long-term strategy in place or even the ambition to do it.”

Stephen Roper, director, Enterprise Research Centre at Warwick Business School, agrees: “SMEs have no interest in productivity. They express their goals in terms of sales and profits,” he says. “We need to talk about it in a different way, stating how firms can become more efficient to boost profits. It is a communications challenge.” Roper suggests firms need to focus on innovation, exporting, skills and investment in new technology to make real productivity improvements.

“Shifting the office furniture around may feel useful but if you don’t get the fundamentals right it won’t matter where you place the office plant,” he says. Prowle says better leadership is vital. “It is up to business owners,” he explains. “Do they have the management skills to make these changes? Do they encourage their workforce to innovate? Are they offering flexible working to staff and developing their skills? Are they utilising the best technology and making improvements to operational processes?” he asks.

Blade suggests taking time away from the workplace can help. “Get away from the minutiae. Think about how you can improve and network with peers,” he says. “Challenge the status quo, focus your staff and be enthusiastic about change.”

Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

​1., Sept 2018

2., Sept 2017