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Navigating the UK’s performance and productivity landscape

Between 1974 and 2008, the UK’s productivity – the amount of output you get per worker – grew at an annual rate of 2.3%. However, a significant shift occurred in the subsequent 12 years, where from 2008 to 2020, the growth rate plummeted to 0.5%.

In the following article, which includes a snippet from The State of Employee Engagement 2023 report, we look into the shifts in the performance and productivity landscape and the key challenges impacting this.

The link between productivity & performance and employee engagement

When you consider how closely linked productivity is with employee engagement, it’s no wonder that it has jumped up the rankings of HR professionals’ top priorities. This is down to the fact that when employees feel more connected to their work, their colleagues and their organisation’s mission, they are more likely to go above and beyond, contributing to increased efficiency, innovation, and overall success. In fact, Gallup’s research indicates that organisations with highly engaged workforces are 21% more profitable and 17% more productive compared to those with disengaged staff.

However, when assessing whether performance and productivity is getting any better, we found that a substantial majority, 77% of our survey respondents, believe the situation is either deteriorating or stagnating. That said, 23% express hope, stating that things were improving.

Skills shortages take the lead

When it comes to the biggest challenge associated with performance and productivity however, 24% of respondents highlight skills shortages as the most significant barrier.

Skills shortages can lead to delays in project completion, as well as limiting an organisation’s capacity to adapt to evolving industry demands, and employees may struggle to meet performance expectations, which results in a decline of overall productivity and performance.

Other factors cited as having a big impact on performance and productivity from our research include low morale and motivation (17%), difficulties with cross-departmental collaboration (15%), and internal obstacles such as complex processes and a lack of empowerment to make decisions (both at 13%).

A shift in work patterns

Contrary to popular belief, only 8% of respondents identify remote and hybrid working as a barrier to performance and productivity. With certain larger organisations mandating a return to regular office hours, the question surfaces: are they risking a backlash? Additionally, as different generations demand different levels of flexibility from their employers, are we on the brink of a generational battle for talent?

The ups and downs in the UK’s performance and productivity show how different factors effect it. Challenges like not having enough skilled workers and the changes in how we work, like remote work, are important to understand here – and it’s important we learn from the past to make things better for the future.

This article contains a snippet from The State of Employee Engagement 2023/24. This report draws on insights from over 450 senior HR practitioners to understand their key priorities and challenges going into 2024, including key insights on employee listening, employee engagement, retention, recruitment, and productivity & performance.

Download the full version of the report here as we dive deeper into HR’s four biggest priorities. To view all our other eBooks, click here.

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