· 2 min read · Features

Job boom, pay slump: Improving the UK's economy through productivity

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There was much trumpeting yesterday when the latest Office of National Statistics (ONS) data showed another increase in the number of people in full-time employment.

There was a lot of positive news to come out of the figures, which revealed a record number of 29.73 million UK workers in employment.

However, this presents a conundrum, according to John Philpott, director of consultancy firm The Jobs Economist. He said: "We are in a middle of both a jobs boom and a pay slump as jobseekers struggle to gain or retain employment in a stagnant economy by pricing themselves into work… with the economy using more and more people at falling real rates of pay to produce a static level of output."

Although the Government will no doubt say the figures justify its job policies, the ONS has said the UK economy is still in decline or flat.

But in our view, economic prosperity never was, and shouldn't be a measure of the number of people in jobs. For instance, the banking boom was not about 100% employment or overly engaged staff; it was about a rising tide. "Even turkeys fly in a hurricane" is the phrase that comes to mind.

We saw this in the mobile telecommunications boom that led to the unrelenting growth of the big mobile players. Did these companies thrive because their employees were better or more engaged than others? The truth is, they thrived in spite of whether their people turned up and were productive.

As the market changed and the tide went out, the leadership and culture of these organisations were exposed as flawed and shallow. The people were not truly engaged. The hiring process was inaccurate and not fit for purpose, while the development process was an exercise in box-ticking.

What we find in the employment numbers today is that nothing has changed. Yes, more people are being employed, and no, these people are no more productive than the people they join or those who preceded them.

The question is: whose fault is that?

It's not the Government's, it's not even HR. It's the CEOs of these firms.

We would argue that if organisations hired, developed and nurtured the right people for their organisations in a systematic and objective way, they would thrive and productivity would increase. Smaller, yes; more effective, definitely.

In order for our economy to increase in productivity, organisations need to shrink –less of the right people, not more of the wrong. You need to intelligently contract before intelligently expanding.

Our data suggests that organisations currently have 25% of the right people in their organisation. In order to shift economic productivity, 75% of an organisation's workforce needs to change. If organisations are currently flatlining with 25% of the right people, it would only require an extra 25% of the right people for them to thrive.

Fifty percent less people, then, would create an organisation that was 50% more productive. It's logical. If we had double the amount of people behaving and performing like our top 25%, then usually we would get double the performance, surely?

Our view of what's happening is a complete lack of joy. Seriously declining productivity is what the numbers suggest is directly linked by the moments of joy we have in our work. Some call it "flow"; Maslow described it as "self-actualisation", and consultants call it "engagement". We call it people bringing their whole selves to work.

Frankly, the way the economy views employment data is flawed. We use a model that looks at how organisations hire, develop and energise their people to give a better view of the productivity of that company vs. the productivity opportunity available. We know today that most organisations are exploiting 25% of their opportunity.

Adding more of the wrong people doesn't change this.

Roger Philby, CEO and founder of consultancy firm The Chemistry Group