Meeting the productivity challenge

Here is a conundrum: if economic growth is improving, interest rates remain at a historic low, unemployment is manageable, and inflation is unheard of, then why is UK productivity lagging?

Some view productivity as an elusive metric for gains in efficiency due to the adoption of technology and better working practices. However, economists and thinktanks regularly cite the fact that productivity is linked to slow earnings growth and higher costs of living – thereby removing any association to efficiency gains and replacing it with economic factors outside the control of many.

But one factor, some might say the prime factor, is perhaps missing – behaviour.

Behavioural studies – and more specifically behavioural economics – have now become a fashionable addendum to many conversations about how we live, engage, react and deal with the environment around us. These concepts have been advocated by notable economists such as Amos Tversky, Richard Thaler, David Sundstein, Werner De Bondt, Daniel Kahneman, and others.

But businesses and organisations in general have been much slower to incorporate behaviour as part of their core strategy and operations. This lack of attention to the nature of each individual’s behaviour is possibly the cause of productivity slowdown. At a time when it is becoming increasingly recognised that products and services are in fact ecosystems, and brand loyalty is an emotional attachment, organisations must now consider behaviour to be a unique and vital component of their productive output.

Behaviour as well as productivity should be taught and developed as an executive skill in all organisations, as much as any other recognised business function. This is because behaviour sits comfortably with almost any aspect of an organisation and extends the growing list of 'new' business fundamentals such as user experience design, social network relationships, design and branding, data science, mobile computing and mass personalisation.

The breadth of how behaviour can be used means that we now need to consider a framework or typology of how we should be understanding and taking human psychology into account in wider terms.

This means that to meet the productivity challenge, organisations and individuals need to embrace, rather than retreat from, incorporating human perspectives in everything they do. Bootstrapping behaviour into a business plan or model may seem like an alien concept, but this is such a fundamental force that it defines the very fabric of what an organisation, product or service constitutes and what makes it exist in the first place (humans!).

Productivity needs a new narrative and terminology; one that is far removed from purely measureable definitions. This is not so much about ROI, but about ROB (return on behaviour). While economic measures alongside the impact and adoption of technology and improvements to working practices may be trusted methods of explicitly defining productivity – these elements are no longer going to be enough to sustain further gains in productivity alone.

Amir Sharif is acting head of Brunel Business School and professor of operations management at Brunel University