International comparisons also show that UK productivity levels are mediocre compared to other developed economies. There are plenty of different economic ideas about why productivity is low, some of which are outlined by the Financial Times. Companies are not investing enough (capital spending is too low), GDP may not be the best way to measure productivity, interest rates are too low/finance is too cheap, businesses have held on to unproductive workers.
And while there may be macroeconomic factors that affect productivity, it misses the point that psychologists and HR know: people can change and improve.
When we’re looking at causes and influences of productivity it can be helpful to think of productivity on an individual or team level instead of an overall economic average. Think of one employee’s productivity as something that can be improved. Does capital spending or the Bank of England’s official interest rate affect your own daily productivity at work? Probably not.
And research from ONS and the Economic Statistics Centre of Excellence shows that productivity is stagnant in the largest companies. There are vast differences between sectors and businesses, and even within organisations. From an HR perspective it is much more interesting and useful to look at how to change individual productivity than national productivity.
The national vs. the individual perspective
What makes a productive employee? Intelligence and personality are linked with work performance, so selecting intelligent and conscientious employees is certainly a good start. But intelligence and personality are also stable traits, which means they are difficult or impossible to change. To improve productivity we need to look at what can be improved, and one of the best predictors of productivity that HR can influence is work engagement. The most comprehensive scientific studies of work engagement show that engagement has a direct link to productivity at individual as well as national levels.
This is useful for HR because implementing change at the individual level is far more practical than trying to influence macroeconomic policy and hoping for some sort of indirect effect on productivity. How a workplace is designed, organised and managed can have a direct impact on work engagement and consequently employee productivity.
Burnout dampens productivity
When people are managed in a way that leaves them exhausted, cynical, tired and powerless their productivity will plummet. Stretching the limits of an employee’s physical and psychological wellbeing to get more hours is counterproductive.
It’s not just about hours worked, it’s also about getting support within the company. Psychologists call these factors job resources: support from your manager, support from colleagues, support from HR. It’s about getting everything you need from the company and the people around you to get your job done effectively. Even the most inspiring and rewarding job can turn disengaging if you don’t have the tools and support needed to get the job done.
Mental health challenges, presenteeism, and burnout are all symptoms of disengagement. But really they demonstrate that there is a gap between what is asked of employees and what is offered to them. When people are asked to achieve difficult goals and given all the necessary resources and support they are often capable of achieving amazing things. When people are asked to do something impossible that is a certain route to burnout.
Engagement boosts productivity
Work engagement is a positive mental state where people are energised by their work, immersed in it, and have a sense of meaning and purpose. It is motivating, can be exciting, and is often challenging. It’s that feeling of ‘flow’ where the work is challenging but possible. The psychological research consistently demonstrates that there is a direct link between higher work engagement and improved productivity.
Then the challenge for HR is to set up systems and processes where people have the opportunity to deploy their skills in a working environment that enables them to be high performers.
Ian MacRae is director of High Potential and co-author of Myths of Work