Productivity is a word that is being thrown about an awful lot lately. But despite the definition of the term being quite straightforward (“an economic measure of output per unit of input”), pinning down what it actually means for businesses is a whole lot harder.
As our series on productivity explores, there are myriad complex factors affecting the UK’s productivity – and leaving it languishing near the bottom of the G7. But against the complexity of the macro picture, could it be possible that we are starting from the wrong place when we talk about productivity? Are our measures no longer fit for purpose?
Given the changing shape of our economy and rapidly evolving business models, it could be argued that we are measuring an old version of the economy. Take Uber, for example. It doesn't own any assets, apart from ‘intangible’ ones. As Imperial College economics professor Jonathan Haskel put it to me: “Uber is useless as far as the tangible thing goes. It doesn’t own a building or any taxis. The asset is in the code.”
As the world of business becomes increasingly based on intangibles, surely the way we talk about productivity needs to shift too, rather than harking back to a bygone industrial age. And in the words of Paul Kearns, chair of the Maturity Institute and measurement expert, “management has failed to account for the value of people in the productivity equation”.
We need to improve how we measure the value-add of inputs into a more knowledge-based economy. And this means viewing productivity through a different lens – one that takes into account the value of people and what they bring to an organisation, beyond being cogs in a production line.
Coming up with a coherent method of doing so will be anything but easy. After all, if it were simple to measure and put a value on human capital, we would have done it a long time ago. But shifting the conversation onto people is one place to start.
Moving the conversation in such a way gives HR an opportunity to play a leading role in tackling the productivity problem. It means thinking seriously about challenging issues like how we can improve the quality of management, the link between collaboration and productivity, and how we measure the value of intangible assets, including people.
For while people aren't owned by the organisation for which they work, businesses and the UK economy need to figure out how to better capitalise on the value people bring. Otherwise the productivity puzzle will never be solved.
Katie Jacobs is editor of HR magazine