Productivity: work better, not harder

In today’s world, where automation is growing, pace increasing and borders disappearing, an organisation needs to be dynamic and able to adjust quickly to changing market conditions. This also means being comfortably uncomfortable and constantly challenging your management and working practices. Why is this so important? Because it drives productivity.

And productivity is vital to the UK economy. ~80% of our economic growth in the last 50 years came from improvements in productivity. It also drives social prosperity and living standards. As the Nobel laureate Paul Krugman said:

"Productivity is not everything, but in the long run, it’s almost everything"

The UK’s longstanding productivity problem is becoming more pressing as we navigate Brexit uncertainties and adjust to an ageing population. As of today, we have the 2nd lowest labour productivity (in output per worker) in the G7 and lag behind other economies, with two thirds of UK employees working for low-productivity firms, compared to only 55% in Germany. Are we not working hard enough? Are we wasting time on things we shouldn’t be doing? Do we just not have the right skills?

While there is no simple answer to these questions, what keeps me optimistic are initiatives such as Sir Charlie Mayfield’s “Be the Business”, which McKinsey is proud to support. Business leaders are joining forces to put a spotlight on productivity. The solution lies at the level of individual firms, managers and employees. We should not underestimate the impact we can all have together.

Being more productive is not about working more but working better. As such, a key driver of productivity is the adoption of stronger management and working practices. The more these are embedded into a company’s DNA, the higher the productivity. Each organisation will have to find its own way, but three levers can have a strong influence across the board:

1. Building diverse and inclusive teams

I have already shared the correlation we found between a more diverse leadership team and stronger financial performance. Diversity means better decisions and creates a positive environment for innovation and productivity. This is true for not only gender and ethnicity but also age. When different generations work together, they can each leverage their respective strengths. For example, older workers can be more productive than younger ones in jobs requiring social skills. On top of diversity, simple (but not easy!) things can help you create an inclusive environment where your teams can thrive. Listen to them and help them find a meaning in their jobs. Teams will feel motivated to go the extra mile. Even small wins can boost their “inner work life” – the way people are affected by what’s happening at work.

2. Creating a positive environment to focus and think

This can be difficult in our modern and highly connected workplace, but improving individual and collective time management is a “must have” for productivity. For example, we can rethink the format and need for meetings. More attendees may make it harder to make good decisions and increase the risk of pushing work to outside office hours. Amazon’s CEO Jeff Bezos has an interesting (and unique) approach: consider how many people you could feed with two pizzas and that’s how many participants you should have! Encourage your teams to think by giving them space and time. They will then feel supported to streamline their work, meet deadlines and challenge inefficient processes.

3. Elevating skills

With task automation growing, we tend to forget what really makes an organisation shine: its people. Your employees’ skills are your true asset and can make a fundamental difference to your productivity. We should attach more importance to intrinsic skills such as emotional intelligence, communication and problem solving. These are just as valuable as degrees and work history and can be identified with innovative technics such as AI algorithms. Building up your teams’ skills will also help you achieve greater productivity. As an example, we have recently supported a UK organisation in creating a centre of digital excellence, resulting in a significant increase in traffic to their e-commerce platform and a higher conversion rate. This was made possible by implementing agile working practices and upskilling.

The productivity challenge can seem overwhelming, but, with the right management and working practices, businesses can overcome it. I would encourage you to check out “Be the Business”, which provides helpful resources and a benchmarking tool for all UK businesses.

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Vivian Hunt is the Managing Partner for McKinsey & Company in the United Kingdom and Ireland. She advises leading British and global organisations on a broad range of strategy topics and is an expert on leadership and global talent.

McKinsey & Company contributed research and analysis to “Be the Business”