Saturday, 16 September 2017

Last week we talked about productivity levels - and the conundrum about unemployment and wage levels.

I suggested, as I have done several times lately, that we might need to reconsider how we measure productivity - since the measure used to compare nations uses labour productivity.

But the growth of robots and other automation devices has distorted this figure.  The cost of the robots is not part of labour cost - and their g=hours are not part of labour hours.

So, nations that have automated the most lose in the productivity figures.  This does not seem right.
This investment goes unrewarded and we are no longer comparing like with like.

But remember - these figures are bot 'real' - so invest away, regardless of whether you distort the national productivity figures and the national standing in international tables.  Your job is to boost real productivity - and if automation does that, good luck to you.

Saturday, 9 September 2017

Most of the old economic certainties have gone.

For many years, the 'rule' was the as unemployment levels dropped, wages would rise (to entice workers away from others to your organisation).  Since the great 2008 financial crisis, this has not proved true.  Unemployment has dropped to the point where the UK is close to full employment - but wages have not risen correspondingly (though they have risen).

This position is mirrored throughout the developed world.

The experts don't seem to know why this is so or whether this is a temporary phenomenon.

We seem to be in a position where all we can do is 'watch this space', 'wait and see'.

Of course, you might not be bothered about this - feeling low wages simply helps your business

But national wage levels are important - wages create money that circulares in the economy - and may buy your goods or services.

Saturday, 2 September 2017

The Power of Benchmarking

The UK government recently established the Productivity Leadership Group (PLG)  to try and boost the nation's productivity.

The PLG says that if all except our most competitive businesses were able to improve their productivity to match the companies ranked 10 per cent above them, an additional £130bn Gross Value Added (GVA) would be unlocked every year – certainly a boost to business confidence and national productivity.

The power of benchmarking of this kind is that when organisations see that others (and especially others in the same sector) are already achieving such results, it shows the 'art of the possible'. "If they can do it, we can too."

This is why we always suggest that governments should carry out sector benchmarking - and show organisations what is achievable - preferably against a number of productivity variables.... so that any one organisation might find its performs well against some of these variables but poorly against others.  If it could raise performance to be among the top performers against all variables, it gains a significant productivity increase.

If the government is not doing it, you have to find ways of doing it for yourself.  There are a number of employer organisations and benchmarking 'clubs' that will help you share data with your peers to create sector benchmarks.

Saturday, 26 August 2017

Take a longer view

The US has created lots of jobs since President Tump was elected.  I am sure he will take the credit - and bask in the reflected glory.

President Trump should be careful, though.  America's productivity is not rising.  Any wage rises will be at the expense of inflation.  In a year's time, we may have a better guide to the success of his policies - for now, those in work will be pleased... but may find their wage being eroded.

Short-term gains are often illusory.

The same is true within companies.  When judging your latest quarter results, set them in the longer-term context.  You can grow short-term profits at the expense of longer-term investment - but only improved productivity gives longer-term, sustainable growth.

Saturday, 19 August 2017

What are you mesuring?

France takes the summer off.  many factories close down for a month while workers holiday en masse.

Other European countries also take longer holidays than the UK.

Yet the productivity of these countries is higher.

Can anyone explain this - it is intuitive.

I have voiced my doubts about the way we measure national productivity before.

Each time I note something like this, I become more convinced that we need to take a fresh look at what we measure and compare.

Similarly, you should be careful what you measure and compare in your business.

if you measure the wrong things, you will make the wrong conclusions - and worn decisions.

Saturday, 12 August 2017

Don't wait for technology

Over the last 50 years, there is no doubt that technology has made significant contributions to GDP and thus to national productivity. However most technology soon reduces in price and thus any contribution is soon lessened. Worse, we appear to be in a relative technology slump - there has been little true innovation in the last few years.

So, technology is not going to come to our rescue. We have to take the 'low road' and pick up all the small productivity gains we can. We need a systematic, national productivity drive with government addressing policy and infrastructure and companies like yours addessing skills and culture. We can create impact but it's not going to be easy.

Saturday, 29 July 2017

Not in your organisation

If your employees were fighting in factions, arguing among themselves and failing to do what you expect them to do, would you continue to pay them?  You might - but presumably you would also initiate disciplinary procedures to try to correct such behaviours.

I suspect, though, that your answer to the question is that you would not tolerate it - or that it wouldn't happen in your well -run organisation.

This is, however, what happens regularly, in politics. Both the US and the UK have exhibited such behaviours recently - infighting and squabbling between Republicans and Democrats - or Conservatives and Labourites.  All we, as the voting public, can do is to sit and watch - and perhaps seethe with anger - and wit until the next election.  These infighters and squabblers would not behave like this in the other compartments of their  life, surely.  But they seem to think this is how they are expected to behave as 'politicians'.

There is an old adage - 'we get the politicians we deserve' - so it must be our fault.

If we want productive government, we must demonstrate productive behaviours in all we do - and set these 'children' some role models.  We should also write to them and remind them of the constructive and productive behaviours we expect from our elected representatives - and we should certainly use our vote to sanction these unruly and unproductive behaviours whenever we get the chance.

As a businessman, you should also lobby whoever you can to put pressure on the political parties to control the worst excesses of their members.
EvanCarmichael.com