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.

EvanCarmichael.com