Is this possible?
A study commissioned to identify the key management factors driving workplace performance in the UK has found a significant deficit in a very human, but quantifiable front: the ability to manage people. Poor people management is hitting the efficiency of UK businesses by an average of 8%, costing UK PLC (publicly listed companies) about £100 billion ($140 billion) a year.
The study published today by Investors in People and economic research consultancy TBR has found a performance premium of up to 11% for companies focusing on better people management. Small firms (less than 50 employees) and large firms (greater than 250) could see savings of £39 billion and £38 billion respectively, by closing this “people management gap.” It claims to be the first study of its kind to calculate the monetary benefits of implementing more effective people management approaches.
Its key findings suggest that employers adopting more sustainable practices, responding flexibly to change while planning for the future, are likely to drive the most improvement in their performance.
The lessons are clear for different industry sectors: based on research among 8,750 UK businesses and data from the Office of National Statistics (ONS), the research reveals that the health and social care industry has the most potential to improve its performance by changing how it manages its staff. Performance here would be increased by 8.9%, contributing £2.8 billion to the industry.
Interestingly, the sector that would benefit the most financially is one that should know better: the professional and financial services industry, with an 8.2% performance boost generating an additional £35 billion in output.
Different industry sectors call for varied approaches: developing strong and inspiring leaders generates the greatest efficiency gap in Construction, while recognizing and rewarding performance has the greatest impact on efficiency in Manufacturing (115%), Accommodation, Food and Leisure (109%), and Wholesale and Retail (109%).
“It’s obvious that a skilled, confident workforce is essential to a productive enterprise. However, it is difficult to determine the true impact on the bottom line, so sometimes business leaders can forget the importance of good people management. This study provides the evidence that focusing on excellence in people management can lead to significant performance gains for the sector and economy as a whole,” says Paul Devoy, Head of Investors in People.
“The effect of an efficiency gap is hitting the UK economy hard, and better people management within firms should be recognized as a key mechanism by which the UK economy can address low performance,” he adds.
To make it easier to identify and compare approaches of the best performing firms, Investors in People has launched what it terms “the first-ever real-time People Management Dashboard.”
“Anyone can now access a unique set of common metrics, showing the management performance of workplaces across the UK,” says Mr. Devoy, adding, “It’s a simple way to see how well employers are leading and supporting their people.”
Investors in People says it has been working with thousands of top businesses across the UK, from Allianz Insurance, McDonald’s restaurants, to Brompton Bikes, which has garnered attention recently via coverage in The Economist. Hundreds of academics, business leaders, and industry experts have been involved in creating the sixth-generation Investors in People standard, which is expected to launch soon – on September 15.
At the heart of every business is its people – and this is something publicly listed businesses in the UK, and indeed worldwide, are coming to grips with. Employees from graduate recruits to those in senior leadership positions are redefining what they want out of work, life, and the balance. Not only are these employees better informed, but they are also better armed via technology and social media. They know their worth and expect to be managed accordingly.
