UK losing £13,000 per household
Article Date: Feb 26 2008If UK productivity equalled that of the US, each household would generate an extra £13,000 per year. But most businesses are still failing to capture meaningful data about productivity, according to a study from business advisory firm Grant Thornton.
Almost all medium and large-sized businesses will be using some gauge of workplace productivity by the end of the year, with two-thirds already having a system in place and another quarter planning to introduce one.
However, of the companies already measuring productivity, one in five still avoid measuring the efficiency of their management team. Businesses also fail to use performance-related pay to drive performance, the study suggests.
Alysoun Stewart, head of the entrepreneurial advisory team at Grant Thornton, comments: ‘It is a fundamental principle that reward must be clearly linked with productivity. Every employee needs to understand what is expected of them and how they will be rewarded for achievement.’
The study, which surveyed 200 businesses, shows that 96 per cent have some form of performance pay initiative. However, just ten per cent offer it with each pay cheque, with the largest group (31 per cent) still offering only an annual bonus.
There are very few companies willing to base more than a fraction of total pay on performance. More than three-quarters of businesses offer 15 per cent of pay or less in performance-related add-ons.
The study’s suggestion that the UK would gain £13,000 a year by matching US productivity levels is based on estimated UK GDP for 2008 of £1.45 trillion and the London School of Economics’ productivity index which places the UK at 82 versus 100 for the US.
