In the last two quarters the UK has seen the strongest growth in productivity in ten years. HSBC looked behind the figures to see what’s driving the change.
Productivity, or rather the UK’s lack of it, has been the cause of major headaches for policy makers and business leaders for the last 10 years.
UK productivity plateaued in 2008 following the financial crisis and has since fallen away. Today, the country’s productivity lags behind other industrial powers with UK workers producing less in each hour than those in France, Germany or the US. Famously, a German worker could clock off on a Thursday afternoon in a typical week and still produce as much as a British worker doing a full week’s work.
However, change is in the air. The latest figures from the Office of National Statistics show that in the last two quarters the UK has seen the strongest growth in productivity in ten years. This has prompted HSBC to look behind the figures to see what businesses are doing to address the challenge.
The findings from our study of UK workers and business leaders show how the technology sector is leading the way when it comes to productivity. The data also highlights the huge importance workers place on flexible hours and work-life balance when it comes to being more productive in the workplace with nine-out-of-ten workers (89 per cent) saying flexible working motivates them to be more productive at work.
In fact, workers rate the opportunity to work flexibly as being more likely to motivate them, and ultimately increase their productivity than financial incentives. What’s more, flexible working has become so important that almost one in five (18 per cent) cited a poor work-life balance as the reason for leaving their last job – ranking higher than limited opportunities for a pay rise.
Tech firms are among the most likely of any sector to offer flexible working with 47 per cent of employees saying the option is available to them. As a result, more than half (56 per cent) say it motivates them ‘a great deal’ – one of the highest satisfaction rates across all industries.
We’ve seen these statistics brought to life by the increased appetite our tech customers have to invest in the kind of technology needed to enable staff to work remotely, flexibly and collaboratively with colleagues and clients. This ranges from simply bringing in more phones, tablets and laptops so employees can work flexibly and in different ways, to seeking bank finance to fund investment in the systems and infrastructure needed to securely work remotely.
The result of this is that productivity levels for the tech sector as a whole are amongst the highest. According to the annual TechNation report, tech industry workers’ contribution to the economy is £103,000 per year in terms of Gross Value Added (GVA) compared to the £50,000 contribution of non-digital workers. What’s more the productivity gap between the two has grown to 10 per cent over the past five years.
Millennials and Flexible Working
I see work as something I do – and not somewhere I go. Whilst human interaction is important and should not be underestimated, productivity and staff happiness, as well as lower staff churn, appear to be directly linked to allowing people to work on a flexible basis.
This link also has a lot to do with the changing demographics, desires and ambitions of the typical workforce. This has seen many firms adapting the way they attract and retain talent to focus on millennials, who are so important to the tech sector and predicted to make up 75% of the global workforce by 2025 according to Deloitte.
As a cohort, they have become renowned for being motivated in the workplace by ‘softer’ benefits. Whereas previous generations may have hoped for a work-life balance, millennials expect it and the idea of controlling their own working hours and location is critical. Trust plays a big role in this and is very important to younger workers.
Back in the mid-90s, economist Paul Krugman wrote, “Productivity isn’t everything but, in the long run, it is almost everything.”
Savvy tech firms have heeded these words and are leading the way when it comes to flexible working and recognising the needs of today’s workforce. Many are now reaping the rewards by creating happier and more productive workplaces.
About the author
Roland Emmans is Head of Technology Sector for HSBC Commercial Banking. Roland uses his 20 years of banking experience to get under the skin of tech firms and help them prosper. He has supported the growth of a wide range of tech businesses, which has given Roland unique insight into the sector, its challenges and opportunities.