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3 minute read with link to full report

CBI report highlights how people management improves productivity

New CBI research shows that the UK could add £110 billion to the UK economy by improving people management practices within British firms. This is equivalent to the value of the UK’s entire construction sector.

Great Job: Solving the productivity puzzle through the power of people, a new CBI report and toolkit supported by McKinsey & Company, reveals that UK companies know that effectively leading, engaging and developing their staff matters. Many firms are already doing this well.  The CBI and its members are stepping up and highlighting the practical actions business can take to collectively improve further.

Over the last decade, labour productivity growth is lower than at any time in the 20th Century. The reasons for this are complex and deep-seated, but one factor is that UK business has not kept pace with international peers on people management. Indeed, the CBI report finds that UK businesses perform at or below the average for other companies in the EMEA region (Europe, Middle East and Africa) on nearly 80% of good people practice indicators.

The CBI has set out its plan for how business, backed by Government, will lead a race to the top in the way UK firms lead, develop and engage their workforces / Picture: Getty/iStock


Unlocking the power of its people could give the UK a much-needed productivity boost – and the change needed is well within reach. CBI research shows that making even small improvements can yield sizeable productivity increases. Businesses that improve their management practices from the lowest levels to the UK median can increase their productivity by 19%.  Even more importantly, better people practices would lead to better jobs across the UK.

Carolyn Fairbairn, CBI Director-General, said: “It’s no secret that UK productivity has been stubbornly flat since the financial crisis. If we want to breathe new life into the economy, then investing time, effort and resource in people is a great opportunity for business.

“Many are already doing this successfully, but it’s clear that firms should continue to up the game.  The size of the prize from improving the management practices could be a massive £110 billion injected into our economy.”

Great Job highlights the hurdles that can hold back a firm’s progress. These include a lack of awareness of what good looks like, difficulties in getting all parts of the business to pull in the same direction, and leaders underestimating the importance of their words and actions. The opportunities from overcoming these hurdles are significant. This report highlights the scale of the opportunity for UK firms’ performance if they adopt the habits of the most effective businesses at leading, engaging, and developing their people.

The key habits which can help firms improve their people management practices include:

Setting people management targets and placing them on a par with company commercial targets
• Making the Board accountable for these targets and communicating openly with employees and the public about their firm’s performance
• Linking a company’s reward strategy for line managers with their performance on people management.

CBI research shows that making even small improvements can yield sizeable productivity increases. Businesses that improve their management practices could increase their productivity by 19% / Picture: Getty/iStock


The habits of people-driven businesses

Great Job has identified a set of tangible changes that all firms can make to improve how they lead, engage and develop their people.

1. Make good people practice a shared business priority

Organisational transformations are more than four times more likely to succeed when leaders role-model the practices and behaviours that need to change.

2. Put people management on a par with commercial targets

All line managers should have people management objectives with Key Performance Indicators (KPIs), and these should be given equal weight to commercial objectives when assessing their performance.

3. Establish a shared purpose for the business and recognise people’s contribution towards it

Firms which have the highest employee engagement see absenteeism 41% lower and profits 22% higher than those with the lowest.

4. Put people’s skills and competencies at the heart of the recruitment process

Recruiting high performers has been found to generate 40% higher productivity in operational roles, 49% higher profit in management roles.

5. Provide high-quality on-the-job development & support

Businesses that develop their staff’s strengths have been found to reduce employee turnover by up to 72%.

6. Assess how your business is performing on people practices

25% of UK managers say their business improved its people practices because it compared them to other businesses.

7. Be open about how your business is performing on people practices

69% of the public believe that treating staff well is the primary way to improve business’ reputation. Therefore, businesses that talk publicly about how they develop and engage staff could see a boost to their reputations.

You can download the full report below