A very British productivity problem

Holland, Ireland and Belgium. Hardly a who's who of manufacturing superpowers but, from Liege to Limerick, these employees outperform their British counterparts in the productivity stakes, according to ONS figures. With the gap in output per worker between us and the rest of the G7 stretching to its widest point since 1992, WM set out to salvage some national pride at the Great Productivity Debate, which WM held in London recently, in partnership with workforce management system provider Kronos. "Your productivity was lower than almost every other country that was evaluated by the Office for National Statistics. I mean, really low," Gregg Gordon, a US-based manufacturing author and senior director of manufacturing practice at Kronos, told an audience of frontline UK manufacturing managers. "You have to be careful with some measures. Productivity is calculated by dividing output by input, but there are a lot of ways to swizzle those numbers." Swizzle away, claimed David Fox, chief executive and chairman of PP Electrical Systems, a Walsall-based electrical control systems manufacturer. The inconvenient truth, he said, was that British workers were simply not up to international standards. "In my opinion, our manpower is not sufficiently motivated to get a result. We've got no discipline in the country. We're not allowed to tell the workers off. If you tell anyone off in this country, they'll soon tell you what to do." Fox's frustrations are portentous. Even a former Best Factory Award winner concedes a heavy deficit in workforce productivity versus its European rivals, he revealed. "We've got four huge opportunities in Germany at the moment and our productivity is at least 20% lower than the Germans. We're absolutely competitive on everything apart from the productivity." The Germans may have put their towels down on the tender. Yet all is not lost for PP Electrical and its UK manufacturing brethren, responded Gordon. "There are four ways you can increase productivity: you can offshore to decrease your input costs, you can automate...you can reduce wages. The fourth way is to increase throughput with your existing labour." Dig deeper and you pretty quickly find a case of Hobson's choice. Gordon added: "People have automated what they can, offshored and brought it back because of fuel costs or quality issues. They can't cut wages any further, so it's down to people. What do you do? You can't whip them. You have to engage them." Showing restraint Engagement might come easy to Gordon's countrymen. The Americans just love to whoop at even the smallest victory. But letting out a holler because we halved a takt time – well, that just wouldn't be very British. "Here, you don't celebrate victories enough," said Gordon. "In the US, the more progressive manufacturers have little parties to highlight when people have done good things. They don't punish the people who take a risk and fail. So, that builds an environment where people are willing to share ideas... creating people who are adding [something] to the business." But amid all the talk of stiff upper lips, it's worth considering that self-castigation is another quality that Britons do best. "I get to work in plants around the world. I've worked with people in Belgium and Germany, and you can't shout at them either," remarked Mark Bown of Cummins Power Generation. "In fact, it's tougher out there. The works councils are strong and there are restrictions on the hours people can work." The productivity measure – output divided by time – was not as simple as it might seem, claimed Bown. "From a productivity point of view, it's about how it's measured and how accurately. This starts off with the engineers who determine the standards and the time factor it's measured against. If you look at sales value per employee instead of productivity, it will start to level the playing field." The empire strikes back. Another bigger consideration before bemoaning our ONS showing was to consider the universe beyond shopfloor productivity. "My big concern is, when we look at productivity, we look at labour profile of the product, which is probably 20-25% of the cost," said Bown. "We've got to be really careful that we keep pushing the shopfloor and pushing people that take a small period of the lead time and cost of the product." Blindspots were all too common amid colourful charts comparing labour efficiency, agreed Norman Allan, finance director at DW Windsor Lighting. "I went into a carpet manufacturer who wanted me to help analyse productivity. They did lots of KPIs on employee productivity, but the one thing they missed was you could buy the product from Holland for the same price as the material and energy cost. The labour productivity didn't matter a jot – their investment in equipment and technology priced them out." Yet, not everyone was receptive to the reductionist theories. "At the end of the day, the ONS work was done for a reason – to find out where we stood," responded Fox of PP Electrical Systems. "We can go on kidding ourselves that it's to do with support staff and not production. We're not last but one in the table because someone wanted to put us there." The UK manufacturing worker is accused of being defective, destined to be earmarked by QC for rework. "Of our temporary workforce, 60-70% come from Eastern European countries," said Simon Noakes of Hozelock, whose firm relies on huge influxes of temporary workers to cope with seasonal swings in demand for garden equipment. "That's not deliberate policy. But it's a sad fact that Eastern European temporary employees react and respond to manufacturing challenges very quickly... We find home-grown people see manufacturing as a last resort." Noake's lament was indicative of WM's recent People & Productivity research, which found nearly half of UK manufacturers had sacked an employee for critical job errors in 2012. However, even base metals can turn to gold in the hands of a good alchemist, argued Phil Carpenter of the Royal Mint. "Develop a vision and give people a reason to want to change. I sometimes wonder, when we talk about Eastern Europeans, whether they have a personal drive to make things better even when the business doesn't have a vision." Success was down to keeping things simple, recommended the Royal Mint chief. "Stand on the gatehouse at the end of a shift and ask people if they have achieved what they set out to achieve today. If they can't answer that question, it's overcomplicated." Shoddy employees, slack management or a mathematical anomaly. The Great Productivity Debate had determined three alternative explanations for the UK's poor showing in the global productivity stakes. It was down to the non-partisan Gordon to assume his best Jerry Springer voice and have the final say. "How you measure [productivity] is quirky. The bottom line is the economy is not doing well when other countries are improving. Your export numbers are down. That's the real, true competitive metric... No matter how you swizzle it, when you put yourself up against global standards, you're not productive." How to create a productivity-enhancing super-employee 1 Apply good hygiene: The first step to engagement is taking care of people's essential or, as Austrian psychologist Frederick Herzberg called them, 'hygiene factors'. Assurances over job security, paying people on time and correctly, and keeping them in the loop on business performance are the business world's equivalent of deodorant. You can get away with forgetting to apply once or twice, but do it consistently and you leave a very nasty smell. 2 Celebrate even the smallest victory: Attempt to high five your operators over good output figures and you can expect someone to be sniffing your coffee cup, come break time. Public recognition clashes with the classic self-effacing British style. But a well-judged pat on the back reinforces good habits and could spur your shopfloor to greater heights, says Gregg Gordon. Recognition needn't be about cash bonuses, according to debate delegates. One noted a 90% reduction in ideas when vouchers were tied in with a suggestion scheme – perhaps linked to fears of departmental envy and dispute. Money really is the route of all evil, it seems. 3 Leave no doubt: The big spoon should be in every manufacturing manager's top drawer, says Gordon. You'll need it to feed your shopfloor the fundamental tasks you want done and the standards they must reach. Assume competence and – when you're bemoaning that any halfwit could have seen that coming – the real fool will be you. Gordon told debate delegates to ensure they spell out expectations and instructions: "You need to tell them how to be successful. They need to know what to do. You can't make them guess." 4 People are the same the world over: If you've tried all of the above without reward, don't despair. You are not employing a mutant strain of employee, resistant to good management repertoire. It's just a case of keep on experimenting until you uncover what makes an individual tick. Gordon concludes: "When they're engaged, I would suggest your people have the innate ability to be creative. Your challenge is how do you engage them?"