A new CIPD report finds too many businesses in ‘survivor mode’ or failing to invest enough in their people or the technology and equipment needed to boost productivity. The CIPD’s chief economist Mark Beatson warns that too many businesses are being held back by an ‘ambition ceiling’ which is preventing them from making the productivity gains needed to achieve business growth and implement the new National Living Wage without risk of job cuts.
When asked about their future plans and productivity potential:
- 55% of organisations expect to produce more goods and services in the coming year, 32% expect to produce the same and 8% expect to produce less.
- 34% of organisations consider themselves high performers that don’t see the need for major change and lots of investment.
- A further third (33%) fall into the category of intending to make up lost ground, with 17% saying that they will now be able to make the investments in equipment and technology they haven’t been able to do in the last few years and 16% saying that they will now be able to make the investments in people that they haven’t been able to in recent years.
However, a fifth (20%) thought they wouldn’t be in a position to improve existing poor performance because they lacked the finance to invest (reported by 16%) or the skills and ambition to improve (reported by 4%).
Mark Beatson, chief economist at the CIPD, and author of the report said: “The recession has cast a long shadow over many British businesses and residual fears about a future downturn have left many organisations with a ‘glass half empty’ mind set which has held them back from investing, despite improved economic conditions. We need these businesses to recognise the current opportunities for growth, innovation and investment, to raise their sights and break through their ‘ambition ceiling.” Unless they can do this, it’s questionable how many companies will be able to absorb the planned National Living Wage without an adverse impact on employment levels.”
Beatson comments: “This report shows the characteristics that differentiate high productivity businesses from low productivity ones. Businesses that focus on quality, have an internal culture that fits their intended direction of travel and take a balanced approach to investment in both capital and equipment and their people are likely to have higher productivity now as well as being more optimistic about the future.”
The report also raises alarm bells for the Government about the ability of public sector organisations to deliver the improvements in productivity needed if the intended cuts in funding of public services are to be met without damaging service quality. Whereas 14% of private sector organisations say they lack the finance or skills to increase investment and productivity, almost triple (38%) the proportion of public sector organisations see themselves in this position.
