Chicken & Egg – Productivity & Pay

Chicken & Egg - Seksuwat I was intrigued last week by New Year’s messages put out by the respective heads of the CIPD and the CBI. Mark Beatson, chief economist at the CIPD, said: “Employment growth looks set to continue at an impressive rate over the year to come. However, the downside is that UK productivity has yet to improve and remains below its pre-recession level.” In his annual new year’s message, Mr Cridland said despite economic growth, there were “still far too many people stuck in minimum wage jobs without routes to progression, and that’s a serious challenge that businesses and the government must address.”

To be fair neither was disagreeing directly with the other and both commented the need for the other factor as part of their wider messages.

My interest is the debate about which should come first?

Should employers simply raise pay as a gesture of good will?

After all they were quick to use the dire state of the economy to freeze pay rises in the first place (in some instances for several years).

Would this not send a message of ‘trust’ to the workforce and encourage an improvement in productivity.

From my experience of working with clients through the recession, I have seen productivity drop in some areas as workers do just the bare minimum of work in protest at frozen pay.

Other workers have however been driven by fear of redundancy and have actually worked harder.

The alternative option is to offer the carrot of a future pay rise linked to clear productivity improvements.

The workforce however, may well see this as delaying tactics and this in itself could antagonise and further demotivate them.

Some of the businesses I have visited in the past few years, faced with exactly the same challenges as the ones described above, have seen productivity increase and sustained high levels of employee engagement.

The main difference with these businesses is the quality and skill of the management teams.

The communication from top to bottom is clear and transparent.

They work to a common purpose and everyone understands the importance of their contribution to the wider business.

It was greatly satisfying therefore in reading both the CIPD and CBI messages that both ‘heads’ agreed on the importance of training and management training in particular. Mr Cridland said “It was important that skill shortages did not undermine recovery.”

Mr Beatson said: “Central to this [lacking productivity] is business and government acting together to improve the way people are managed, with more emphasis on working smarter and creating value.”

So my conclusion on the ‘what comes first’ in the Pay Rise or Productivity debate is NIETHER!

It doesn’t matter what option you choose, none will work effectively if you do not have the necessary leadership and management skills within your organisation.

It is leadership and management training that must be prioritised as in many businesses this vital piece of education has been sacrificed over recent years!

At MTD Training we can obviously help so check out our course portfolio or call one of our experts today.

Many thanks

Mark Williams

Head of Training

MTD Training   | Image courtesy by Seksuwat of FreeDigitalPhotos.Net

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Updated on: 8 January, 2014

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