Talking productivity with Be the Business’ Sir Charlie Mayfield and Tera Allas
Being more productive can deliver many benefits to your business, from boosting growth and competitiveness to improving morale. But how do you know how productive you are?
We talk productivity with Sir Charlie Mayfield, former Chairman of the John Lewis Partnership and Chairman of Be the Business; an independent not-for-profit movement established to support UK businesses to improve performance. Lloyds Banking Group have partnered with Be the Business to help companies across the UK to be more productive.
Benchmarking for success – how to measure your business’s productivity
Tera Allas CBE, Director of Research and Economics at McKinsey & Company, is a member of the UK’s Productivity Leadership Group and also a trustee of Be the Business. We spoke to her about the best ways for businesses to measure productivity and how to effectively use their findings.
Productivity has been a much-discussed topic in recent years. The ‘productivity puzzle’ that many UK firms have been experiencing for the past decade has seen productivity levels flatlining and lagging behind other nations. However, there is the potential for UK businesses to experience real productivity growth in the coming years, and there are plenty of ways they can achieve this, from upskilling staff to making the most of digital technologies. The first step for most companies is to start measuring their own productivity and identifying areas where they can make the most valuable improvements.
Why measure productivity?
Productivity means different things to different people. For economists, it’s a measure of output divided by input. But for businesses themselves, measuring productivity is key to understanding how they are performing and whether they are in a position to grow and be successful over the long term. Vitally, it can help identify the improvements they need to make to adapt for success.
What is benchmarking?
One effective way to measure productivity is benchmarking your business against your peers to see how you compare. Seeing how well other companies are doing, especially ones in the same sector as you, can spur you on to make improvements yourself.
Benchmarking also helps identify really clear, actionable targets. Understanding what’s causing the differences between you and your competitors’ productivity levels – whether it’s a new piece of machinery they’re using or a training course they’re sending their staff on – means you can adapt those good practices for your own business and hopefully see your own productivity increase as a result.
How to benchmark productivity successfully
Here are some pointers to ensure you get the most out of your benchmarking efforts:
- Choose the right things to benchmark. This could be as simple as measuring and comparing profitability. Or, for maximum benefit, it’s worth examining a range of areas that a business could act on swiftly, such as planning, sales and growth, leadership and strategy, digital readiness and people. Looking at leadership and strategy is crucial as it has a knock-on effect on to so many other areas. A good leader will spot opportunities and be continually looking for ways to improve. Digitisation is another important area. There are so many opportunities to automate routine processes, freeing up your people to do something more useful or creative, and, ultimately, be more productive.
- Benchmark against the right mix of companies. Looking at competitors within your field is likely to result in improvements that are most relevant to your business, but it can also be useful to look beyond your own sector for some more creative ideas. For example, a service company could learn a lot about running effective meetings from the way a manufacturing company runs its pre-shift meetings. Or large businesses can learn how to be more agile from small companies.
Benchmark your business with Be the Business
While benchmarking is extremely useful, it has proved challenging in the past as, understandably, businesses can be guarded. Plus, some of the methods of gathering information can be expensive. However, Be the Business’s new benchmarking tool allows companies to compare their productivity levels anonymously with 48,000 other businesses across the UK, at no cost. By answering a few simple questions, you can also quickly ascertain the practical steps you could take to improve. Armed with this data you can then make informed decisions about the future of your business.
Take a closer look at the benchmarking tool.
Making the most of your benchmarking data
Benchmarking can provide you with a wealth of data. Here are a few ways to help you get the most out of it:
- Make sure you use the findings effectively. Even when you know, in theory, what you should be doing to improve productivity, putting it into practice can take a lot of time and effort. It can be overwhelming to get so much information and inspiration at once. Take your time to look through it all carefully and assess what’s most relevant to the business, what quick wins you might be able to make and what changes might require a more strategic plan, or more investment. You probably won’t be able to change everything at once, so it’s important to prioritise a few areas that you think will have a real impact.
- Be wary of making generalisations. With all benchmarking tools there’ll be a degree of generalisation, so it’s important to make your own interpretation of the findings. Start by actioning those ideas that make the most sense to you and your staff, as these are most likely to deliver early successes.
- Be open to needing improvements. Over-confidence and a reluctance to acknowledge that your business has areas in need of improvement can prevent companies from really benefitting from benchmarking. So, look at the information with an open mind and be willing to make changes where necessary.
- Make sure your staff are prepared for change. If your culture isn’t very ambitious or there isn’t a culture of continuous change, it can be harder to get people excited about the idea of measuring and improving productivity. It’s common for people to be resistant to change. If this sounds like your business, it’s worth doing some groundwork explaining why you’re making these changes before jumping right in. Involving staff in discussions about what the company does well and what it doesn’t can also be extremely valuable. Staff typically have some really useful insights into what improvements can be made and are often keen to see their own ideas implemented.
There’s a lot to consider when it comes to measuring productivity, but the important thing is to get started and not be afraid to make changes. Productivity is the lifeblood of UK businesses and taking steps to improve yours will only help your business grow and be more competitive.
Productivity changes lead to new business wins at Cumbria Crystal
Lake District-based Cumbria Crystal, the UK’s last producer of completely hand-blown and hand-cut crystal, implemented a series of improvements after using the Be the Business benchmarking tool, with great results.
Changes included introducing a staff bonus scheme for hitting turnover and margin targets, and challenging employees to deliver a 1% performance improvement to each area of the business each month.
The company credits the changes with significant cost savings and new contract wins, including the likes of Bentley Motors.
Chris Blade, managing director, said: “Benchmarking helped me to identify the areas where we could make meaningful improvements to the business. The changes were often small tweaks, but taken together they led to a big improvement to our performance.”