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Google can help you solve the productivity puzzle


In all major economies, the ‘productivity puzzle’ (lower-than-forecast, since the financial crisis) defies easy explanation. The UK has a particularly acute challenge (and opportunity): labour productivity – output per hour worked – is 35% below Germany and 30% below the US. French workers produce as much by Thursday tea time as British workers do by Friday night.

The picture is complex, and has economists scratching their heads:

  • High UK employment means output is divided by more workers, so productivity is lower;
  • Traditional measures of ‘output’ ‘may be less useful for services in the digital economy;
  • There’s disagreement about the impact from AI and automation, and likely impact on jobs.

I’m sceptical about aggregate data presented by economists. Too often, I fear, they disguise useful insight about what workers and organisations are actually doing to create or destroy value. For example, the rise in part-time work and forced self-employment is a dramatic post-crash trend, linked with the so-called ‘gig economy’ which depresses wages. These may increase productivity but at the price of instability in companies like Uber and Ryanair. They fail to account for all the sources of value-creation – including trust.

According to the Bank of England’s Chief Economist, the leading edge of ‘frontier’ companies (and countries) continue to innovate. The problem, he says, is the lack of ‘diffusion’ to the ‘long tail’ who continue to under-perform (but not go bust). To raise their game, he targets one statistically significant factor: quality of management practices.

For those of us in the field of HR, we can help with diffusion. We should be working more closely and more often with finance people, talking about investing in management practices that create value. Now here’s a remarkable free resource from Google, identifying eight good management practices, including career development: re:Work.

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