The UK’s productivity problem is nothing new. We have often struggled in terms of output per hour compared to our continental and global competitors. What is new – and indeed worrying – is the extent to which productivity has plateaued following the recession. The normal pattern whereby productivity springs back following the shock of a downturn has not played out. Productivity growth has stalled since 2008; it is now 16 per cent below the pre-crisis trend. Having almost caught up, we are now 17 per cent below the average for the rest of the G7.

So why has productivity stalled? Explanations tend to focus on the traditional economists’ fare of education and skills, investment – both tangible and intangible, corporate governance, and the financial system. Employee engagement may offer part of the answer. And indeed, part of the solution. Employee engagement, according to the Institute of Employment Studies, is ‘a positive attitude held by the employee towards the organisation and its values. An engaged employee is aware of the business context, and works with colleagues to improve performance within the job for the benefit of the organisation.’

There is increasing evidence of the link between engagement and productivity – on an individual and an organisational level. There is a strong relationship between engagement and both employee advocacy and customer satisfaction and loyalty. In a massive survey of over 23,000 business units, Gallup found that those with engagement scores in the highest quartile were 18 per cent more productive than those in the lowest quartile.  

How are we to explain this link? Innovation may be central to this. Engaged employees are more innovative; they seek to continuously improve processes, look for new ways of adding value to their work and are more likely to suggest and follow through on new ideas. Gallup (2007) found that 59 per cent of the more engaged employees said that work brings out their most creative ideas, compared to just 3 per cent of the less engaged.

So what are we to do? It may be worth looking back at the four enablers of engagement - a strategic narrative, engaging managers, employee voice and integrity – identified in the MacLeod report Engaging for Success (2008).

Strategic Narrative

The strategic narrative is about having ‘a strong, transparent and explicit organisational culture which gives employees a line of sight between their job and the vision and aims of their organisation.’ Employees need to find meaning and purpose in their work. They need to see how their individual graft and toil contributes to something greater, something that they can buy in to and believe in. Otherwise work becomes merely contractual and transactional – you come to work and do what you’re told just because you have to.

Looking at the Workplace Employee Relations Study (WERS) – a large survey of the UK workforce – there seems to be some way to go here. Two in three employees (65 per cent) agree or strongly agree that they share the same values as their organisation. But just 16 per cent strongly agree, indicating some room for improvement.

Engaging Managers

Line managers are absolutely crucial to employee engagement. The MacLeod report identified the importance of having engaging managers who offer clarity, appreciation of employees’ effort and contribution, who treat their people as individuals and who ensure that work is organised efficiently and effectively so that employees feel they are valued, and equipped and supported to do their job.’

Again, while the headline figure from WERS is reassuring – with two third (64 per cent) saying that relationships with managers are good/very good – just one in five (21 per cent) believe they are very good.

Employee Voice

Voice is central to employee engagement. MacLeod and Clarke defined voice as having a situation whereby “Employees’ views are sought out; they are listened to and see that their opinions count and make a difference. They speak out and challenge when appropriate. A strong sense of listening and responsiveness permeates the organisation, enabled by effective communication.’

There is evidence of a voice deficit. ETUI rate the UK as second bottom of the league in the EU in terms of employee participation – beaten into last place only by Lithuania. Evidence from WERS shows that just one employee in two (52 per cent) says that managers are good or very good at seeking their views. Fewer still – just one in three (32 per cent) – say that managers are good or very good at allowing employees to influence decision making.

This is a significant cause for concern. If employers are to benefit from the expertise and experience, the ideas and innovation of their employees, they need to allow and indeed encourage them to speak up.

Many of our most productive industries tend to buck the trend of low voice and low involvement. Take the automotive industry or the aerospace sector, where high levels of union membership, and high levels of employee involvement go alongside incredibly high levels of productivity.

Integrity

The final enabler of engagement is integrity. This is defined as ‘a belief among employees that the organisation lives its values, and that espoused behavioural norms are adhered to, resulting in trust and a sense of integrity.’

Again, there is evidence of some work to do here. WERS shows that just one in two employees (50 per cent) agree/strongly agree that managers keep their promises. Only slightly more (58 per cent) agree/strongly agree that managers deal with employees honestly.

The UK faces a productivity puzzle. Employment relations could in part be the missing piece. If employers in the UK were better able to engage with their employees, we could both improve the quality of work for people, and drive up productivity for the benefit of all.