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Does Productivity Matter?

14 October 2016

The latest productivity figures, released by the Office of National Statistics (ONS) do not make particularly happy reading. Although productivity rose in the first quarter of this year, compared to the last quarter of 2015, it is still 17% below its trajectory, had the 2008 recession not happened.

It’s a phenomenon that has been vexing our politicians and economists for some time, summed up by the Government report Fixing the Foundations: Creating a More Prosperous Nation, which was published last summer. The report sets out a 12-point plan on how to make us more productive – although more recently this was criticised by a Commons committee as a ‘vague collection of existing policies’.

news-productivityReading the bulletins from the ONS, or the stories in the finance pages of the papers, it can be tempting to dismiss productivity trends as ‘lies, damn lies and statistics’. Thinking about productivity and how it effects our products and services – and our lives – is perhaps more useful.

Productivity is important because it’s considered to be a fundamental measure of a standard of living. Greater productivity means that labour is worth more which means that wages rise. Measuring productivity is not always straightforward, however.

In a manufacturing environment, like that at Eurocell, it’s easy to look at how many hours are being worked and the meterage of product being produced. But once we start looking at construction sites, or refurbishment projects, things are not so clear.
The way the ONS calculates productivity is to look at the output in terms of Gross Value Added and divide it either by the number of hours worked, the number of workers or the number of jobs. For some this is far too blunt an instrument.

The Chartered Institute of Building (CIOB) has argued that a building or piece of infrastructure adds value to organisations and to society; and this should be taken into consideration when looking at construction productivity. This seems to make good sense: well-designed, well-made and well-fitted glazing, for instance can enhance well-being and productivity – with the converse also being true.

Like many manufacturers, we understand that investment in innovation and in our employees is an important way to ensure high levels of productivity. Our management development programme aims to produce leaders who can lead change and improve the way we do things and we are very proud of the number of apprentices we have in the different areas of our business.

We also recognise that the way we do things has a much further effect too. The designs of our profiles and windows, the way we run our logistics operations and our branches all have a direct impact on the productivity of the people fitting our products.

In conclusion, while it is possible to criticise current means of measuring productivity, it is always important to keep challenging the way things are done, designed, produced. For us it’s vital that we look beyond our own gates to help improve the productivity of those who install our windows – and those who look through them.

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