Is this possible? A study commissioned to identify the key management factors driving workplace performance in the U.K. has found a large deficit on a very human, but quantifiable front: the ability to manage people. Poor people management, it says, is hitting the efficiency of U.K. businesses by an average of 8%, and costing U.K. PLC (publicly listed companies) about £84 billion ($129 billion) a year.
The study published today by Investors in People and economic research consultancy TBR has found a performance premium of up to 11% for companies focusing on better people management. Small firms (less than 50 employees) and large firms (greater than 250) could see savings of £33 billion and £32 billion respectively, by closing this "people management gap," it suggests. It claims to be the first study of its kind to calculate the monetary benefits of implementing more effective people management approaches.
Its key findings suggest that those employers that adopt more sustainable practices, responding flexibly to change whilst planning for the future, are likely to be the ones that drive the most improvement in their performance.
The lessons are clear for different industry sectors: based on research among 8,750 U.K. businesses and data from the Office of National Statistics (ONS), the research reveals that the health and social care industry has the most potential to improve its performance by changing how it manages its staff. Performance here would be increased by 8.9% , it says, contributing £2.4 billion to the industry.
But, interestingly, the sector that would benefit the most financially is one that really should know better: the professional and financial services industry, with an 8.2% performance boost generating an additional £29.9 billion in output.
Different industry sectors call for a varied approach : developing strong and inspiring leaders generates the greatest efficiency gap in Construction, says the study while recognizing and rewarding performance has the greatest impact on efficiency in manufacturing (115%), Accommodation, Food and Leisure (109%) and Wholesale and Retail (109%).
“It’s obvious that a skilled, confident workforce is essential to a productive enterprise. However, it is difficult to determine the true impact on the bottom line, so sometimes business leaders can forget the importance of good people management. This study provides the evidence that focusing on excellence in people management can lead to significant performance gains for the sector and economy as a whole” says Paul Devoy, Head of Investors in People.
“The effect of an efficiency gap is hitting the U.K. economy hard and better people management within firms should be recognized as a key mechanism by which the U.K. economy can address low performance," he adds.
To make it easier to identify and compare approaches of the best performing firms, Investors in People has launched what it terms "the first ever real-time People Management Dashboard."
"Anyone can now access a unique set of common metrics, showing the management performance of workplaces across the U.K., says Mr Devoy, adding - "It’s a simple way to see how well employers are leading and supporting their people.”
Investors in People says it has been working with thousands of top businesses across the U.K., from Allianz Insurance, McDonald’s restaurants, to Brompton Bikes - @BromptonBicycle on Twitter and even more famous recently via coverage in The Economist. Hundreds of academics, business leaders, and industry experts have been involved in the creation of a sixth generation Investors in People standard, which is expected to launch soon - on September 15.
Because, at the heart of every business is its people - and that is something publicly listed business in the U.K - and also all over the world - are having to come to grips with as employees from graduate recruits to those in senior leadership positions across gender redefine what they want out of work, life - and the balance.
Not only are these employees better informed, they are better armed via technology and social media - and the L'Oreal advertisement has taught them well - they know it's because they are "worth it."
