A guide to improving productivity for professional services firms

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Incremental Productivity Gains can deliver lasting value

Most people already know that UK productivity is not as strong as it should be, but do you understand why it matters and what you can do about it?

According to the Office for National Statistics, UK productivity growth has fallen further
behind that of countries like France and Germany since the financial crisis. Based on the latest OBR forecasts, only meagre productivity growth is expected in the next few years, rising by just 1.3 per cent by 2023, which is disappointingly low.

The revelation that a French worker achieves as much in four days as a British worker does in a full working week has captured the imagination of unions, politicians, employers and workers alike. At a time when many businesses are considering cutting jobs or reducing working hours to improve operational efficiency, productivity gains could create an opportunity to improve output and deliver more profits.

On average, British workers worked 325 hours more than their counterparts in Germany in 2017 – that’s equivalent to about 40 extra days, based on an 8-hour day.

Accounting Business services statistics

In the professional services sector, where salary costs often represent the largest overhead, even just a small improvement in productivity could enhance business value significantly. Whilst this could be viewed as an opportunity to reduce head count, forward-looking firms could view it as an opportunity to improve efficiency and become more competitive, at the same time as making it easier to attract and retain top talent, as well as having increased capacity for new clients.

Improving productivity may sound like a big ask for professional services firms, particularly at a time of intense market competition and the considerable uncertainty about future trading conditions with Europe and the rest of the world. However, this guide is intended to demonstrate that even small incremental improvements in productivity can generate that sought-after all round positive effect of improved results and a better work experience for all.

UK PRODUCTIVITY – a global perspective

At a national level, productivity is most commonly calculated as Gross Domestic Product (GDP) generated per hour worked.

On average, British workers worked 325 hours more than their counterparts in Germany in 2017 – that’s equivalent to about 40 extra days, based on an 8-hour day.

Based on this measure, it is evident that productivity in the UK is trailing that of France and Germany. However, the number of hours worked on average per UK worker is higher than that of their French and German counterparts. Whilst an impressive time commitment, this is ultimately concerning and undermines UK competitiveness.

Whilst driving productivity is important for the UK economy as a whole, there are steps – based on five ‘foundations’ – ideas, people, infrastructure, business environment and places – that professional services firms can take to close the productivity gap within their own organisations.

Contact Menzies Business Services team