The productivity debate has significantly risen up the political and business agenda. There are different views on what drives productivity, but understanding it is vital to improving living standards and achieving sustainable economic growth.
The debate usually centres on our production of goods, but with 80% of GDP being services-related we are in danger of missing a crucial aspect if we confine it to manufacturing and physical output.
The fact is that service productivity lies at the heart of the challenge. We have set this out recently in a new report based on research amongst senior managers, employees and customers that you can find here.
Customers – and therefore customer service – are critical to productivity because they both stimulate productivity by buying products and services and shape it through their interactions with organisations. What’s more, when businesses get things wrong through poor service, customers have an impact on productivity because their complaints and queries have to be dealt with, taking up time and resource.
There are three key ways in which service issues affect productivity. Firstly, our research has found that employees spend, on average, 24 hours a year of work time sorting out service issues relating to their own personal orders and purchases. Secondly, employees spend an average of 2.5 days a month resolving customer-related problems arising from supplier issues. And finally, they spend 2.6 days a month sorting out the consequences of their own organisations getting things wrong.
The combined effect is that the UK loses an astonishing £11 billion a month in wasted productivity. All the time that employees and managers spend resolving service issues is time that they are not able to be creative and productive. If we could reduce this time and cost, the boost to productivity would be truly considerable; let alone the ability to raise our levels of innovation and insight.
We set out a number of ways in which both organisations and government could address the service productivity issue. For organisations, there is of course no single magic bullet but rather a whole set of interlinking solutions that all stem from putting service at the heart of the organisation’s purpose and vision and then clearly their business plans.
One of the most important of these is to get the right blend of technology to free staff up from low-level transactional and processing tasks, with people who have brilliant service skills to sort out problems quickly when they do arise. In order to minimise incidences of things going wrong, it is vital to design processes from a customer point of view so that you are much more likely to get things right first time.
It is about making yourself easy to do business with: taking a customer-centric approach, designing a smooth customer experience, and being responsive to feedback and interactions.
To make this really work, you also need to empower your staff – bringing your values and vision to life and making it feel authentic to employees. Recognition and reward are important too, and in fact being rewarded fairly was one of the key issues for lower paid staff in particular. Rewarding staff fairly can unlock greater employee engagement and productivity.
Our research also provided some clear views on government’s part in stimulating productivity. The number one item was to get the education and training system right, and to improve apprenticeships and vocational training, perhaps by offering tax breaks to businesses for skills training. Many customers also believed that government should ensure there is more punitive regulation for businesses that deliver poor service.
This should serve as a warning to all businesses. We need to take the service challenge seriously and see it as a boardroom priority. If all organisations did so, we could boost service productivity. Businesses would prosper individually and the economy as a whole would receive a significant uplift at a time when it is badly needed.