Boosting client productivity

The Managing Partners’ Forum annual Productivity Summit was hosted by Bryan Cave Leighton Paisner, and included keynote presentations by Jessica Northend, director of corporate affairs at Be the Business; Ben Willmott, head of public policy at the Chartered Institute of Personnel and Development (CIPD); Nida Broughton, head of work and economy at the Behavioural Insights Team; and Forum founder and chief executive Richard Chaplin. This was followed by a panel session chaired by Forum chair Neville Eisenberg and featuring Nicola Sawford, a portfolio non-executive director.

SMEs can make a big difference

Jessica Northend reminded delegates that UK productivity levels have remained stagnant for a decade and there are no signs of improvement. The government cannot make businesses more productive; but if individual businesses make changes to improve their own productivity, they will make a difference on a macroeconomic scale.

Be the Business is working to stimulate and inspire businesses to become more productive.  Two limiting factors are management capability and technology adoption.

Be the Business conducted 1,400 interviews with small and medium enterprises (SME) into the barriers to change – and identified an additional cause: motivation and confidence.

Sustainable change requires emotional commitment, said Northend. This led Be the Business to focus on behavioural triggers at grass-roots level to address the UK’s competitiveness challenge:

  • The long tail of underproductive businesses – with opportunities to improve mid-performing firms
  • Management skills – four out of five managers have no formal training
  • Technology adoption – including basic technology: only 31% of UK firms have a CRM (customer relationship management) system, compared with 51% of German firms.
  • Inflexible labour market lacking incentives
  • Supply chains focused on building efficiencies not capabilities
  • Insufficient support – government resources and management courses are generally aimed at bigger organisations.

Segmentation of firms around improvement characteristics (plans to change, and confidence in their ability to change) highlighted the behaviours of ‘purposeful improvers’ who

  • Plan: follow a clear strategy backed up by powerful metrics. Set the right targets to turn business vision into action
  • Engage employees: there is a direct positive correlation between employee engagement and productivity
  • Invest in leadership and management

Be the Business has introduced 12-month leadership programme, a mentoring programme, business improvement networks and online benchmarking tool.

The right technology is critical, as SMEs generally cannot invest heavily in technology.

A coalition for change across British firms.

Finally, Northend urged SMEs to gain better self-awareness in order to understand where to focus their efforts; invest in key areas for improvement; and connect with others to learn and improve. The best business support functions and resources bring together peers, experts and intermediaries (perhaps in the way that the Forum does for business leaders – Ed)

People management is key

CIPD’s Ben Willmott referred to Andy Haldane’s 2017 observation that a lack of management quality was a plausible explanation for the UK’s long tail of low-productivity companies, particularly among small firms, although small firms tend to improve faster. Recent ONS research finds a positive significant correlation between management practice and labour productivity (measured as gross value added per worker). Practices around continuous improvement and employment management (promotions, training, performance management and reviews) showed the highest correlations with productivity.

Workplace innovation is another productivity driver, and Willmott highlighted the shift in thinking about innovation towards the Doing, Using, Interacting approach. Management practices are a critical success factor, both to give employees a voice – and knowing that their opinions matter – and to improve job quality, which includes work-life balance.  Employees who have good jobs and managers who win people’s hearts and minds are key to employee engagement. In addition to practical management skills and attributes, building and sustaining relationships is critical – Timpson, whose strapline is ‘Great service by great people’ appraises its managers on how well they know their people – and supporting employee development.

Finally, Willmott turned to the SME challenge. SMEs are less strategic and more reactive. They are time and resource poor and they have fewer formal HR processes. A key issue is that owner managers may be unaware of what they don’t know.

The CIPD won funding for three pilots to support small firms. The first was a growth hub in Stoke. It identified that:

  • Getting the people management basics right is crucial
  • Support needs to be embedded in local networks and ecosystems
  • Management is a contact sport – face-to-face interaction helps people understand when things are going wrong
  • People skills support boosts demand for improving people management capability

Building SME capability requires long-term commitment and CIPD is about to launch another pilot in Birmingham.

Behaviours drive productivity

The Behavioural Insights team (aka the Nudge Unit) was set up within the Cabinet Office in 2010 to apply behavioural science, psychology and sociology to public policy. Now part-owned by Government, NESTA and its own people, it has expanded from focusing on tax compliance and healthcare to cover education, skills, employment, economic growth and productivity.

Nida Broughton, head of work and economy, used Nobel Laureate Daniel Kahneman’s definition of behavioural insights: it is identifying and engaging with the two basic forms of human decision-making:

  • System 1 thinking, which is fast, automatic, effortless and intuitive (e.g. a daily commute)
  • System 2 thinking, which is slower, reflective, deliberate and analytic (e.g. planning a trip overseas)

Neither is wrong – they occur in different contexts. However, under pressure we default to system 1 thinking. From the perspective of government, or any service provider, it is easy to assume that users are applying system 2 thinking, but when people are short of time, they may resort to system 1. User interfaces that are designed using behavioural insights need to consider both scenarios.

The Behavioural Insights team creates content that enables policy makers to apply the concept of behavioural thinking.  A central principle is the acronym EAST, which stands for Easy, Attractive, Social, Timely and underpins effective communication and facilitation.

At first, the Behavioural Insights team was focused on influencing consumers; it is now turning its attention to business performance. Behaviours in the workplace drive businesses to make better or worse decisions. Time pressure is one of the most important factors – when a decision-maker says, “I haven’t had time to think about that,” they will probably revert to system 1 thinking.

Broughton classifies behavioural challenges in decision making into challenges and enablers. Enablers include

  • Triggers/chance events – that make people more receptive to advice for example.
  • Social/peer effects – how people work together and make decisions, but also about how businesses influence each other.

Small interventions can have significant effects. For example, one Behavioural Insights team assignment was to improve take-up of flexible working. Interventions included adjusting Outlook calendar colours, ensuring managers and influencers set an example, and gamification – creating a competition between teams, awarding points for arriving and leaving at ‘off-peak’ hours.

A common barrier to behavioural change is ‘overconfidence’. Firms may have a misperception of how well they are performing compared with other businesses in their sector and are reluctant to trust consultants and advisors. However, when businesses are already undergoing disruption – a restructuring, or a significant client win – they are more open to behavioural change. The social equivalent is that people are more receptive to changing their mode of transport when they have just moved to a new house. System 1 thinking hasn’t kicked in yet.

Broughton’s underlying message is that in order to change behaviours and become more productive, businesses need to think about how they communicate with all their stakeholders. The Behavioural Insights team has been working with government departments to cut through bureaucracy so that important messages get through quickly – and are understood.

Mindfulness and engagement

Management is something that is done to people; engagement is how they feel about it, observed Managing Partners’ Forum’s founder and CEO, Richard Chaplin.

The UK is an 80% services economy, so most professional services (PS) firms’ clients are also services businesses. According to research, the most engaged businesses are employee owned businesses, and PS are next, with around 85% engagement. Professional services are one of the most productive sectors, even though their productivity is hard to measure.

There is a big disconnect around leadership engagement. According to “The Mind of the Leader” 77% of leaders think they do a great job engaging their people, but 88% of employees say their leaders don’t engage enough! According to McKinsey, the solution is to put people at the heart of organisational strategy by engaging leaders with three core qualities:

  • Mindfulness –learning to manage your attention and remaining focused and aware
  • Selflessness – combining self-confidence with attention to being of service
  • Compassion – understanding others and using human insight as a catalyst for supportive action and delivering difficult business decisions.

These qualities are embedded in PS’ ‘challenge and support’ leadership style which encourages employee engagement. Chaplin believes that this relates to the fact that most PS leaders remain client focused, so retain their advisory mindset.

Chaplin then presented the Forum’s productivity initiatives including research into whether collaborative design can help organisations adopt artificial intelligence; a productivity exchange, combining curated research with members’ contributions; a productivity marketplace, and productivity cascades to accelerate knowledge transfer between PS organisations and their clients and develop business between member organisations.

Chaplin concluded by urging PS organisations to work with clients on improving their productivity – thereby developing a new line of business and boosting UK productivity.

Joanna Goodman