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Better HR in local businesses needed to revive UK productivity, says CIPD

9 Jul 2018 By Lauren Brown

Experts warn Brexit is being used as an excuse to cover up more serious problems

The CIPD is calling on the government to introduce better HR support for local businesses after official figures late last week revealed productivity growth remained sluggish in the first quarter of 2018. 

Office for National Statistics (ONS) data, published on Friday, showed UK labour productivity grew by just 0.9 per cent in the first three months of the year, significantly lower than pre-2008 levels. 

“Unless policymakers start to think more innovatively about implementing the Industrial Strategy and addressing the long tail of poorly-managed firms in this country – particularly among the UK’s 1.2m businesses employing between 1 and 50 employees – it is difficult to see how we will start to close the productivity gap with our key competitors,” said Ian Brinkley, acting chief economist at the CIPD. 

“An area policymakers should be focusing more on is providing much better local business support to small firms on people management, as this is key to achieving the marginal gains in capability that over time can boost workplace productivity levels.”

Brinkley also said Brexit should not be used as an excuse to cover up longer-term problems with the country’s productivity, such as poor management. 

This is not the first time the CIPD has argued that better HR support at local businesses is needed to solve the productivity puzzle. Speaking to the business, energy and industrial strategy committee last month, Ben Willmott, the CIPD’s head of public policy, said many small companies have a people management “blind spot”.

“A lot of small business owner-managers don’t know what they don’t know,” Willmott told MPs. “So, when you start to talk to someone around people management issues, they start thinking: ‘Actually, that’s an obstacle to my business growth. I need to address that and what’s the people management solution?’”

The CIPD has also previously called on the government to nationally roll out its People Skills programme, which gave small businesses access to HR support and advice

Meanwhile, Dean Forbes, chief executive of CoreHR, said businesses should do more to make their workers feel empowered to address productivity problems. 

“People do their best work when they’re feeling challenged and fulfilled,” he added. “By meeting employees’ expectations of a seamless, collaborative, real-time experience, UK organisations can harness the full potential of their workforce.”

Research by CoreHR has previously found 70 per cent of companies are failing to tap into the full potential of top performing employees.

Meanwhile, the British Chamber of Commerce (BCC) today warned in its most recent quarterly economic survey that conditions remained “sluggish”, with fewer businesses willing to invest in training.

Adam Marshall, director-general of the BCC, added Brexit was not the sole problem facing UK businesses. 

He said: “The availability of skilled staff remains the biggest issue that firms face. Unless the government gets a handle on the disarray in the training and apprenticeship system and sets out a clear immigration policy that enables firms to cover vacancies, the economic potential of many areas across the UK will continue to be held back.”

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