Revamping human capital strategies and transformational change in people practices is needed to boost productivity – Hugh Billot shares a human capital barometer 

The UK has seen a significant decline in adult education and training says the Institute of Fiscal Studies. My barometer of human capital performance (below) confirms the case. Workers in general are now less productive than in the past. Almost on all critical measures of human capital performance the outcome is poor. 

There has been a slump in training, and resulting shortages in capability will be one major cause of poor productivity 

UK plc is suffering from lack of productivity and profitability. In fact, the productivity of the British workforce stopped growing around 2009 and is now around 20% below the level it ought to be. Organisations are becoming increasingly vulnerable to higher costs without matching productivity to provide long-term sustainability. GDP has flatlined. Organisations lack profitability to invest in plant, technology and human capital and business and employee taxes are insufficient to provide government with the means to put in place effective public services. 

What is going wrong? Well, my simple view is that employees are not, in general, performing at the level they ought to. Why? The answer must be that the human capital specialists alongside line management have not done enough to increase labour productivity.  

Clearly there has been a slump in training, and resulting shortages in capability will be one major cause of poor productivity. Inadequate workforce planning mapping people and skill needs evolving over time has been another reason. The jury is out on the performance benefits of hybrid working which evolved, often in an unstructured way, during the Covid pandemic.  

There has been a growth in the ‘accidental manager’ at a time when good management and leadership is needed more than ever. Finally, many HR/LD experts have been drawn into activities that add little value to organisational performance. 

The role of human capital specialists  

Human capital structure is mainly defined by organisational size with smaller organisations using generalists and larger organisations dividing HC into specialist teams such as recruitment, L&D, employee relations etc.  

There is no right or wrong structure if it works, namely it leads to continuing improvements in employee productivity and organisational performance. So radical new organisation is not necessary but radical new thought and practice is. 

Strategies for transformational change 

While investment in technology and new equipment is the principal driver of productivity, human capital also plays a critical part through retraining, creativity and in continuous improvement programmes.  

Given the right environment (happy, healthy and rewarding) employees can transform performance and to do so requires HR/LD professionals to be the champions of change and line managers the transformational drivers of success. If HR/LD professionals want to see continuing improvements in performance they should: 

• Ensure strategic business and human capital (including workforce plans) are integrated. 

• Workforce plans, if properly constructed, should drive training. 

• Continue seeking out best practice (external training is a great source) and initiate change. 

• Work with line management to enable change and training to become the norm. 

• Hire, retain and develop people capable of meeting job and organisational change. 

• Ensure line managers are equipped to manage people effectively, constantly improving business performance and securing value for all stakeholders. 

• Focus on important strategic issues that add value not on fads or initiatives of the day. 

• Never stop training at any level. 

• Use ‘business KPIs’ to check for continuous improvement such as: output per employee; sales per employee; profit per employee; employment cost per hour/person; proportion of workforce with formal qualifications; training spend per employee etc. 

The barometer and its importance  

My barometer is designed to kickstart sunnier times for human capital professionals to take action to provide benefits for all stakeholders and demonstrate their value to organisational success. The barometer is important because it sets a benchmark against the ideological framework of what human resource management aims to achieve and measures existing performance from real data as to the UK performance of HR/LD/line manager input.  

The idea behind this being that there is a recognition that contribution levels in raising employee performance are falling short of expectation and change needs to take place and now. 

Enhancing productivity across the UK  

Improving UK productivity is needed, and improvements will lead to benefits for all stakeholders whoever they may be – more reward for employees; better training and career development for all; higher quality products/services for customers; improved dividends for shareholders; a stronger organisation strengthens the community.  

If HR/LD/line managers recognise their combined output in developing human capital isn’t working as well as it should, my hope is that they will grasp the nettle and focus on stakeholder value activities. In doing so they may need some training themselves to put together the strategic vision and actions that will bring the change. 

---

Dr Hugh Billot is Managing Partner at Billot & Associates