David Brent could just be the saviour of the UK economy

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  • September 13, 2017
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A couple of years ago, things were chugging along nicely. The 5th largest economy by GDP [1], in 2014 GDP grew by 2.8%. The financial crisis was weathered without huge rises in unemployment. And at the end of 2015, the forecasted tax take was revised up by some £27 billion by 2020 [2], a significant figure given the annual approx. £700bn total.

Fast forward 2 years and the garden is not so rosy. The British workforce has been this week’s topic of business conversation, because of a leaked Home Office paper [3] on the government’s intentions for immigration and working visas post-Brexit. The reaction to the paper has been, shall we say, mixed [4]. Bottom line, without the Europeans, the UK doesn’t have enough workers, nor enough skills. Predictions are of a more than 3% GDP fall in the next few years.

So, is this another Brexit doom story?

Well, no. The problem is highlighted by Brexit, but it is long in the tooth. Productivity. Simply put, despite having one of the largest GDPs in the world, the UK’s productivity lags behind its peers. Behind even France, who also seem to do better on the wine, cheese and weather. Enough to make a Londoner grumpy.

And it is not moving. No amount of investment [5], technology, Sterling devaluation [6] or divorcing of your closest trading partners (oops!) seems to make the needle so much as twitch. A third of British companies have seen no rise in productivity since the turn of the century. McKinsey calculates that 66% of British workers work for ‘low productivity’ companies, compared to 55% of Germans [7].

Some industries are worse than others, with Finance and Pharma, innovative as they are, some of the worst [8]. So, what is this all about? Productivity is supposed to get better with technology, education and investment. Until now, it has been thought that lower regulation and freer and better-invested capital is the answer.

But still, the UK lags, and isn’t that prescription what got us all into the mess of the banking crash in the first place?

So what to do?

If the problem isn’t solved by the macroeconomic levers, what to do? Another answer is emerging – David Brent.

Those of you that have seen the office (US or UK version) will know the scenario. Somehow, the fates have conspired so that a man-child with the EQ of a shark, the IQ of an amoeba and, in one very famous scene, the dancing skills of a constipated cow that has just been stung by a wasp

has been appointed the manager of a stationery firm. This is how the Economist characterises British management in general[9]. It points to a piece of research by the LSE, outlined this month in the Harvard Business Review[10] (HBR).

The research shows that simple (but not easy) basic management competencies make a huge difference to how well companies run. Moving a firm from the worst 10% to the best 10% of management practices is associated with 25% faster annual growth and 75% higher productivity. In the companies, they studied this meant a $15 million increase in profits.

Furthermore, the UK workforce is notoriously under-skilled for a developed economy. 4 out of 5 managers are ‘accidental bosses’ [11], promoted for technical skill, not leadership potential. Most never get a business qualification, relying on what they learned at school or University for a 45-year career. The half-life of knowledge is way shorter than that!

 

It has been a truism of management thinking over the last 20 years that management competency is easily copied and is therefore not a competitive advantage. It seems this precept was mistaken.

And what is worse, people don’t realise it, because they have no point of comparison. Everybody rates themselves and their company as above average in management. We can’t all be above average!!

In fairness, if you’d never seen electricity, you’d think gas lights were great.

What works?

According to the research, executive education and management training are the answer.

And it’s not just a case of ‘send them on a course’.

Think about it. You get sent on a course. You learn some cool whizzy stuff. You come back to work after a week all enthusiastic and revved up. And everyone looks at you. And then gets on with that urgent report that was due last Tuesday. And makes another cuppa.

By the time Thursday comes, you just about remember how good (or not!) the lunches were.

So that doesn’t work, but what does?

It’s actually common sense but uncommonly practised. Learning takes time and needs repetition and context (called Distributed Practice). A half hour briefing on the parts of a car will not help you drive. You have to do it, transfer the theory to real life, and practice in different situations, with help and guidance.

It’s not just practice. It also has to be real. We’re all busy – how does this new stuff that bends my brain help me now, in this project? How does it connect to our strategy? The learning needs to be tied to real business priorities and actions. And to make a change in the company, you ALL have to do it. Else everyone just carries on the same old way, and you go back to telling them about the lunch. Much of the best management training and executive education in the UK has until now been just for the big corporate elite. It is surely time for everyone in the business to benefit from the huge amount of international class skills and understanding sitting in the UK’s business schools.

There are other steps you can take [12] to make learning effective. And like any organisational change, it has to be very actively sponsored.

UK business is stuck in a storm right now. Inefficient capital, unsympathetic government, and Brexit risks piling up. This much is in their control, however. There are big benefits to be had by skilling up the management. Step forward, David Brent, your time has come. Now, maybe start with a dance class or 2…

References:

[1] https://fullfact.org/economy/uk-worlds-5th-or-9th-largest-economy/

[2] https://www.economist.com/news/britain/21690192-wonks-worrying-about-public-finances-austerity-may-intensify-coming-budget-lower

[3] https://www.theguardian.com/uk-news/2017/sep/05/leaked-document-reveals-uk-brexit-plan-to-deter-eu-immigrants

[4] https://www.theguardian.com/business/2017/sep/06/immigration-plans-cbi-institute-of-directors-eu-brexit

[5] https://www.economist.com/news/britain/21721707-foreign-investors-do-less-boost-productivity-commonly-supposed-take-away-finance-and

[6] https://www.economist.com/news/britain/21727930-devaluing-your-way-prosperity-not-easy-sterlings-depreciation-has-not-led-export-boom

[7] https://www.economist.com/news/britain/21652310-britains-stall-productivity-more-serious-any-rich-world-peer-closer-look

[8] https://www.economist.com/news/britain/21652310-britains-stall-productivity-more-serious-any-rich-world-peer-closer-look

[9] https://www.economist.com/news/britain/21727943-countrys-problem-not-it-has-too-many-fat-cats-it-has-too-few-good

[10] https://hbr.org/2017/09/why-do-we-undervalue-competent-management

[11] https://www.economist.com/news/britain/21679215-business-gets-serious-about-running-business-end-accidental-boss

[12] http://www.mckinsey.com/global-themes/leadership/whats-missing-in-leadership-development?cid=other-eml-nsl-mkq-mck-oth-1709-nts&hlkid=98a668c323204c48abe680b62bff1603&hctky=9501254&hdpid=7a910610-f920-4ac7-aff8-320bd99a9ee3

 

- Neil Marshall