Business

Improving north's standard of living depends almost entirely on ability to increase production

Improving productivity remains a significant issue in Northern Ireland

CONSIDERABLY less Brexit talk over the last few weeks has meant I've been able to get much more involved in many positive discussions with businesses on topics such as productivity, innovation, green growth, people's quality of life and nurturing talent.

Last week at Queen's University I participated in a panel discussion focused on understanding why workforce productivity in Northern Ireland lags that of our international competitors.

Productivity is the cornerstone of boosting wages locally and lifting overall living standards. Paul Krugman, Professor of Economics and International Affairs Emeritus at Princeton University, is often quoted as saying “Productivity?isn't everything, but, in the long run, it is?almost everything.?A country's ability to?improve its standard of living over time?depends almost entirely on its ability to raise its output per worker.”

In Northern Ireland a huge range of complex influences are at play when it comes to lower productivity. For example, the relatively low export base, the structure of the economy in terms of industrial sectors, participation and skill levels, educational attainment, leadership/management practices and technology adoption.

At last week's productivity event, we discussed these reasons – reflecting why this problem isn't easy to solve. We talked in particular about how ineffective training and worker incentives through poor engagement play an especially important role in Northern Ireland – something the CBI is keen to help fix.

We have worked with McKinsey & Company, the leading consultancy group, on the issue of productivity for the last three years. We have looked at the causes of productivity disparities between parts of the UK - namely the uptake of technology, leadership and management performance and educational attainment.

We have looked at evidence of the impact these areas have on people's experience of work, business' bottom-line and UK productivity, and are supporting our business members by sharing best practice from highly productive firms to encourage others to adopt tried and tested technologies, proven leadership and management practices and deepen links with schools.

Most recently, the CBI has put a spotlight on how businesses lead, engage and develop their people – encouraging our members and the wider businesses community to adopt practices that mean people are happy, engaged and motivated to give their best at work. This involves giving staff a shared stake in the success of the business and creating an environment in which leaders and managers are able to prioritise how they engage and develop their team. Get this right, and it'll have a massive economic benefit. If UK firms matched their performance on management to those in the US, the productivity of the UK workforce would jump by 12 per cent.

Businesses come in all shapes and sizes, so there are loads of different approaches that firms are taking every day. Some of the most interesting things firms are doing in Northern Ireland and across the UK is changing how managers are rewarded, linking their bonuses to their performance as people managers not just against commercial targets. This incentivises and rewards great managers, rather than – as is too often the case – line management being viewed as another added responsibility which managers aren't given the time to prioritise.

Another approach we're increasingly seeing is more businesses making someone on their board responsible for the firm's performance on people. This ensures that issues like people's development, staff engagement and effective management are prioritised and progress measured. Without leaders showing that great people practices are a business priority, nothing changes. We know that leaders often underestimate how important their words and actions are in making great engagement and development practices stick.

The public consistently say that how businesses treat their staff is the number one way to improve the reputation of UK business. And it's what people expect too – over three-quarters of workers say that they expect their employer to offer development opportunities and almost two thirds expect their workplace to have a sense of shared values.

Progress within the business community is without doubt being made – the UK has some of the best performing businesses on leadership and management in the world, and the number involved in business led movements to improve UK productivity – like Be the Business – is on the up.

Closing the gap between how the best businesses are performing and the rest is now what must happen. And the next UK government has a big role to play. The CBI has been clear that the next government will need to have a concrete plan to tackle the UK's productivity puzzle and any future budgets must raise productivity boosting programmes to the top of the agenda.

Local government and Northern Ireland's Westminster representatives will have a huge role to play in tackling this issue too. Investment in local infrastructure, our connectivity with London and Dublin, local educational attainment levels and the supply of skills are all local issues that will determine our productivity levels and overall economic success.

Next week CBI is hosting a business hustings event in Belfast with five of the local political parties. The business audience will be asking those candidates to outline their plans and priorities for addressing economic growth.

Firms are keen to hear from political leaders how they would make Northern Ireland a place to invest, start a business and attract and retain talented workers. This will be a unique opportunity for the business community to hear directly from local political parties around how they see their role in growing business at a time when economic growth here is lack lustre and consumer confidence is falling.

Without a strong partnership between political leaders and the business community we will not be able to tackle some of the biggest challenges of our time. Productivity is just one of those challenges where business and government cannot work in isolation.

:: Angela McGowan is director of CBI Northern Ireland. Follow her at @angela_mcgowan

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