When the world went into lockdown in 2020, organisations across sectors feared how the enforced switch to remote working would affect their staff productivity and in turn their business performance. Yet, the post pandemic era has made one thing clear – businesses had nothing to fear as the UK and Ireland actually saw productivity improve  during the pandemic. And paradoxically, since working life has gone back to ‘normal’, productivity in the UK and Ireland has declined.

Indeed,  new figures published by the Office for National Statistics (ONS), reveal that UK productivity levels are now falling behind other countries in the G7. Unless it regains pandemic-peak levels of productivity, the UK risks losing out to its more productive international counterparts. So why is the UK feeling the strain more than others? and what can be done to improve the situation?

A critical time to boost output and staff morale
Stagnation in productivity is one of the biggest challenges facing the UK economy today. What’s more, against a backdrop of rising inflation, interest rates and energy costs and with the continued public sector strikes, UK staff morale is at an all time low. And to add to these woes, employment rates remain high. Enterprises and organisations are therefore facing the dual challenge of needing to reduce costs and drive output while at the same time seeking to retain and attract talent – all without negatively impacting on their customer experience. 

In the financial services sector alone, the situation is particularly alarming. According to the recent study, OpsTracker: The Performance Tracker for Operations in Financial Services Q1 report, operational efficiency in UK and Ireland slumped from 57% at the pandemic peak to just 47.5% in the fourth quarter of 2022; a drop of a massive 16.7% with organisations today operating at a significantly lower standard than they were before and during the pandemic.  

Unleashing capacity – the key to riding out the economic storm?
Increasing productivity and operational performance will be critical to getting the UK back on track. But where do organisations begin to go about doing this? In the financial services sector, a common problem for organisations is that capacity is being squandered; they are not getting the most out of all of their staff and are unsure how to make use of their resources. 

Our report found that the ‘work out per paid hour’ rate was down by over 8% since the start of the pandemic. There are multiple reasons for this and the current economic and political climate which is taking its toll on the individual finances of employees themselves is an important factor here. However, failure to make the most of resources available is a key issue. Another recent industry research by ActiveOps found that 55% of UK and Irish operations professionals recognise that there is spare capacity but don’t know where it is or how to access it.

The problem is that teams tend to work in silos focussed on their own part of running the business. Organisations do not have the flexibility or the capability in terms of skills to move workloads between teams and therefore to cope with fluctuations through sharing the load. Indeed, the same study found that almost two-thirds of organisations (63%) recognise they need to cross-skill or upskill as they weather the current economic turmoil, although we have yet to see organisations actively acting on this.

Failing to make the most from IT Investment
The UK makes huge investments in IT. It is considered the most important capital expenditure after buildings. According to the Economist Intelligence Unit, Britain spent 4.5% of GDP on IT last year compared to the US’s 4.1%, 3.3% in France and 3.1 % in Germany. So why is this investment not reflected in the UK’s productivity rating?

In the financial sector, the use of legacy systems in the UK is still prevalent and therefore investment in technology to maintain these systems could be one explanation. Then there are the cultural barriers and reticence by staff to embrace technological change and thereby make the most out of IT investments. However, the most obvious explanation is that UK organisations in the financial sector are simply not getting the most out of their IT investments or that they do not produce the expected ROI.  Many are not investing in the tools needed  to make the operational changes that will actively make a difference to their bottom line. Others may be making the right investment choices but due to their operational models where work is carried out in silos, they fail to either reap the comprehensive data from across the organisation that they need, or lack the agility to act on that data once they manage to obtain it.

Shed light on operational efficiency
To get back to pandemic levels of productivity, leaders at financial organisations should take steps to identify the issues that are inhibiting operational performance and then act on these to find solutions. Ultimately, they need to have better visibility over performance and productivity levels so they can fully understand where the roadblocks are. Without a clear vision of how their organisation is operating and the areas it can improve upon, any changes they do introduce will be futile because they will not be tackling the issue at heart.

At this current time of economic instability, data has become fundamental in managing operations, offering powerful insights that can be acted upon to achieve improved performance. The collation of data allows leaders to unleash and better share capacity. If organisations can identify the capacity ‘red spots’ and understand the skills they need to boost across their organisation they can make important, lasting and effective changes. By introducing measures to upskill and cross skill staff and better distribute workload, leaders can create an operating environment that is efficient and running at a high-performance level. Only by taking action now can we can improve the UK’s reputation for productivity and boost our international standing – while also creating a satisfying place to work where employees wish to remain.