Poor People Management ‘Costing UK Businesses £84bn a Year’
Poor people management is costing UK businesses a total of £84bn a year, according to research carried out by Investors in People (IiP).
The study identified a ‘performance premium’ of up to 11% that could be achieved by companies who achieved better people management. The UK’s small and large firms could make total gains of up to £33bn and £32bn respectively by closing what IiP refer to as the ‘people management gap’.
This study is the first of its kind in trying to calculate the monetary benefits of implementing more effective people management approaches and was commissioned to identify the key management factors driving workplace performance.
It highlighted how employers, who adopt a more sustainable practice, respond flexibly to change, whilst planning for the future, will drive the most improvement in their performance.
The study found the Health and Social Care industry has the most potential to improve its performance by changing how it manages its staff, and performance could be increased by 8.9% by doing so – contributing £2.4 billion to the industry. The sector that could benefit the most financially is the Professional and Financial Services industry, with an 8.2% performance increase, generating an additional £29.9bn output.
The study also highlighted which people management approaches offer the greatest financial return by industry. For example, developing strong and inspiring leaders generates the greatest efficiency gap in construction, whereas recognising and rewarding performance has the greatest impact on efficiency in manufacturing (115%), accommodation, food and leisure (109%) and wholesale and retail (109%).
It’s obvious that a skilled, confident workforce is essential to a productive enterprise. However, it has previously been difficult to determine the true impact on the bottom line. This study provides the evidence that focusing on excellence in people management can lead to significant performance gains across sectors and for the economy as a whole.
The effect of an efficiency gap is hitting the UK economy hard and better people management within firms should be recognised as a key mechanism by which the UK economy can address low performance. To make it easier to identify and compare approaches of the best performing firms, Investors in People has launched the first ever real-time ‘People Management Dashboard’. Anyone can now access a unique set of common metrics, showing the management performance of workplaces across the UK. It’s a simple way to see how well employers are leading and supporting their people.