{"id":42173,"date":"2020-09-29T10:05:26","date_gmt":"2020-09-29T09:05:26","guid":{"rendered":"http:\/\/www.enterpriseresearch.ac.uk\/?p=42173"},"modified":"2022-05-12T12:23:20","modified_gmt":"2022-05-12T11:23:20","slug":"leadership-in-laggards-key-to-post-covid-productivity-gains","status":"publish","type":"post","link":"https:\/\/www.enterpriseresearch.ac.uk\/leadership-in-laggards-key-to-post-covid-productivity-gains\/","title":{"rendered":"Leadership in \u2018laggards\u2019 key to post-Covid productivity gains"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div><ul>\n<li><strong>New study challenges assumption that most productive firms will drive future productivity gains<\/strong><\/li>\n<li><strong>Inspirational leadership shown to boost productivity in firms of all sizes and sectors, even those starting with low levels<\/strong><\/li>\n<li><strong>Research provides evidence to support recent public investment in \u2018soft skills\u2019 training for business leaders <\/strong><\/li>\n<\/ul>\n<p>New <a href=\"https:\/\/www.enterpriseresearch.ac.uk\/publications\/what-drives-productivity-growth-behind-the-frontier-a-mixed-methods-investigation-into-uk-smes-research-paper-no-89\/\">research<\/a> from the <a href=\"http:\/\/www.enterpriseresearch.ac.uk\">Enterprise Research Centre<\/a> suggests that small-to-medium-sized enterprises (SMEs) with lower starting levels of productivity \u2013 sometimes referred to pejoratively as \u201claggards\u201d \u2013 are in fact just as likely to see gains over time as their more productive rivals.<\/p>\n<p>The analysis of more than 17,000 firms across 12 different manufacturing and services sectors found that \u2018observable characteristics\u2019 of firms such as size, age or investment levels showed no correlation with future productivity growth \u2013 defined as growth in turnover or valued-added per employee.<\/p>\n<p>Instead, good leadership \u2013 and the better management practices it leads to across businesses &#8211; was found to be a much stronger predictor of productivity gains over time.<\/p>\n<p>The team behind the study said the findings challenged established thinking on how to boost productivity and should inform policy responses as firms recover from the coronavirus crisis.<\/p>\n<p>The distinction between so-called \u201cfrontier firms\u201d \u2013 those at the top end of the productivity scale \u2013 and other firms was popularized in an <a href=\"https:\/\/www.oecd.org\/economy\/Frontier-firms-technology-diffusion-and-public-policy-OECD-productivity-working-papers.pdf\">influential OECD report<\/a> in 2015. The idea has since been picked up by experts such as Bank of England chief economist <a href=\"https:\/\/www.bis.org\/review\/r170322b.pdf\">Andy Haldane<\/a> when talking about the firm-level dynamics behind the UK\u2019s stalling productivity rate.<\/p>\n<p><strong>Professor Stephen Roper, Director of the Enterprise Research Centre, said<\/strong>:<\/p>\n<p><em>\u201cIt\u2019s well known that UK productivity is lower than many of our international competitors, but in recent years the discussion has focused \u2013 perhaps excessively \u2013 on supporting firms that are already highly productive, in the hope that some of their magic will rub off on others.<\/em><\/p>\n<p><em>\u201cBut when we analysed this very large cohort of SMEs by a host of factors including size, existing productivity levels and what sort of investment profile they had, we found that none of that actually matters for productivity growth. In fact, what matters is whether you\u2019ve got the leadership capability and ambition to improve.\u201d<\/em><\/p>\n<p>In the study, one-to-one interviews with business leaders identified a number of leadership and management factors that influenced overall company productivity.<\/p>\n<p>Successful leaders were found to create a motivational, \u201cpeople orientated\u201d culture within the business, with staff feeling more valued and giving better customer service as a result. Ongoing two-way dialogue with staff and regular meetings that delved into the data around firm performance were also important.<\/p>\n<p>Productive firms were also found to place a high priority on innovation in all forms \u2013 from developing new products and services to more efficient work processes.<\/p>\n<p><strong>Professor Roper added<\/strong>:<\/p>\n<p><em>\u201cThis study suggests that we need to recognise the importance of inspirational leaders in driving performance up across a busines and help them develop the \u2018soft skills\u2019 needed to get the best out of their people.<\/em><\/p>\n<p><em>\u201cWith productivity growth so vital to the UK\u2019s economic recovery from Covid-19, we need to ensure this kind of training is prioritised as a long-term investment and avoid a situation where it becomes a casualty of belt-tightening.\u201d<\/em><\/p>\n<p>Last month, the government <a href=\"https:\/\/www.gov.uk\/government\/news\/20-million-to-improve-small-business-leadership-and-problem-solving-skills-in-the-wake-of-coronavirus\">announced<\/a> a \u00a320m investment in two new schemes to improve small businesses\u2019 leadership, management, productivity and problem-solving skills. The Small Business Leadership Programme and Peer Networks Programme will be delivered by university business schools and Local Enterprise Partnership (LEP) growth hubs.<\/p>\n<p>Meanwhile, the Economic and Social Research Council (ESRC), part of UK Research and Innovation (UKRI), <a href=\"https:\/\/esrc.ukri.org\/news-events-and-publications\/news\/news-items\/esrc-productivity-announcement\/\">awarded \u00a332m<\/a> to establish a new Productivity Institute at Alliance Manchester Business School, drawing on research expertise from across the UK.<\/p>\n<p><strong>\u201cLeading with compassion has kept productivity high\u201d \u2013 case study<\/strong><\/p>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-tc5qjh-2e810d35be9c381303140c19e0a5b2a6\">\n.avia-image-container.av-tc5qjh-2e810d35be9c381303140c19e0a5b2a6 .av-image-caption-overlay-center{\ncolor:#ffffff;\n}\n<\/style>\n<div  class='avia-image-container av-tc5qjh-2e810d35be9c381303140c19e0a5b2a6 av-styling- avia-align-left  avia-builder-el-0  avia-builder-el-no-sibling '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\" ><div class=\"avia-image-container-inner\"><div class=\"avia-image-overlay-wrap\"><img decoding=\"async\" class='wp-image-42177 avia-img-lazy-loading-not-42177 avia_image' src=\"https:\/\/www.enterpriseresearch.ac.uk\/wp-content\/uploads\/2020\/09\/Susanna-Lawson-OneFile.jpg-web-300x200.jpg\" alt='' title='Susanna-Lawson,-OneFile.jpg-(web)'  height=\"200\" width=\"300\"  itemprop=\"thumbnailUrl\" srcset=\"https:\/\/www.enterpriseresearch.ac.uk\/wp-content\/uploads\/2020\/09\/Susanna-Lawson-OneFile.jpg-web-300x200.jpg 300w, https:\/\/www.enterpriseresearch.ac.uk\/wp-content\/uploads\/2020\/09\/Susanna-Lawson-OneFile.jpg-web-450x300.jpg 450w, https:\/\/www.enterpriseresearch.ac.uk\/wp-content\/uploads\/2020\/09\/Susanna-Lawson-OneFile.jpg-web-500x333.jpg 500w, https:\/\/www.enterpriseresearch.ac.uk\/wp-content\/uploads\/2020\/09\/Susanna-Lawson-OneFile.jpg-web.jpg 600w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/div><\/div><\/div>\n<p>When lockdown was imposed across the UK in March, Susanna Lawson had already prepared her staff for the long haul. Susanna, 45, co-founded OneFile, a leading \u2018edtech\u2019 company that provides digital tools to help firms manage apprenticeships, with her husband Chris 15 years ago. The Manchester-based software business now employs 83 people.<\/p>\n<p>\u201cWe held a company-wide meeting at the beginning of lockdown week and explained people would be working from home and it would last for at least three months,\u201d recalled Susanna. \u201cWe wanted everyone to be mentally prepared and not think they\u2019d be back after a couple of weeks.\u201d<\/p>\n<p>Then came the challenge: how to inspire and manage a now-remote team and keep motivation and productivity high? After checking all staff had the equipment they needed and making welfare calls to every one of her employees, Susanna and her senior leadership team set up new schedules using Microsoft Teams to keep everyone connected.<\/p>\n<p>But tech wasn\u2019t everything. \u201cWe\u2019d actually just finalised our new company values of respect, courage, compassion, integrity and creativity,\u201d said Susanna. \u201cThe one that\u2019s really come to the fore is compassion \u2013 understanding that everyone\u2019s been dealing with different issues during this tough period and you\u2019ve got to provide flexibility and a listening ear.<\/p>\n<p>\u201cAs a leader, it\u2019s also been about showing my own vulnerability. I had a tearful evening and I shared that with my team the next day, because I wanted them to know we were all experiencing stresses and it\u2019s OK to be open and transparent about that.\u201d<\/p>\n<p>While different teams at OneFile measure productivity in different ways \u2013 from hitting sales targets to turning round projects according to timeframes \u2013 Susanna encouraged managers to understand there would be \u201ctroughs and downtime\u201d as well as spikes.<\/p>\n<p>\u201cI think what\u2019s united all our people is the pride they have in what they do,\u201d she added. \u201cThey understand that our success as a business is built on enabling other firms to train their staff well. And we\u2019ve actually seen increased demand, for example from employees who were furloughed but then put more time into their apprenticeship training. We\u2019ve also supported our customers to implement features which mean, post-Covid, they can continue to work more remotely, in turn increasing their own productivity.\u201d<\/p>\n<p>While some staff are now voluntarily returning to the office, others are continuing to work remotely at least part of the time. For Susanna, the \u2018new normal\u2019 will involve a more mixed approach and OneFile isn\u2019t forcing anyone back to the office: \u201cIf people want to come in that\u2019s great, but equally if they\u2019re at all worried I\u2019ve told them they can keep working from home, because if people are anxious they won\u2019t be productive.\u201d<\/p>\n<p>Despite the challenges, Susanna can see longer-term benefits from working differently. \u201cA lot of people have talked about how it\u2019s accelerated rapport between the team. You\u2019d never normally see someone\u2019s kitchen or their cat and families in the background \u2013 it makes people more human and it\u2019s made this period more manageable.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p><strong>ENDS<\/strong><\/p>\n<p><strong>Notes to editors<\/strong><\/p>\n<p><a href=\"https:\/\/www.enterpriseresearch.ac.uk\/publications\/what-drives-productivity-growth-behind-the-frontier-a-mixed-methods-investigation-into-uk-smes-research-paper-no-89\/\"><strong>Read\u00a0<\/strong><b>the\u00a0<\/b><strong>Full report here\u00a0<\/strong><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><strong>About the Enterprise Research Centre<\/strong><\/p>\n<p>The ERC is the UK\u2019s leading independent research institute on growth, productivity and innovation in small and medium-sized enterprises (SMEs). It is funded by the Economic and Social Research Council (ESRC), Department for Business, Energy and Industrial Strategy (BEIS), Innovate UK, The Intellectual Property Office (IPO) and the British Business Bank (BBB).<\/p>\n<p>The ERC is producing the new knowledge around SMEs that will allow us to create a business-friendly environment nationwide, grounded in hard evidence. We want to understand what makes entrepreneurs and firms thrive so we can spread the lessons from best practice and make the UK a more successful economy.<\/p>\n<p>The Centre is led by Professors Stephen Roper of Warwick Business School and Mark Hart of Aston University, Birmingham. Our senior researchers are world-class academics from both Aston and Warwick Universities as well as from our partner institutions which include Queens University Belfast and the University of Strathclyde.<\/p>\n<p><a href=\"http:\/\/www.enterpriseresearch.ac.uk\">http:\/\/www.enterpriseresearch.ac.uk<\/a><\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>Contact<\/strong><\/p>\n<p>For further information or to arrange interviews, please contact:<\/p>\n<p>James Tout at ZPB Associates on 07989 610 276 or email <a href=\"mailto:james.tout@zpb-associates.com\">james.tout@zpb-associates.com<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New study challenges assumption that most productive firms will drive future productivity gains Inspirational leadership shown to boost productivity in firms of all sizes and sectors, even those starting with low levels Research provides evidence to support recent public investment in \u2018soft skills\u2019 training for business leaders New research from the Enterprise Research Centre suggests&#8230; <a class=\"moretag\" href=\"https:\/\/www.enterpriseresearch.ac.uk\/leadership-in-laggards-key-to-post-covid-productivity-gains\/\"><strong>Read more<\/strong><\/a><\/p>\n","protected":false},"author":15,"featured_media":42185,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73,75],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/posts\/42173"}],"collection":[{"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/comments?post=42173"}],"version-history":[{"count":6,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/posts\/42173\/revisions"}],"predecessor-version":[{"id":45159,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/posts\/42173\/revisions\/45159"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/media\/42185"}],"wp:attachment":[{"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/media?parent=42173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/categories?post=42173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enterpriseresearch.ac.uk\/wp-json\/wp\/v2\/tags?post=42173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}