The UK productivity puzzle: managers are a missing piece

Press Releases

7 Sep 2016

A new report pulls together the evidence on management and leadership practice and its impact on organisation performance and productivity.

A consortium of researchers, led by the Institute for Employment Studies and SQW economic development consultancy, carried out an in-depth investigation into the current ‘productivity puzzle’ in relation to different UK sectors and challenges, including leadership and management.

The recent poor productivity performance of the UK economy has become a major concern for economists and policy-makers. Existing data on productivity differs from sector to sector, presenting a challenge to those trying to unpick the causes of the recent downturn.

There is now considerable evidence that management and leadership practices are linked to firm-level productivity at all levels of business, regardless of size, sector, country, or ownership.

The evidence also shows that the UK is ‘mid-level’ in terms of management and leadership capability and lags behind the US, Germany, Sweden, Canada and Japan. The very best UK organisations are as good as the best elsewhere, but compared to the top tier, the UK has relatively fewer organisations with very good management practices and relatively more with poorer practices, so there is clear potential for improvement in management as a route back to improved organisational performance and productivity.

The report also uncovers the barriers to improving management performance, which is currently inhibited by a lack of understanding of what good practice looks like, and an inability to accurately self-assess the quality of existing organisational management and leadership practice.

The authors suggest that in order to improve, organisations should give greater attention to benchmarking their own practices and discovering where improvements could be made. Making comparisons with other organisations, and networking with higher-performing firms are steps that could be taken to uncover areas for development.

Other approaches that the report recommends for improving performance, such as work organisation innovation and high-performance working practices, are harder to achieve, so the authors recommend starting with identifiable management practices before tackling these systemic changes.

Penny Tamkin, director of employer research and consultancy at the Institute for Employment Studies, commented:

‘When we looked at the evidence, the striking issue was how can organisations improve if they don’t realise that their managers and leaders are under-performing? We would recommend that organisations take a good look at their own practices and how they compare when it comes to the nitty gritty of managing people and processes. Having done this they will be in a much better position to follow the guidelines for improvement that are outlined in the report.’


Notes for the Editor

For a press release about the project as a whole and all six reports, visit:

The report

The report can be downloaded from:

The research

In 2015, the UK Commission for Employment and Skills (UKCES) commissioned a consortium of research organisations to prepare a series of papers investigating the current productivity challenges for UK businesses. The consortium, led by the Institute for Employment Studies and SQW, also included the Institute for Employment Research at the University of Warwick, and Cambridge Econometrics. The consortium was commissioned to prepare a series of strategic labour market intelligence reports on the challenges and opportunities for increasing productivity in four sectors and two cross-cutting themes.

The consortium has published a set of reports on these topics, which unpack the characteristics of productivity for each sector, outlining the major challenges, looking to the future, identifying priorities for change and how employers and government can help:

The relationship between UK management and leadership and productivity

Understanding the future of productivity in the creative industries

Productivity in the retail sector: Challenges and opportunities

The future of productivity in manufacturing

The future of productivity in food and drink manufacturing

State of Digitisation in UK Business

About Penny Tamkin

Penny Tamkin is director of employer research and consultancy at the Institute for Employment Studies. Penny has over 20 years’ experience of what helps people perform better at work and the contribution of management and leadership, human capital and learning and development. She has published and spoken widely on these subjects, conducted research and evaluation studies and worked with UK policy-makers and organisations of all sizes to develop new thinking, understanding and practice.

About the Institute for Employment Studies

The Institute for Employment Studies is a leading independent, not-for-profit centre for research and evidence-based consultancy on employment, the labour market, and HR policy and practice.

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