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The Bank of England’s quarterly bulletin is out and as usual it contains a wealth of articles ranging from international finance to more domestic concerns such as how credit conditions affect private households. One article in particular caught our attention. Titled ‘the UK productivity puzzle’ the article explores the dichotomy between businesses looking to recruit further staff and the continued weakness in productivity. According to the report whilst the level of output has returned to pre-crisis levels, the level of productivity is 16% down on where it would be expected to be if pre-crisis trends were followed.
The report examines a range of potential factors including problems with the measurement of productivity, the cyclical nature of productivity and the effect of reduced spending on capital items during the crisis. Other factors considered include a slowing down of the implementation of innovation and the effects of diverting resources to ‘non-output’ tasks such as business development and sales-driven work.
One factor which the report did not examine is that of the effect of low employee engagement levels. A Contact Centre Association survey revealed that disengaged employees can cost their company 46% of their salary in lost production. With employee engagement at a low base, CEOs may need to look to more than a return to capital investment or reassigning employees to output-generating duties before the productivity puzzle is fully solved.