With many more of us continuing to work from home than pre-pandemic, what will happen to UK innovation and productivity?
The latest research from Expert Market (Sep 2021) places the UK in 13th position amongst the world’s Top 40 most productive countries at $35.43 GDP output per person per hour. This is behind countries such as Switzerland, Netherlands, Germany, Sweden, and the USA, but ahead of France, Finland, Canada, Australia, and Japan. As the fifth largest economy in the world by nominal GDP, this is not the best record for UK productivity, but more worryingly, the Time Series from the ONS records the trend line over the past 15 years as a slow but steady decline. Now, since the pandemic and advances in technology, we are setting new precedents for the numbers of people working from home (WFH). So, what will this mean for British productivity over the next 10 years?
Since the industrial revolution, Britain has enjoyed a reputation as a leader in innovation across a multitude of industries and disciplines. Innovation thrives on collective thought, collaboration, discussion, and problem solving traditionally undertaken in offices, factories, laboratories, and institutions as well as infrastructure, mining, and agricultural environments. Can we rely on the home working environment to continue to deliver innovation that will keep Britain in the global leadership position?
Vision is critical to leadership and achievement. The “Vision Statement” is usually the carefully worded grand communication statement setting out the whole purpose and future for the enterprise and its communication at every possible opportunity plays a vital role in setting direction, pace, expectations, determination, and outcome. Successful organisations infuse that vision in the minds of all who work in or for that enterprise through overt and subliminal messages in everyday speech, everyday actions, everyday work, nuances of expression and even body language. The office is an important platform to reinforce that vision message at every opportunity in the working day and demonstrate vision, leadership, and drive. Isolated working-from-homers, relying on daily communications by phone or computer, (both inferior substitutes for face-to-face communication), will lose out on that important daily reinforcement.
Culturally, Britain is a hard-working nation, no better demonstrated than by the extraordinary performances during the Covid pandemic of the NHS staff, the innovation and research of pharmaceutical companies and the call to arms of the delivery industry. We have built that performance culture through leadership, vision, and a lust to achieve, supported by our close-working colleagues and an inherent British fear of failure. Can we continue to build and develop that achievement culture while working from home? Don’t we run the risk of making this WFH move too rapidly and discarding tried and tested working norms too easily, which have stood the tests of time for decades and successfully produced the 5th largest economy in the world? Isn’t WFH simply a convenient justification for “easier” working hours which will reward the lazy and pass the burden on to the driven, resulting in higher stress and mental health issues for those truly committed to achievement, service, and delivery.
WFH may well improve productivity in certain types of work, cut commuting time and provide more constructive, quality time for thought and problem solving, but we must remember most homes are not designed as a working environment and don’t have the structure or discipline that an office provides! Comments we’ve heard include: “My home office is the coat cupboard under the stairs”; “I do find it difficult without the office equipment”; “It’s just not practical to stock our company literature at home”; “Our best client/customer is now a 45 minute drive away, rather than 2 floors down”; “Our 30 minute weekly sales meeting is constantly experiencing technical problems, and the list goes on…..
Most importantly, homes have distractions and plenty of them – the kids are ill; the window-cleaner didn’t arrive; the cat’s just thrown up in the hallway; the Amazon delivery driver is lost; the neighbour wants to borrow jump-leads; our ton of soil has just been delivered to the wrong house, ……. the list is endless, the day flashes past and you had 3 deadlines to deliver before 5:00pm today!!
Then there is the Video Conference factor – technology has accelerated at lightning speed during the pandemic, BUT it still has a long way to go. Workers from home are besieged by technical failures, lack of the technical knowledge that the IT department could fix in minutes and the frustration and stress associated with drawn out telephone calls for help, or worse still, telephone queues from help lines that are so often the ultimate frustration. But it also goes beyond the video conference call – today, offices are generally efficient and well oiled. If you need quick help from a colleague or a specialist, e.g., Accounts Dept, HR, Sales, etc., it is usually readily accessible within a well-structured office. If you work from home, it is more likely to take more time to get internal help regardless of technology. Phones or computers create a time barrier because your priority is just another intrusion to the recipient and you will have to take your place in his/her priority response list, whereas in the office a quick question can usually receive an equally quick grunt for yes or shake of the head!
Now, let us look at the other side of the coin!
While the pandemic brought with it a dramatic plunge in economic activity across the globe, many innovative and quick-thinking companies took the opportunity for bold steps to transform their business for the future. As evidenced by recent McKinsey research, many companies turned to technology to step up their pace of digitization and introduce new technologies; many firms improved their agility and efficiency, WFH became the new normal, and many businesses went online for the first time.
But WFH only suits certain sectors of the economy – Carers, Retailers, Manufacturers, Delivery drivers, Pilots, Police, cannot work from home. Britain is a service economy and sectors such as professional, financial, IT; scientific, and technical services; communication services and a segment of healthcare form a significant percentage of output and potential productivity gains from WFH which could well create an overall uplift in productivity throughout the UK. McKinsey estimates that these sectors could account for an uplift in UK productivity by 2% per year between now and 2024, while the increasing use of technology across all sectors of the economy will almost certainly bring new and exciting productivity gains.
Covid-19 has forced boards and companies to re-think business models, actively seek new agility and efficiencies and adapt to the new realities of life and business in the determination to survive and prosper. Innovation over 2020 and 2021 has been strong and productive, as demonstrated particularly in the Pharmaceutical and Healthcare sectors which will have direct spin-offs into other industries and services over the short-to-medium term. New businesses, products and services have been created and although we currently have few reliable statistics to quote, due to the short timeframes involved, there is ample evidence throughout the economy to give us the re-assurance that British innovation is alive and well.
Working from home is not a new concept in the UK. According to Statista Inc., a statistics publisher, “In 2020 approximately 5.6 million people worked mainly from home in the United Kingdom, an increase of around 1.69 million people when compared with 1998. As a share of all workers in the United Kingdom the equivalent of 17.4 percent of the UK workforce, compared with 14.2 percent in 1998.” The number of people working from home, during the time of the pandemic rose from 4.6M in 2019 to 5.6M in 2020, an increase of 21.7% over the year, but still only accounting for 17.4% of the working population of the UK.
The Covid-19 impact on UK GDP has been well publicised and recorded, and while the stock market dived 32% in March 2020, much to the surprise of many financial analysts, share prices bounced back in a remarkably short time and currently stand at just 10% behind the all-time highs of January 2020.
Working from home is a new norm for some, but we are in a process of great technological change and people and businesses will change and adapt. Good leadership will encourage employees to maintain close ties with the office and most of the new work-from-homers will be expected to be in the office at least 2 days a week. WFH will not mean Armageddon for Productivity or Innovation in the UK, but business will continue to be managed during this transition period and a new stability will emerge.