Are the middle class chaps in management why the middle class chaps in think tanks, in politics and amongst the Commentariat cannot solve the UK’s productivity conundrum?

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“The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or for outdated methods on either side of industry … in the Cabinet room and the board room alike those charged with the control of our affairs must be ready to think and to speak in the language of our scientific age.

For the commanding heights of British industry to be controlled today by men whose only claim is their aristocratic connections or the power of inherited wealth or speculative finance is as irrelevant to the twentieth century as would be the continued purchase of commissions in the armed forces by lordly amateurs. At the very time that even the MCC has abolished the distinction between amateurs and professionals, in science and industry we are content to remain a nation of Gentlemen in a world of Players.”

“The white heat of technology” Harold Wilson, Scarborough, 1st October 1963

And in a similarly serious vein …

Sir Desmond Glazebrook: “City’s a funny place, you know, Prime Minister. If you spill the beans you open up a whole can of worms. I mean, how can you let sleeping dogs lie if you let the cat out of the bag? Bring in a new broom and if you’re not very careful you find you’ve thrown the baby out with the bathwater. If you change horses in the middle of the stream, next thing you know you’re up the creek without a paddle.”

James Hacker: “And then the balloon goes up.”

Sir Desmond Glazebrook: “Obviously. They hit you for six. An own goal in fact.”

A Conflict of Interest, Yes, Prime Minister

Harold Wilson became leader of the Labour Party in 1963 after the death of Hugh Gaitskell. His challenge to the Tories, now led after the retirement of Harold Macmillan by the aristocratic Sir Alec Douglas-Home, was mounted with dramatic effect at the Labour Party conference, an annual platform for a major speech by the party leader.

In a speech that was rewritten during the small hours of the morning of 1st October 1963, Wilson summoned Labour to embrace the cult of the new and to harness the white heat of the technological revolution, and identified himself with the technicians and white-coat workers. There should be more scientists in government, he urged, more investment in scientific research and a new minister of technology. There was no room in the Labour movement for Luddites or antique working practices.

Moreover, in Labour’s National Economic Plan drawn up by Labour in Government in August 1965, the party spoke not just about training, but made specific reference to “provide better training for managers” as well as “to improve efficiency in other ways”.

How often in 2022, do we hear of the quality of management or its lack being a factor in poor productivity, if not the prime factor?

Enterprise is the economic factor that brings together the other three, land, labour and capital, to produce goods and services.

Surely the better the management, the better the combination of factors and thus the better quality and quantity of the goods and services produced?

The lead actor in the production to improve productivity in any workforce, whether it be in the private, the public or voluntary and community sector, is the employer of the aforementioned workforce, not the Government, except, of course, where the Government is itself the employer.

Productivity improvements take place and may be most accurately measured at the business or business unit level.

I was once asked for my view on the first response from Dorkins to The Economist: The Productivity Puzzle:

“I don’t get what the huge productivity mystery is supposed to be. The UK is a country in which productive work is not really rewarded due to the system of rents (high near employment centres) and taxes (mostly raised from labour). Many people quite sensibly respond to this by avoiding heavily taxed productive work as much as possible (e.g. doing the minimum number of hours required to qualify for tax credits) and instead focus their efforts on extracting rents from other people (e.g. arranging their living arrangements to maximise benefit and tax credit income, becoming BTL landlords).

Maybe if there was some kind of reward for productive work (higher net income, better standard of living, ability to buy secure housing) then people would do more of it?”

The neo-liberal fallacy in a nutshell?

The assumption people act like calculating machines, 24/7, and so make such fine (selfish?) calculations at each and every opportunity.

Incidentally, if this year I earn £20,000 gross and £18,000 net and you cut my taxes next year so I net £19,000 for working no harder, why should I work any harder than I do now?

I am £1,000 better off without working my fingers any further to the bone. 

Neo-liberal argument hoist by its own petard?

Poor productivity in the UK economy, as measured at the national level, is most likely to be down to ongoing poor investment in and management of research and development, land, labour and capital.

It is logical to remark that no matter how much money, say, you invest in research and development, if it is not managed well and its fruits properly exploited then you will not get the best return on your investment.

The vast majority of folk in employment, almost all of the time, do not start every working day intending to do a bad job. It is surely a disservice to them to say their productivity is low due to disaffection with pay, equality, quality of life and/or holiday entitlement.

The impact of poor or no job satisfaction on a commitment to work is, perhaps, a different matter.

Deming, amongst others, observed, that most workers only have control over about 10% of their workload and so their productivity is not within their capacity to improve, except very marginally. 90% of their workload is determined by those above them in the management chain.

An inclusive management philosophy exists that drives power and responsibility down within the structure of an organisation in order to drive up quality by focusing on meeting the need of the customer or service user and in the process reducing cost.

The workers are treated with respect and are highly skilled, because they have a greater say in how they undertake their daily tasks and are expected to exercise that power and responsibility.

Soft skills, like the ability to communicate effectively and work well as part of a team, are very important in the process.

By devolving power and responsibility downwards the organisation makes maximum use of the knowledge of all of those working in it from the shop floor or front line upwards.

The insight of those who regularly interact with customers or service users is of paramount importance and value to the organisation and its continuing survival.

The workforce are not mindless cogs in an organisation pursuing this philosophy whether it be a factory; a bank; a Jobcentre or an NHS acute ward.

British management, which notoriously cuts investment in capital and labour (and advertising), research and development, at the first sign of a downturn in the economy, has the major responsibility for the poor productivity of its staff.

And in 2008, and thereafter, it yet again cut significantly its investment in staff training.

You reap what you sow.

Real world economics has a tendency to trump neo-liberal theory every time, perhaps because it studies the real world and then theorises rather than trying to impose its (politically motivated) theories on the real world?

Mind you …

Sir Humphrey Appleby: “Didn’t you read the Financial Times this morning?”

Sir Desmond Glazebrook: “Never do.”

Sir Humphrey Appleby: “Well, you’re a banker. Surely you read the Financial Times?”

Sir Desmond Glazebrook: “Can’t understand it. Full of economic theory.”

Sir Humphrey Appleby: “Why do you buy it?”

Sir Desmond Glazebrook: “Oh, you know, it’s part of the uniform. Took me 30 years to understand Keynes’ economics. Then when I’d just cottoned on, everyone started getting hooked on these new monetarist ideas, you know, “I Want To Be Free” by Milton Shulman.”

Sir Humphrey Appleby: “Milton Friedman.”

Sir Desmond Glazebrook: “Why are they all called Milton? Anyway, I’ve only got as far as Milton Keynes.”

Sir Humphrey Appleby: “Maynard Keynes.”

Sir Desmond Glazebrook: I’m sure there’s a Milton Keynes.

Sir Humphrey Appleby: “Yes, there is, but it’s …”

Yes Minister, The Quality of Life

In this instance, it helps if one understands what economists mean by productivity:

“An economic measure of output per unit of input.  Inputs include labor and capital, while output is typically measured in revenues and other GDP components such as business inventories.  Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement.

Productivity gains are vital to the economy because they allow us to accomplish more with less.  Capital and labor are both scarce resources, so maximizing their impact is always a core concern of modern business.  Productivity enhancements come from technology advances, such as computers and the Internet, supply chain and logistics improvements, and increased skill levels within the workforce.”

Read more at: Productivity

You will notice that working harder and/or longer hours do not figure in the above!

Neither does increasing the number of entrepreneurs as that might actually reduce productivity averaged out across the economy.

Improving productivity is about working smarter not becoming a latter day Stakhanovite.

Although …

“In the 1930s, miners used picks to work the coal, which was then loaded on carts and pulled out of the shaft by pit ponies. Lying on his side or his back, a miner would hack into the coal. He also had a set of pit props – logs cut to different lengths – and from time to time, he would prop up the roof of the tunnel where he worked.

Stakhanov came up with the idea of having one miner constantly picking coal, while another loaded the coal on the cart, a third miner propped the roof with pit props, and a fourth led the pony in and out. And instead of the traditional pick, Stakhanov was keen to use a mining drill, which was a novelty and required specialist training. Drills were extremely heavy, weighing more than 15kg.

“He went on a course, and he learned to use that drill,” says Violetta. “He had no education beyond primary school – but when it came to his job, he was determined.”

The manager of the mine had serious doubts about Stakhanov’s initiative. However, Stakhanov persuaded his team leader and the local party boss to give it a go.

On 30 August 1935, at 22:00, Alexei Stakhanov and three colleagues entered the mine, accompanied by the party boss and a local journalist. Six hours later they emerged, triumphant, having produced 102 tonnes of coal – more than 14 times the target.”

Alexei Stakhanov: The USSR’s superstar miner

How do we measure productivity in an economy wherein most work within the service sector?

The crude method designed for mining or manufacturing counts output per worker per hour. If I dig out more coal or produce more widgets per hour than previously and sustain that increase my productivity (ignoring the issue of its quality) may be said to have increased.

However, a waiter, for example, may only serve so many tables per hour before the quality of service to patrons starts to suffer.

If I am being waited upon, I could not care less how many other tables my waiter is serving unless it impacts negatively on me.

If I get poor service then maybe I do not come back, again, so serving lots of tables not especially well is bad for repeat business, let alone reviews and word of mouth recommendations.

Toyota follows the management philosophy I outlined above.

Toyota mass produces, in a normal year, 150,000 cars to specific customer requirements at Burnaston.

The car that just left the production line may be different from the one that preceded it and the one that will follow it.

High quality, high volume production, courtesy of pursuing that 70 year old business philosophy.

The management has done much to solve the productivity conundrum by co-opting the workforce.

If most workers are hemmed in by management, restrained from working smarter then we return to the lead actor in the production to improve productivity.

Why then is he, even in 2022 it is more likely to be he than she, not the subject of learned discussion, reports and seminars; questions and debate in the House and informed comment on all media?

Nothing to do surely, with the fact that the higher up the management chain one goes and remember the top tier sets the direction and management style of most organisations, the more the folk in business look, sound and behave like those working in think tanks, politics and the media?

Same educational, class and social backgrounds.

The Old Boys Network, in fact.

“Decent chaps don’t check up on decent chaps to see if they are behaving decently. If you go to the sort of chap that chaps trust, you can trust him to be the sort of chap to see that the chaps don’t get involved in any scandals.”

“If you’re incompetent you have to be honest, and if you’re crooked you have to be clever. See, if you’re honest, then when you make a pig’s breakfast of things the chaps rally round and help you out.”

“Well (if you’re crooked), if you’re making good profits for them, chaps don’t start asking questions; they’re not stupid. Well, not that stupid.”

“(Embezzlement?) Usually it’s just a chap who’s advanced himself a short-term, unauthorized, unsecured, temporary loan from the company’s account, and, uh, invested it unluckily. You, know, horse falls at the first fence, that sort of thing.”

Sir Desmond Glazebrook A Conflict of Interest, Yes, Prime Minister

One would not want to let the side down by washing a decent chap’s dirty laundry in public, drawing attention to his flaws where the other ranks might see them, would one?

I mean they might start talking about the need to improve the productivity of the officer class.

One might well describe this as poor quality outsourcing, especially as the contractor is known to have a preferred, we assume quality, supplier known as Nanny who usually does all of his intellectual heavy lifting for him.

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