where the us leads - sometimes we should follow

2nd Jan 2007

By Steve Hull, managing director, Sawfish Software, York

Why can the United States create productivity levels so much higher than ours? If they’re doing something so right, let’s take a closer look and learn their lessons.

The US has proudly proclaimed its own ‘productivity miracle’ since the mid 1990s. In fact, the slight decline in productivity in the last quarter of 2005 was a news story because it was the exception. And since then US productivity has reverted to the norm and climbed again.

A recent study by the London School of Economics has reported that investment in new information and communications technologies (ICT) combined with organisation and management are the key influences.

A closer look at the research reveals that investment in computer hardware and software are directly associated with a significantly higher output per worker - which is the standard measure of productivity.

It is evident that US multinationals in the UK spend about 40% more on ICT per employee than the average, non-US multinationals spend about 20% above average, whereas domestic firms spend considerably less.

We must be competitive not only here in Yorkshire and nationally, but also in the global marketplace. Currently the UK lags well behind the US and the majority of the other G7 countries - we even lag behind France. Yes, France! A country known not only for two-hour lunches but a total month-long shut-down every summer.

So we’ve established that we must compete. But how?

Each individual business must look at its own processes and management, along with assessing whether its ICT provision is capable of improving production levels.

Ask yourself - or even better ask your staff - where are the snagging points? Where is the process grinding to a halt? Does this happen repeatedly? If so why? And if so, what’s being done to break the habit? Does your ICT help or hinder the process? Can ICT help improve production levels?

Well, I can definitely answer the last question for you. Yes.

When searching for the correct systems for your business, make sure you ask the right questions. Investment in ICT should and can provide the solutions to your problems.

Systems can now provide your management team with information about each and every lead coming into your business. That information can include how a lead is being processed and by who, at what stage it is, how quickly it’s being progressed and any potential problems which have been encountered by your staff. The software can therefore give you an instant overview of your company’s productivity, giving you the opportunity to pinpoint the ways of boosting it.

US companies are seemingly more efficiently managed, or maybe that should be more aggressively managed. Effective, successful staff are inevitably promoted rapidly through the ranks, whereas under performers are far less likely to last than they are in Yorkshire businesses.

The simplified version goes like this: find, keep and promote the good people and provide them with the right technology to improve the efficiency with which they can do their job.

Improved productivity boosts the economy without putting any pressure on inflation because increased output allows companies to pay staff more without raising their prices to the consumer.

We must learn the lessons from studies such as that recently undertaken by the LSE. The right investment decisions in correctly managed software, and good management practices will give us a similar starting position to businesses in the US.