Productivity: it’s about people, not machines
Covid-19 has shown that workers want to do their best at work, but it’s up to companies to unlock that potential and not squander the goodwill
How much do you trust your workforce to do their best? The Covid-19 crisis has opened many employers’ eyes to what researchers have been saying for decades - employees want to do a good job and the more they are trusted to do so, the more productive they are.
Pandemic lockdowns have demonstrated that people are at least as productive remotely as they are in the office, and often thrive with less regimented working days.
Trust is the keyword when it comes to capitalising on this development and the (re)insurance world has lessons to learn.
The insurance industry has suffered from poor productivity growth for a decade, according to management consulting firm McKinsey and the global reinsurance sector has failed to meet its cost of capital for several years, with Fitch predicting that it would fail to do so again in 2020 with the impact of coronavirus.
A pre-pandemic report on the sector by McKinsey recommended measures such as digital services, IT upgrades and disposing of business units to create a more efficient business.
McKinsey also said companies should “energise the organisation with strong talent and change management capabilities”, emphasising the importance of “effective communication” and “engagement”.
The human touch
The pandemic has focused minds on this human side of productivity – people’s motivations, needs and the ability to balance work with other commitments.
But before Covid-19, there was already a wealth of research that highlighted this issue. A Gallup survey in 2017 found only 15% of the global workforce was engaged with their jobs, with the rest largely going through the motions at work. In 2019 a Warwick University study found happier workers were 12% more productive and unhappy employees were 10% less productive and urged companies to consider the implications.
Susanne Jacobs, a business coach specialising in employee motivation, says working ‘9 to 5’ in an office is a product of the early 20th century, based on the production lines of Henry Ford and the time and motion studies of industrial engineer FW “Speedy” Taylor.
This way of working was always contrary to human instincts and is increasingly obsolete when ideas, collaboration and innovation are the drivers of success, she says.
Long, relentless hours make employees less creative and efficient and ultimately lead to sickness and burnout, Jacobs says. She argues that people thrive on trust and other motivations such as inclusion, security, recognition and achievement.
“The human being is not a machine,” Jacobs says.
‘Trusting our people’
Specialist insurance group Beazley was already changing its way of working before the pandemic in a search for greater productivity. The FTSE 250 carrier started its move to “activity-based working” in 2018 by fitting out its Birmingham office with spaces for silent working, collaboration and meetings, according to employees’ requirements.
Beazley adopted core hours of 10am to 3pm to give employees more flexibility. During the pandemic it went further by scrapping working hours and giving staff complete control over their day.
Pippa Vowles, head of talent management at Beazley, says: “As a global business, a lot of our people manage employees in other locations so core hours of 10-3 didn’t make sense either. By trusting our people and empowering them we found we were getting better productivity.”
Several UK senior cabinet ministers contributed to a book published in 2012 that said British workers were “among the worst idlers in the world”.
But research has found the UK is in fact beset by “presenteeism” with workers staying in the office for no reason or when they are ill, leading to long-term sickness and costing the economy £15bn a year.
Contract of trust
When startup broker McGill and Partners launched in May 2019 its founders took the chance to rethink working practices in the belief that giving people control would make them more productive.
McGill employees sign a contract of trust and are allowed to work when and where they want with no limit on holidays as long as the job gets done.
Lynne Farrage, McGill’s human resources partner, says: “It’s all about outcomes. It’s as far away from presenteeism as you can get.”
McGill has only one profit and loss account with no divisional P&Ls which Farrage says is “unique in the insurance industry”. She says this leads to more collaboration and everyone feeling like an owner of the business.
With a full year of trading completed, productivity is high and employee attrition is low at 3%, Farrage says.
And what about incentives? Financial hubs like the City of London obviously revolve around money, but studies have shown bonuses do not necessarily make people more productive. Research has also found that above an annual salary of around £50,000 people become less happy as work saps their time and energy.
Amit Ranjan, chief administration officer at Xceedance, says: “Monetary compensation can drive positive results but may not lead to enhanced productivity over time. More emphasis can be placed on ensuring team members understand the purpose of their work.”
It can be difficult to tell your boss you would prefer more time off than more money but for the millennial generation, who will be the leaders of the future, these priorities appear to be more important.
Tony Cicio, chief human resources officer at specialty insurance and reinsurance group Argo, says: “We encourage our managers to have conversations where people can share openly. This kind of dialogue is hard, but it’s worthwhile and reaps benefits in terms of engagement and productivity.
“With multiple generations in the workplace, diversity and inclusion topics are coming into sharper focus, and that also applies to how people work and the individual choices they wish to make.”
Poorly trained and undervalued managers have been partly blamed for the UK’s poor productivity growth. Switching to new ways of working asks a lot of employees in these roles and many (re)insurance companies say they are investing in their managers.
Lorraine Denny, chief engagement officer at Brit Insurance, says: “Managers need to be much more attuned to how people are faring and heighten their awareness of other factors that employees may be navigating. This experience has compelled us as leaders to consider the totality of issues an employee may be facing so that we can give them the space and time they need.”
For some human resources professionals the pandemic has opened an opportunity for long-overdue changes to the world of work.
Beazley’s Vowles says data is vital not just to monitor progress but to convince business leaders that trusting employees is the route to greater productivity. Premiums written, claims handled, costs and, more recently, employee engagement, are all assessed.
“In discussions about culture and people that are sometimes hard, I have the data to support those discussions,” she says.
So does your organisation trust your workers? If the answer is ‘No’ it may have some work to do.