Looking Forward..

Belinda Johnson – Worklab Ltd

September 2014

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Looking forward towards…

..the potential impact of the UK’s (World’s) productivity issue

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The UK’s productivity issue…

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

0

5

10

15

20

25

30

G7 excl. UK GDP per Hour

G7 excl. UK GDP per worker

Shortfall in UK’s productivity compared to other G7 countries

Source: ONS

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The UK’s productivity issue…

To what extent is worker sentiment a major contributor to this productivity shortfall?

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The UK’s productivity issue… One in five employees (21%) in the UK earn below

£7.50 an hour – two thirds of the UK median wage – putting them under the official OECD definition of low pay.

Sector Proportion of sector workforce

on low pay

Number

Hotels & restaurants 68% 830,000

Retail & Wholesale 41% 1,501,000

Admin & support services

36% 523,000

Health & Social Work 17% 569,000

Education 14% 530,000

Manufacturing 14% 318,000Source: Resolution Foundation

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The UK’s productivity issue…

The minimum wage “was put in place as a safety net” but, in many instances, it has now become a standard…

“Too many employers are seeing that as the level, in fact it's the national wage, not the national minimum wage.”

Norman Pickavance, NED - HMRC and SFO & former HRD Morrisons

According to the ONS, 3.1m people want or need to work more hours/earn more money

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The UK’s productivity issue…

Source: Kelly Global Workforce Index: Career Development August 2014

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The UK’s productivity issue…

Source: Kelly Global Workforce Index: Career Development August 2014

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The UK’s productivity issue…

Level of engagement Percentage of UK workforce

Engaged 16%

Disengaged 60%

Actively disengaged 24%

Source: Gallup

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The UK’s productivity issue..

Source: Kelly Global Workforce Index: Career Development August 2014

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The UK’s productivity issue…

Workers:

Continually concerned about earnings/outgoings…

Disengaged and unhappy…

Continually looking for new opportunities…including new ways of working…

Many are working, but not serving.

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Additional challenges..

Less money available to fund public services

Harder for legacy commercial enterprises to make same levels of profits

New technologies enabling unprecedented levels of innovation – and competition.

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The productivity crisis will bring ‘total resource’ into view

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Of note amongst ‘total resource’..

Source: ONS Labour Market Statistics series

Officially, c. 42% of the UK workforce works outside the legacy concept of fixed, full-time employment…

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The productivity crisis will drive outcomes-based working

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…the shift to outcomes based working Employers:

Challenged with sourcing (and being responsible for growing) newly emerging skills..

Looking for a return on their investment in people. Will increasingly consider AI and automation alternatives.

Being impacted with significant costs associated with rising churn..

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…the shift to outcomes-based working Time taken for new/replacement workers to reach

optimum productivity:

Time taken to reach optimum productivity, based on source:

Size of organisation Average time taken to reach optimum

productivity

Micro-organisations 12 weeks

SMEs 24 weeks

Large organisations 28 weeks

Source Average time taken to reach optimum

productivity

Same sector 15 weeks

Another sector 32 weeks

New graduates 40 weeks

Unemployed / Inactive 52 weeksSource: Oxford Economics/Unum

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…the shift to outcomes based working Cost of replacement / new worker (£25k+ salary) in

large organisation = >£30,000

Cost element Cost

Lost wages whilst not running at full efficiency

£13,128

‘Lost capital income’ – output that would have been achieved if working at full efficiency

£12,043

Logistical fees (incl. advertising, recruitment fees, etc.)

£5,433

Source: Oxford Economics / Unum

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…the shift to outcomes based working When starting to evaluate ‘total resource’, hirers will realise that

there are an increasing array of new sources of talent/resource available and new ways of ‘work’ being delivered….

Statement of Work assignments On-line working / on-line services The fragmented, networked enterprise AI / Robotics…

…all work on the principle of guaranteed/known outcomes.

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…the shift to outcomes-based working

Source: SIA European Contingent Buyer Survey 2013

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…the shift to outcomes-based working

Matt Cooper, oDeskREC: The Client Paradox

“Those who are successful are those who view it akin to starting their own business, where the necessity is to sell yourself, market yourself to prospects, manage your work efficiently and do what you say when you say you are going to do it.”

“This is a new type of professional, a new workforce, to whom it is totally acceptable to work to outcomes and to be hired – or not – based on their reputation for delivery.”

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…the shift to outcomes-based working

% workers interested in on-line working

% workers with experience of on-line working

Kelly Global Workforce Index 2013

“The shift reflects a change in mind set as

much as in work practices….employees

(are) more ready to accept an element of risk in their pay in return for

improved output.”

41% of large buyers in 2013 said they were

aware of on-line staffing, up from 32%

in 2012

Source: SIA Contingent Buyer Survey 2013

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The impact of outcomes based working..

Why, if workers are increasingly going to be rewarded on outcome, should the recruitment industry continue to warrant the same

reward for their simply turning up for work?

Task-orientated working, outside sensitive areas, has eradicated the need for traditional forms of vetting/checking/worker

validation. A broader shift to outcome-based working will bring with it a reform in what we check for…and what the industry can

subsequently charge for.

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Contacts

Belinda Johnsonowner - worklab

e: belinda.johnson@work-lab.co.ukT: @worklabinsightsm: 07771 534365

www.work-lab.co.uk