Looking Forward..
Belinda Johnson – Worklab Ltd
September 2014
Looking forward towards…
..the potential impact of the UK’s (World’s)
productivity issue
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The UK’s productivity issue…
Shortfall in UK’s productivity compared to other G7 countries
30
G7 excl. UK GDP per
Hour
25
G7 excl. UK GDP per
worker
20
15
10
5
0
Source: ONS
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The UK’s productivity issue…
To what extent is worker sentiment a major contributor to this
productivity shortfall?
4
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%
318,000
Source: 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.
12
The productivity crisis will bring
‘total resource’ into view
13
Of note amongst ‘total resource’..
Officially, c. 42% of the UK workforce works outside the
legacy concept of fixed, full-time employment…
Source: ONS Labour Market Statistics series
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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..



16
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..
…the shift to outcomes-based working

Time taken for new/replacement workers to reach optimum
productivity:
Size of organisation

Average time taken to
reach optimum productivity
Micro-organisations
12 weeks
SMEs
24 weeks
Large organisations
28 weeks
Time taken to reach optimum productivity, based on source:
Source
Average time taken to
reach optimum productivity
Same sector
15 weeks
Another sector
32 weeks
New graduates
40 weeks
Unemployed / Inactive
52 weeks
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Source: Oxford Economics/Unum
…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….





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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.
…the shift to outcomes-based working
Source: SIA European Contingent Buyer Survey 2013
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…the shift to outcomes-based working
“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.”
Matt Cooper, oDesk
REC: The Client Paradox
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…the shift to outcomes-based working
% workers with experience of on-line working
41% of large buyers in 2013
said they were aware of online staffing, up from 32% in
2012
Source: SIA Contingent Buyer Survey 2013
% workers interested in on-line working
“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.”
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Kelly Global Workforce Index 2013
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 Johnson
owner - worklab
e: belinda.johnson@work-lab.co.uk
T: @worklabinsights
m: 07771 534365
www.work-lab.co.uk
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