New research has highlighted that labour shortages have finally led British companies to recognise the benefits of investing in new technology and skills training, in that the increased productivity and efficiency that this investment delivers not only reduces their dependency on labour but enables them to gain competitive advantages over their rivals and increased long term profitability.
Given this, we explore the considerable benefits British companies can gain by prioritising investment in these areas
Low Productivity
As highlighted in a recent article, the UK's longstanding problem with low productivity and a lack of investment in skills and training dates back many years. Over the last two decades, that problem has been masked by the availability of EU workers under the free movement rules. However, with the end of free movement due to Brexit, employers again face issues arising out of low productivity and the need for more investment in skills and training. Indeed, the problem has been aggravated further by the large numbers of over 50's retiring early during the COVID-19 pandemic, which has added to the labour shortages caused by the ending of free movement.
Productivity Levels Lagging Behind
As the Chief Executive Officer at City & Guilds Group, Kirstie Donnelly, points out: "Low productivity and growing skills gaps are plaguing [British] businesses and the wider economy. When compared with our G7 counterparts, the UK's low levels of productivity see us lagging well behind."
The Silver Lining Delivered By Labour Shortages
CBI / Pertemps Network Group Survey
In their new annual Employment Trends Survey, the CBI / Pertemps Network Group reported that 69% of employers were investing in upgrading the skills of their existing employees, whilst 60% were investing in new technology/automation to boost productivity and reduce labour dependency.
The survey found that firms had been compelled to do this on account of the skills/labour shortages that they have encountered. Nevertheless, the increased investment in new technology, automation, and skills training, and the benefits that that will deliver going forward, represents a silver lining that has emerged as a result of having to address these challenges.
Commenting upon the findings, the Chief Executive of CBI, Rain Newton-Smith, stated: "It is crystal clear that...labour shortages are making it more important than ever to focus on productivity....More often and more effectively adopting technology will be key to improving living standards. In doing so, we'll need to help employees add to their skills. That's why government needs to go further with their skills reforms and turn the Apprenticeship Levy into a Skills Challenge Fund, unlocking firms to invest more capital in improving the skills of more workers than apprenticeships alone."
CIPD Report
Moreover, a new report by the Chartered Institute of Personnel and Development (CIPD) has revealed that the number of firms currently planning to address the issue of labour shortages through automation has increased from 13% to 24% in just over a year. The report also found that one of the principal ways firms plan to pursue this strategy is by investing in generative AI, with most taking the view that "implementing the use of generative AI..[is].. more of an opportunity (41%) than a risk (23%)."
The report further points out that: "two in five (40%) employers see increased productivity and efficiency as a potential organisational benefit to using generative AI. Cost savings, likely as a result of the increased efficiency, were seen by one in three employers (32%) as an organisational benefit of using AI. One in five (20%) employers also saw enhanced decision-making and increased customer satisfaction as an organisational benefit of using AI."
Investing In Enhanced Productivity & Skills Training: Long Term Benefits
In today's rapidly changing business environment, staying profitable requires staying ahead of the curve. One of the key ways to achieve this is through investment in new technology and skills training. Through this, businesses can enhance productivity and efficiency, acquire competitive advantage, and increase profitability.
The Benefits
The following are just some of the benefits of investing in enhancing productivity and skills training:-
- Investment in advanced software solutions, automation tools, and cloud-based systems can improve workflow management and enhance team collaboration. This increased efficiency allows faster turnarounds, reduced costs, and improved customer satisfaction.
- Continuous skills training ensures that employees are up-to-date with the latest technologies and industry best practices. By investing in professional development, businesses can empower their workforce, enhancing productivity and better decision-making. Well-trained employees feel confident and motivated and are likelier to contribute innovative ideas that propel the business forward. Moreover, skills training plays a vital role in adapting to evolving customer needs. Equipping employees with excellent interpersonal skills, empathy, and problem-solving abilities can help businesses build long-lasting customer loyalty through exceptional customer service.
- Innovation is the driving force behind any successful business. By investing in new technology, companies can differentiate themselves from competitors and gain a distinct competitive advantage. Cutting-edge tools and systems enable businesses to offer unique products, services, and customer experiences.
- Staying ahead in an increasingly digital world requires adapting to emerging trends and customer expectations. For example, incorporating artificial intelligence, data analytics, and digital marketing strategies can help businesses reach larger audiences and deliver personalised experiences. Organisations that fail to invest in these areas risk falling behind their rivals and losing market share.
- Investing in technology can lead to significant cost reductions and resource optimisation. Automating manual tasks allows businesses to free up valuable human resources to focus on more value-added activities. This enhances efficiency, reduces the risk of error, and increases accuracy.
- Through advanced data analytics and real-time monitoring, companies can identify inefficient processes and areas of potential savings. For instance, implementing energy-efficient technologies can lower utility costs and reduce the carbon footprint, aligning with sustainability goals and improving the brand's reputation.
- Customers today expect seamless interactions and personalised experiences. Investing in technology allows businesses to understand their target audience better, anticipate their needs, and deliver tailor-made solutions. From customer relationship management platforms to chatbots and self-service portals, technology aids in building stronger customer relationships and enhances satisfaction levels.
Low Productivity Can No Longer Be Ignored
Low productivity is a pressing concern that business leaders and politicians can no longer ignore. It hinders economic growth, reduces profitability, and limits innovation potential.
Strategic investment in new technology and skills training are integral to the long-term profitability of any business and the wider economy. By enhancing productivity, gaining a competitive edge, reducing costs, and meeting evolving customer expectations, companies can position themselves as industry leaders and ensure sustainable growth for years to come.
