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Guide to making public sector productivity practical released

A boost to public sector productivity could create a higher quality of service and a happier workforce as well as reducing tax burdens and supporting fiscal responsibility, according to a new report from The Productivity Institute. The report recommends focusing on outcomes as the best starting point for mapping out the service delivery chain in real time and identifying the key bottlenecks for improvement.

The report Making Public Sector Productivity Practical connects the different perspectives from which we can approach productivity. It was written by Bart van Ark, Professor of Productivity Studies at the University of Manchester and Managing Director of The Productivity Institute. The research was supported by Capita.

The report aims to connect our knowledge about concepts, measurement, drivers and barriers to public sector productivity growth with insights on how to improve productivity practically.

The report says frontline workers usually have the most knowledge about the service delivery process and there is untapped potential for improving productivity measurement and performance to better allocate resources. It also notes that an agile workforce – one that is outcome driven, open to new technology and flexible to change – tends to generate greater employee satisfaction and higher morale – but only if they are involved the design and implementation of adaptive business design.

Measuring productivity

Productivity is traditionally measured as output per unit of input, with inputs reflecting a combination of labour, capital – such as building, machinery, computers – and intermediate inputs of goods and services used. However, in the public sector, focus needs to be on outcomes, rather than outputs. For example, in healthcare, an output is successful surgeries and the outcome is an overall better quality of life for patients. A productive public sector also boosts the private sector as they have the critical capabilities to make investments in skills, innovation, and infrastructure to benefit people at a national, regional and local level. Their services assist private businesses to grow, and contribute to the creation of jobs, higher wages, and a better quality of life.

The Productivity Puzzle

Since 2010, there has been a slowdown in productivity across the UK, often called the ‘productivity puzzle.’ Doubling annual productivity growth from 0.5 percent to 1 percent per year through greater output and quality would deliver about £ 1.8 billion in additional GDP annually.

Since 2010, public sector productivity has focused on budget efficiency, including budget cuts, a reduction in pay increases and the introduction of digital technology. While this has boosted productivity, with the ONS reporting that public sector productivity increased by an average of 0.7 percent, the report notes this is not sustainable without a significant increase in budgets.

The Report’s Recommendations

The report recommends organisations create a robust strategy using the three key drivers of public sector productivity: adaptive business design, digital transformation, and building an agile workforce and offers three recommendations:

  1. 1. Systematically identify the major constraints or bottlenecks within an organisation and use an iterative approach to solve the most important constraints.
  2. 2. Ensuring a good, solid, real-time measurement system is in place to help management to understand how their organisation is performing – and how it can improve productivity by removing key constraints.
  3. 3. Cultivating a culture of continuous innovation and collaboration.