I'm delighted to be here today.
When I spoke here last May, at the time of our Full and Fulfilling
Employment White Paper, I outlined my aims of:
- A high performance labour market, where everyone in Britain has
the opportunity to work;
- High performance work places - where everyone has the opportunity
to reach their full potential. And every job is a learning job.
Will announced that he was going to look further at high performance
workplaces. I welcomed his announcement then, and I'm delighted to
welcome this report today.
We've got some of the best businesses in the world in Britain. Like
I) Tesco - where, with USDAW, they operate one of the biggest
workplace partnerships in the country. And, since they launched it in
1998, profits have gone up to a billion pounds a year; and USDAW's
membership is up by a quarter.
ii) Or Microsoft - where, according to their HR director, they want
people "to be desperate to work for them, desperate to stay working
with them." So they provide a games room and even a mechanical
massage chair for their employees. And staff talk about getting an email
from one of the directors saying he "doesn't want to see them after
6pm". Microsoft were winners of this year's 100 companies to work
for scheme. And they can boast that 9 in 10 people of their employees
"love" working there. And that's what the employees say.
You can almost feel there's something special going on when you walk
into these companies. It's the whole culture - not just a mission
statement on the wall, but something flowing through the company's
veins.
We've all seen it. But what's more difficult is pinpointing exactly
what the "X factor" behind it is.
Will, Rebecca and her team have attempted to crack it - bringing
together top lawyers, academics, economists, trade unions and policy
advisers… As well as some of our very best businesses - Tesco,
Eversheds, Lloyds TSB, Astra Zeneca, Microsoft and Manpower. All
leaders. And between them employing over half a million people,
When business speaks with a voice like this, Government has to
listen.
And the report contains some exciting findings.
- It says that companies at the top of the performance index are 42%
more productive than those at the bottom;
- It says that a one-point increase for a company in the High
Performance Index amounts to a 0.7% increase in productivity.
I want to build on the findings in this report. I plan to commission
further research in the New Year to help us improve our evidence base in
this area.
I'm particularly delighted that the report re-enforces so much of
what we've been saying - and doing. People, customers and innovation are
vital to the success of any business; and every business needs to take a
holistic approach to them.
It's encouraging that business has backed, and advanced, our thinking
so considerably.
Because this is a vital issue for all of us. As: -
- Individuals - because work engages our ambitions and expectations
and helps to shape our identity and status. At its best, we are
rewarded with good pay, huge satisfaction in working with others and
in a job well done. At its worst, we can suffer prejudice, bullying,
rights flouted, health jeopardised or even lives put at risk in
workplaces. Whatever our experience, work occupies a large part of
our lives.
- It matters to our businesses - in the modern economy, you need
trusted and committed staff with the skills, tools, management
support and leadership they need to succeed. As this report shows.
- It matters to the overall success of our economy. Because,
although we've had huge success in getting people into work, 1.5
million more jobs since 1997, our productivity is still way behind
our major competitors.
If we could match US output per worker, we'd all be £5,000 a year
better off. With more money to invest in better schools, better
hospitals and more police on the streets.
And obviously the stronger our economy, the stronger our society, our
communities and our families.
So it's a vital issue for UK plc.
And it's one that our best businesses are tackling - and it's not
easy - dealing with, as the report says, two environments at once. The
external - networks, finance, skills, ideas, customers and markets. And
the internal.
Taking the two environments in turn:
Firstly, looking out. The world is going through a profound
transformation.
- China is now in the WTO - the most populous country in the world,
set to become the largest economy in the world within a generation;
- India is producing a quarter of a million science and IT graduates
every year; and
- Ten new members joining the EU next year.
On top of this, technology is reducing product lifecycles from design
to decline from five years to one or two.
So new opportunities but new challenges as well. And new demands from
- Employees - who want not just good pay, but to be valued,
developed and working for a company that makes a positive
contribution to the world and their communities;
- Customers - who are taking advantage of new competition and new
technologies and are now demanding not just what they want - but
when they want it, where they want it too.
- And investors - wanting greater returns, but demanding better
governance too.
High performance organisations recognise these challenges and have
the capability to respond to them quickly. They have creativity and
innovation running through their veins. They don't need to be told to be
innovative by the HR department - it's at the heart of their workplace.
And, looking in, there are several factors they tend to see.
First, the high performance workplace has a diverse workforce -
reflecting their customer base, encouraging creativity, allowing
different experiences and traditions to be drawn upon.
African Caribbean's are still almost four times more likely to be out
of work than white people; less than 10% of directors are women; and too
many older people are thrown on the scrap heap when they still have
plenty too offer any employer.
So there's a long way to go before our labour market is fair. And it
takes innovative solutions by business to tackle it - using the ethnic
press, offering family friendly policies, providing training to attract
older people back to the workplace.
Or, as B&Q do, celebrating different cultures and religions
festivals at their stores if their staff want to.
Second, the high performance workplace has a flexible workforce. Able
to organise work to respond quickly to change.
I was recently talking to a major clothing retailer, who is
approached by hundreds of British manufacturers wanting to work for him.
He met one of these manufacturers and explained that he needs fast
turn-arounds of short runs. The manufacturer explained that his standard
delivery times were x many weeks. The retailer asked whether he could
reduce this by putting on extra shifts and asked how many part-time
workers he had. The manufacturer said he thought that about 4 out of 400
workers were part-time.
Couldn't he employ more, asked the retailer? 'If I started doing
that,' said the manufacturer, 'everyone would want to do it!'
Different working patterns help companies meet demand.
Third, the high performance workplace has a creative workforce. Able
to solve problems and identify opportunities.
Fourth, the high performance workplace has a skilled workforce - they
invest in their staff so they can compete in high value added markets.
As the report shows, nearly 1 in 4 employees are in jobs that don't
match their skills and more than half of these were in jobs for which
they were overqualified.
It's making sure you get the best out of your staff. Employees are
more committed and motivated when they are actively involved in problem
solving and job design. A wider and better range of solutions and ideas
emerge. Employees who are given greater autonomy and responsibility tend
to raise standards of customer service.
Inside every clerical assistant could be a managing director waiting
to get out. The opportunity for the employee is huge but there's also a
great opportunity for the employer there. In unlocking potential. Making
every job a learning job.
Fifth, the high performance workplace has a committed workforce. With
staff eager to follow leadership, move up the value chain, and respond
quickly to challenges. With flatter structures, less hierarchy, and more
involvement from their people.
There are many excellent businesses in Britain.
For us in Government, we need to provide the framework for them to
thrive, and to encourage other businesses to reach their high standard.
So first and foremost, it's about providing stability - so business
can innovate and change. Because of the tough decisions we took in the
first term, we're enjoying the lowest inflation for thirty years, the
lowest interest rates in forty years and the highest employment ever.
It's about investing in transport, broadband and ICT. It's about
equipping people with skills.
It's about getting the competition regime right. Effective
competition, as one CE in this study said, "keeps… attitudes
healthy". With the Competition Act, the Enterprise Act and the
formation of the Competition Commission, we've given Britain one of the
most effective competition regimes in the world.
And now we need to build on this by making sure the consumer acts as
an equally powerful driver of performance.
It's also about driving innovation. We've increased spending on
science and innovation faster than any other area of Government
expenditure, rising to £3 billion a year, and are already seeing the
results of this - with a three-fold increase in the number of university
spin outs since 1997.
We're transforming our business support so it's targeted at
innovation. And we have launched a review of our innovation policy,
asking our best innovators what helps them and what holds them back.
But innovation is fundamentally about people.
Government has an important role in making sure our workplaces
perform as effectively as possible. Because, as the report shows, its
good for business. But also because it's right that staff are paid a
decent wage and given opportunities to reach their full potential at
work.
We have a number of tools at our disposal for this. We've regulated
to stop employers who pay their workforce £2.50 an hour; or
discriminate against people because they're gay, black or disabled, or
think it's ok to sack someone by text message.
We also agreed the Information & Consultation directive. We
started working with the CBI and TUC on how we would implement this two
years before we needed to. We are already reaping the benefits by having
got ahead of the game.
Today, I urge industry, unions and employees to follow our lead. The
sooner you reach agreement, the sooner you can achieve the gains of the
companies benefit - like Tesco and USDAW; Barclays and UNIFI; and the
many others who already have agreements in place. And the better
prepared you will be for the arrival of the new regulations.
To close, we do have some brilliant businesses in Britain.
Innovative, creative, highly skilled, high wage, high value.
But we need more to reach this level.
This report takes us further on the debate to how we unlock the full
potential of each and every person in Britain. My congratulations to the
Work Foundation for such an exciting bit of work.
With the momentum gathering behind this issue, we'll create a labour
market where everyone in Britain has the opportunity to reach their full
potential in life. For themselves and their families. As well as for our
economy.
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