Although companies are constantly striving to keep their costs to a minimum, staff employment is one of the essential outlays that all businesses will incur. Although many businesses will often begin as a small one person venture, as order volumes increase and additional processes are introduced, staff will be brought on to help ensure these are all managed effectively. As staff numbers increase over time, funding this employment can end up being one of the biggest expenditures many companies face. With the cost of staff employment ultimately affecting business profitability, it is important for companies to have the structured processes in place that ensures staff work as productively, accurately and effectively as possible.
However here in the UK, getting staff to work productively is not something that we Brits do too well. In fact just last year, the Office for National Statistics (ONS) found that Britain’s productivity was far below that of its major economic rivals. Their international comparisons showed that output per hour worked in the UK was a massive 21% lower than the average for the other six members of the G7, those being the US, Canada, Germany, France, Italy and Japan. Additionally when measured on output per worker instead, this gap was widened to 25% lower, marking the biggest productivity shortfall in over 20 years.
Productivity Is Going Down And Staff Costs Are Going Up
Fast forward to 2015 and productivity from UK workers has continued to decline. In April this year, the ONS revealed that productivity based on output per worker had decreased by a further 0.2% in the third quarter of the last financial year. This drop means the UK still has one of the worst productivity records of all the leading industrial nations and David Cameron has presided over an economy with the weakest productivity of any government since World War Two. This means businesses across the UK are paying for staff that on an international scale, aren’t delivering an acceptable output level or meeting their full potential when it comes to generating results.
With this trend of low productivity set to continue, it is worse news then that a few months ago George Osbourne announced in his budget that businesses will be expected to pay a National Living Wage from April next year. The idea behind the Living wage is that it provides workers with enough money to maintain a normal standard of living, enabling them to afford everyday things like food, transport and energy bills. Historically paying the living wage has been voluntary for businesses, however from April 2016 companies throughout the UK will be legally obliged to pay this to any of their employees over the age of 25.
Initially the National Living Wage has been set at £7.20 an hour, a reasonable increase on the £6.70 National Minimum Wage businesses are currently paying to their employees aged over 25. This will then be further increased to £9 per hour nationwide by 2020. Put into perspective, this is expected to increase the wages of six million people across the UK, with an employee aged 25 or over working 35 hours a week on the current minimum wage likely to see their pay increase by around £4,000 a year. You can read more about the National Living Wage HERE.
Reduce Your Operational Costs & Negate The Impact Of Paying Staff A Living Wage
Although this is obviously great news for UK workers, for many businesses alarm bells will be ringing as this represents quite substantial extra costs. Unproductive workers are already costing businesses a significant portion of their profitability, as often businesses will employ more staff to increase their output and meet market demands, rather than finding ways to get the most out of the staff they already employ.
The introduction of a National Living Wage from April next year will result in businesses incurring further costs by paying more money towards more staff with the same low productivity being achieved. Therefore it is more important than ever that businesses tackle low productivity amongst their workforce once and for all before the negative impact this has on their profitability rises to unsustainable levels.
For most companies, making small enhancements to everyday processes can in fact have large returns when it comes to increasing productivity and reducing costs, which is exactly what OrderWise is able to offer. For businesses still operating manual processes, they should firstly look to automate this way of working so that staff are spending less time on certain tasks. As a fully integrated system where information is seamlessly transferred between departments, OrderWise is able to massively free up staff time, removing the manual transfer of data into separate systems and therefore the need to employ additional staff in order to complete all necessary work.
Raise Productivity Levels In Your Business With OrderWise
Although OrderWise is proven to increase productivity across a number of key processes, one area in particular where OrderWise is able to generate major improvements is within the warehouse, one area of many business that will see the largest increase in wage costs as the new legislation comes in to effect. With OrderWise, businesses can improve their warehouse operations by making staff use the most efficient walk routes, speeding up despatch, stock takes, the booking in of goods and more.
Time spent correcting errors is also eliminated as barcode scanning technology available on OrderWise Mobile WMS Devices enables businesses to massively increase the accuracy of task performance. These devices can then also be used to raise productivity by enabling staff to pick multiple orders at once and use staff skills to their advantage e.g. ensuring heavy picks are automatically assigned to forklift drivers. Despatch can then be further streamlined with OrderWise by setting target times for staff to achieve and recording how they perform against these benchmarks so that productivity levels are able to be raised.
These are just a few key areas where OrderWise is able to help businesses raise their staff productivity through increased accuracy and efficiency in task performance. You can find out how OrderWise is able to enhance specific business operations by visiting the relevant sections on our website HERE.
In conclusion, although it is clear that the UK is currently lagging behind when it comes to working productively, the introduction of the National Living Wage may be the fuse that leads businesses to improve their processes so that they are able to get more out of their existing staff. This means that even with staff employment potentially representing a greater outlay from April next year, businesses will be able to ensure that costs are kept reduced in other places and high profitability can continue to be maintained.
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To discuss your requirements in more detail contact us today on 01522 704083.