Too many mistakes means too many managers

12 December 2008:

According to a new study on global productivity by Proudfoot Consulting - tellingly entitled 'A world of unrealised opportunities' - UK managers are fiddling while their companies go up in flames, spending more than half their time on admin and unproductive activities, compared with just 11 per cent on improvement-oriented training and active supervision. Partly as a result, frustrated managers believe that nearly 40 per cent of potential productivity improvements in the next two years will be left on the table.

Proliferating bumf shows the size of the problem. Thirteen reports a month thump on to UK managers' desks, more than anywhere except, for some reason, Brazil. More than half are no help in getting the job done, managers say; they would like to slash paperwork by 40 per cent, again the second highest figure in the world. All in all, managers in Britain spend nearly a day a week doing things that have no impact on productivity - an 8 per cent increase on last year.

While shocking - aggregated up, time thus wasted would be the equivalent of several per cent of GDP - this is hardly a surprise. Three years ago, General Electric estimated that administration and back-office functions were costing no less than 40 per cent of its revenues. Think about that for a moment. What's considered one of the best-managed large companies spends $60bn a year on stuff that adds no direct value to customers - or, in plain English, is wasted. At less tightly run ships, the proportion is likely to be much higher.

What's going on here? After all, companies of all descriptions have been downsizing and outsourcing for decade. In manufacturing, the labour content of advanced products is down to a few per cent. Service personnel are notoriously underpaid (except in finance ...) and overstretched - witness dismal customer satisfaction levels. So where's the fat?