By Diane Newell
Organisations must rethink productivity as a people-first challenge, not just a process one. Diane Newell argues that HR leaders must lead this transformation by placing engagement at the core of strategy. With the right approach, HR can convert motivation into sustained performance and help UK businesses tackle the productivity crisis.
Improving productivity isn’t just about tools or targets—it’s about people. And people thrive when they’re engaged.
The UK is facing a deepening productivity crisis. According to analysis from the Resolution Foundation[i] productivity dropped by 0.5% between 2019 and 2024, marking the worst five-year performance since the 1970s, excluding the financial crisis.
This is a major concern for organisations, and a clear call to action for HR teams. In today’s performance-driven workplace it’s rare to find an organisation that isn’t rethinking its operating model, processes, structures, and tools to drive greater productivity. In fact, a survey from Barclays found most business leaders stated that increasing productivity is a key priority this year[ii]. It makes sense – businesses are working in uncertain, challenging times[iii] with scare resources, and need every drop of competitive advantage they can create.
Too often the conversation about productivity is reduced to flowcharts, metrics, dashboards, and deadlines. People, and HR, are often the last consideration a key part of the ‘implementation’, not a key consideration in developing strategy. But its people that make performance.
Beneath the surface of every high-performing organisation and team is something essentially human which is engagement.
There’s a lot of debate about how to define and measure engagement[iv] but it is something most people can feel and see in others. It’s in the energy, commitment, and focus people bring to their work—not because they have to, or are being constrained to, but because they choose to.
Engagement Turns Potential into Performance
Engagement is the emotional and psychological connection people feel to their work, their team, and their organisation. Leaders, including HR leaders talk about how important it is often and many invest in engagement surveys to measure it – but how many of them build strategies deliberately to maximise it? Too often it’s the reverse. Here is the strategy and now HR please build an implementation plan to engage everyone with it.
Performance = Resource × Motivation
Organisations are often resource constrained, and that includes access to skills and talent. An Open University YouGov poll last year showed the biggest barriers hindering productivity are lack of budgets, lack of relevant technical skills and outdated systems of technology[v]. Over time businesses can invest in building and recruiting talent but they can’t buy or dictate motivation. What they can do is shape a culture where motivation thrives and where people are energised and empowered to apply their skills fully and sustainably.
Individual performances, unless the business is a one-man band, are not enough to create great productivity. Productivity in a team or an organisation comes from taking all that performance energy and combining and directing it to deliver the maximum impact.
Engagement: The Bridge Between Motivation and Performance
According to Gallup, highly engaged teams show:
- 23% higher profitability
- 18% higher productivity
- 81% lower absenteeism
- 43% lower turnover
The good news (or the bad depending on the business) is that there’s a self-reinforcing loop. Workplaces with successful teams are motivating places and these teams tend to attract more talent, are given more resources and have more success – so is engagement a product of success rather than its cause? Well, no, because even hugely successful teams can become dis-engaged especially in a changing environment. Engagement can be created so that it turns performance around without changing all the people. So, what drives and sustains engagement?
The 4Cs of Engagement
To build engagement that lasts, organisations need to focus on four key drivers—
- Clarity – People must know what’s expected of them, why it matters, and how success is defined. It’s not enough to ‘cascade’ strategy and allocate targets and KPIs. Real clarity helps employees to see why they are here, how they fit in, and what they are creating together. Many leaders over-estimate the clarity their teams have about the company’s purpose, how strategy delivers on purpose and how the day-to-day priorities of their work contribute.
- Conversation– Conversation is key to building and sustaining engagement. Without conversation there won’t be real clarity – the over-estimation mentioned above is happening because leaders are ‘telling’ not conversing, and conversation fosters commitment when it creates meaningful dialogue that gives space for individuals to explore what it is that truly drives them. It’s those coaching-style conversations that build trust, encourage feedback, and enable growth.
- Commitment– Commitment relies on clarity and coaching conversations. It can only be sustained when individuals find meaning in their work, feel aligned with the organisation’s values and supported in achieving their personal goals. Everyone is driven by different values, beliefs and life-purposes and needs to find enough of what is important to them in their work to sustain energy and commitment.
- Culture– Culture is clarity in action. The old saying ‘culture eats strategy for breakfast’ is still true. Culture isn’t created by writing it down, it’s co-created through priorities, behaviour and what or who is being celebrated. The behaviour of leaders and managers is key because it is how people to understand what is important. What leaders do on a day-to-day basis drive what we will become, and if that isn’t what is intended then there is going to be a mismatch that will in turn undermine clarity and commitment.
HR: The Hidden Engine Behind Engagement
Here’s the twist: when strategies and transformations to increase productivity are created, engagement is often seen as an implementation issue, rather than a strategic driver of productivity. And HR is rarely seen as leading players in shaping productivity strategy. And yet HR holds keys to enabling all four Cs.
- Clarity: HR designs roles and responsibilities with purpose.
- Conversation: HR builds coaching capabilities across the organization.
- Commitment: HR aligns assessment, recognition, and development with values and purpose.
- Culture: HR shapes systems, rituals, and rewards that reinforce the desired culture.
HR is uniquely positioned to drive performance through engagement. But only if it’s empowered to act not just as a support function – but as a co-creator of strategy.
Time for a New Productivity Playbook
If UK productivity is to bounce back, it won’t be because of better technology or tighter workflows alone, but because organisations have learned to tap into the full potential of their people. That means putting engagement – and HR- at the heart of their productivity strategy. Because engagement isn’t just a “nice to have,” it’s the engine that turns performance plans into performance results.
