The latest ONS productivity figures have further reinforced what we already know: the UK along with many other developed economies – has a productivity problem. Whilst we only saw a small dip in productivity, the long-term trend is undeniable.
Simply, higher output (productivity) leads to better wages and a more prosperous economy. This matters beyond the world of business: widespread prosperity drives societal strength and the lack of it is corrosive to society. In low productivity, there’s less investment in schools, hospitals and public services. And feeble productivity drives greater inequality because there is less to go around: in this environment, those who become more prosperous can only be so at the expense of others.
Whether you care about the broader societal implications or not, as a startup leader you’ll care about productivity in your own business. Higher output per unit of input is the path to scale, efficiency and ultimately financial success.
The economics textbooks tell us that productivity is driven by investment, innovation, and competition. True. And it is business leaders – all of us – who decide every day whether we are going to go after those things: chase more investment, take risks on innovation or go into battle with a competitor.
Leadership is the missing piece of the productivity puzzle.
Low productivity in your firm or in your country tells us that leaders are not, on the whole, making those decisions. So what’s getting in the way?
In my recent global study I found that in the UK, a quarter of emerging leaders are leading with unconscious fear, costing a staggering £2.2 billion drop in productivity and performance. It’s estimated there are 235,000 fearful leaders in the UK, nearly a quarter of all emerging leaders (leaders at the earlier end of their leadership experience). Alarmingly, they’re learning from more experienced leaders, who have created the productivity problem.
I conducted the study to see if I could confirm with data what I had seen in my leadership career: complacency, avoidance and a collective kicking of the can down the road. In large, old-economy organisations this is often about delaying digital transformation or moving into new markets. In startups, though, it is more often about people: investing in the team, or perhaps putting in place a COO or CEO once you’ve outgrown the founder model. For those more mature startups who’ve got a more defined structure, often the issue is the founder allowing those newer leaders the autonomy they need to grow the business their way (which will be different from the founder’s way).
This is understandable. There’s no shame in having limits on your leadership. We all have them, and we all fall short much of the time.
Productivity increases when leaders are brave enough to empower their people. Productivity declines when leaders suffocate their people – when they are untrusting, micromanaging, and quite simply, not acting powerfully.
So, leaders will give good reasons to avoid leading: they’re too busy with the trivial, it’s not the right time – we’ve all heard the excuses (and to be clear, I’ve also made them. We all do it). Superficially, the excuses seem valid, until you realise what’s driving them: unconscious fear.
Fear shows up in subtle yet damaging ways in leadership: avoiding difficult conversations, shifting the blame, not empowering others to grow. We see it in overly controlling management styles, where leaders micromanage every aspect, stifling creativity and autonomy.
In startups, the founder is often brilliant and brave – how else to create something and drive it to growth? But that founder will often then be in their own way: not being able to let go of decisions or not trusting new hires to be as good. This ultimately drives costly, damaging talent churn and missed growth opportunities.
Fear of failure, fear of being wrong or fear of losing control all have devastating consequences for businesses and contribute to the alarming productivity decline. Leaders everywhere stare at the problem, imagining it to be so intractable as to be unsolvable. If the whole country has a productivity problem, what can I possibly do about it?
As always, the solution can start with each of us individually. We can decide to choose a more powerful path.
First, understand that we all carry fear in our leadership and it can be helpful: after all, the benefit of fear is vigilance. There’s no shame in having fear. It’s noticing it, and understanding how it limits us that’s the great opportunity.
The antidote to fear is love. People think of love as a romantic connection between two people, but it’s bigger than that. It’s the most powerful force we have.
Think of the best teacher you ever learned from, the best coach you ever played for, or maybe even the best boss you ever had. Chances are you’ll conjure feelings of admiration, commitment, connection, and achievement. You loved what you were doing and you loved doing it with them.
Love leadership – or what the psychologists call psychological safety – drives productivity. Love leaders are brave, clear, and fair. They step into conflict respectfully. They take risks and bear the consequences. They make mistakes and learn. They ruthlessly choose the right people for their teams and allow them space to operate. They don’t tolerate toxic behaviour. When they’re wrong, they say so. When they do all of these things, they allow the people in their teams to do the same. Creativity, discretionary effort and loyalty follow.
None of this is easy and no one leads with love all of the time. It’s the trying that makes leaders great.
It might be that solving the productivity problem in your business is not beyond you. Perhaps – unconsciously – it is you. Feel the fear and do it anyway: choose a more powerful path.
Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.