Robot suit
Too many are to be found in the low productivity, low skill end of the service sectoriStock

Automation and the rise of the robots could lead to a rethink of traditional corporate pronouncements. Perhaps one day businesses will declare that rather than people, "our machines are our greatest asset".

The de facto investment strike among corporations that sit on cash and fail to commit to new technology seems to concede this point. New kit is expensive. Wages, especially for the low or semi-skilled, are not. Why pay millions for leading-edge machinery when people can do the same job at a lower price?

That line of thinking has led to the UK's persistently poor productivity performance. It is true unemployment has fallen and that labour market participation rates are good by recent standards. Jobs have been created and more than 30 million people are now at work every day full or part time. (The UK's population is also at an all-time high, of course.)

But what sort of jobs have been created? Not enough are high-skilled, high-value-adding jobs. Too many are to be found in the low productivity, low-skill end of the service sector. These jobs may be repetitive and machine-like. But for now they are still filled by human beings, albeit ones who are being partially dehumanised.

This trend, too, gives the lie to the empty "people are our greatest asset" talk. And now some new survey data from the Chartered Institute of Management Accountants (CIMA) confirms the suspicion.

It asked over 500 UK businesses about their attitude to managing (and measuring the performance of) people. While almost all (97%) agreed that investing in people made business sense, less than half (42%) took "human resource" data into account when deciding their business strategy.

Few companies report annually on what they are investing in their employees, for example in salaries (25%) and benefits (22%), training and development costs (23%), recruitment costs (15%) and employee satisfaction scores (25%). While most (83%) say they do invest in staff beyond basic salary costs, few report to their investors on what they are doing.

If people really are a big asset, you might think that measuring and reporting on this investment would be a good idea. As CIMA's Tony Manwaring points out, the value of a business is increasingly to be found in its intangible assets, such as the ideas in people's heads.

But investors as well as corporate managers still seem insufficiently concerned about keeping track of that investment. If you don't measure it you cannot manage it, as any seasoned business leader will tell you.

The early economic data for 2016 are not proving to be encouraging. Manufacturing has slipped back into recession. Growth estimates and forecasts are being revised downwards. Outside the UK, nervousness is growing. China's economy is slowing and a falling oil price points to weakening global demand. Some argue Britain is heading for a decade or more of lowish growth, Japanese-style. The chancellor's elation of the autumn has transformed into something far more sombre this winter. Such mood swings are not a good sign.

For all the government's talk about "the march of the makers" and being "the builders", the faltering recovery has actually been based on the more traditional, flawed British model of debt and rising house prices. The only sensible way out of this dubious situation is to rise up the "value chain", to make and sell things of higher value. This means improving the skills and capabilities of British businesses. It means "valuing our talent", as CIMA puts it.

If ever there was a time for business leaders to start meaning what they say about their "greatest asset", it is now. There is a high-skill route to better productivity, higher wages and therefore stronger and more sustainable domestic demand. This is the virtuous circle of better business, which too many British employers still seem reluctant to enter. But you have to start somewhere. And that somewhere is down on the shopfloor or in the office, where people (remember them?) are actually doing the work.


Stefan Stern is a business, management and politics writer. He writes for The Guardian and The Financial Times and is a visiting professor at Cass Business School.