How coaching and skills investment can unlock UK productivity growth

The UK’s persistent productivity challenge remains a major obstacle for businesses. With productivity growth stalling since the 2008 financial crisis, the country continues to lag behind international competitors such as the US, Germany and France. In Powering up Productivity – a new report by the Open University - it is revealed that over a quarter (27%) of organisations believe their productivity has declined in the past five years and the Confederation of British Industry (CBI) highlights that reskilling initiatives alone could bring a 6% to 12% increase in productivity.

While these figures underscore the urgency of action, they also point to an opportunity: targeted investment in leadership development, coaching and skills training could drive a productivity revolution.

Building leadership, management and coaching skills for a productivity boost

Leadership and management skills are widely acknowledged as critical to improving organisational productivity. Yet, one in five (21%) decision-makers believe a lack of these skills is holding back their teams, a figure that rises to 29% in large organisations, according to Dr Fidèle Mutwarasibo of The Open University’s Centre for Voluntary Sector Leadership.

"Leadership and management skills equip managers with the capability to consider how the organisation can evolve to improve its productivity," explains Mutwarasibo. "Perhaps by adopting new technological tools or processes, setting targets, or capitalising on the diversity of its workforce."

This is where coaching plays a vital role. It equips leaders and managers with the self-awareness, empathy and communication techniques needed to inspire and empower their teams.

Karen Smart, head of consultancy at the AoEC, elaborates: "Investing in coaching as part of a skills strategy is one of the most effective ways for organisations to improve productivity. Coaching creates the conditions for employees to succeed by equipping them with the tools, confidence and mindset to adapt to challenges and contribute more fully to organisational goals. It also empowers leaders to inspire and support their teams, fostering an environment where productivity and innovation can thrive."

Notably in the report, Professor Sir Cary Cooper of Manchester Business School emphasises the need to address the shortage of “socially skilled line managers.” He warns that many managers lack people skills, creating demanding environments that overwhelm employees, leading to underperformance or stress-related absences. Cooper adds: “If we recruited and promoted people based on greater parity between their people skills and their technical skills, we would have less sickness absence and greater productivity because they would build better teams.”

Bridging skills gaps for younger employees

The UK’s productivity challenge isn’t limited to experienced leaders; younger employees are also struggling. A 2023 Open University survey cited in the report found over half (58%) of organisation leaders identified a mismatch between the skills of young people and employer expectations. This was attributed to a lack of work experience during the Covid-19 pandemic and limited opportunities for learning through in-person collaboration in remote or hybrid work settings.

Leaders reported declines in both technical and soft skills, including communication, teamwork and time management. Addressing these gaps requires a multifaceted approach that includes onboarding, mentoring and access to coaching. “HR needs to get better at onboarding young people,” notes Cooper. "It needs to help them understand the culture and feel valued. That involves mentoring them properly and giving them a development plan."

Coaching is particularly powerful in equipping junior employees with the tools and confidence to thrive in remote or hybrid environments, enabling them to overcome skills mismatches and contribute meaningfully to organisational goals.

The case for coaching in productivity growth

Anthony Impey of Be the Business points out the unique challenges facing small business leaders, many of whom are “accidental managers.” While skilled in their craft, these leaders often lack the leadership and management training required to maximise productivity. “There’s an opportunity to equip business leaders with capabilities that will help them to get even more value out of their time and the time of the people who work for them,” Impey says.

This perspective reinforces the broader argument for coaching as a cornerstone of productivity improvement. Coaching not only addresses skills gaps but also encourages a culture of continuous learning, employee wellbeing and collaboration. By empowering leaders and employees alike, organisations can create resilient teams capable of navigating today’s fast-changing business landscape.

Transforming the UK’s productivity outlook

The UK’s productivity puzzle demands a coordinated response and coaching is a key piece of the solution. By investing in leadership development, addressing skills shortages and embedding coaching into workplace practices, businesses can unlock their teams' full potential.

As Karen Smart concludes: “Coaching is not just a tool for individual development; it’s a strategic investment in an organisation’s ability to innovate, grow and succeed in an increasingly complex world.”

The productivity imperative may be daunting, but with coaching and skills development at the core of organisational strategy, it’s one that businesses can rise to meet.