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UK businesses miss out on £84 billion a year due to poor people management

Poor people management is hitting the efficiency of UK businesses by an average of eight per cent, costing UK PLC £84bn a year.

A study by Investors in People and economic research consultancy TBR has found a performance premium of up to 11 per cent for companies focusing on better people management. Small firms (less than 50 employees) and large firms (greater than 250) could see £33bn and £32bn respectively, by closing this people management gap. The study is the first of its kind to calculate the monetary benefits of implementing more effective people management approaches.

Download the report

The ‘Impact of investing in people’ report was commissioned to identify the key management factors driving workplace performance. The study investigated a set of 10 people management approaches common to many high performing businesses, finding that 6 factors were significant in explaining direct improvements in performance and efficiency.

Key findings highlight employers that adopt more sustainable practices, responding flexibly to change, whilst planning for the future, will drive the most improvement in their performance. 

The study, based on research amongst 8,750 businesses and ONS data, reveals that the health and social care industry has the most potential to improve its performance by changing how it manages its staff. Performance would be increased by 8.9 per cent, contributing £2.4 billion to the industry. The sector that would benefit the most financially is the professional and financial services industry, with an 8.2 per cent performance boost generating an additional £29.9bn output.

The study also reveals which people management approaches offer the greatest financial return by industry. For example, developing strong and inspiring leaders generates the greatest efficiency gap in Construction. Whereas Recognising and rewarding performance has the greatest impact on efficiency in manufacturing (115%), Accommodation, Food and Leisure (109%) and Wholesale and Retail (109%).

Paul Devoy, Head of Investors in People, explains:

“It’s obvious that a skilled, confident workforce is essential to a productive enterprise. However, it has previously been difficult to determine the true impact on the bottom line. This study provides the evidence that focusing on excellence in people management can lead to significant performance gains across sectors and for the economy as a whole.”

“The effect of an efficiency gap is hitting the UK economy hard and better people management within firms should be recognised as a key mechanism by which the UK economy can address low performance. To make it easier to identify and compare approaches of the best performing firms, Investors in People has launched the first ever real-time ‘People Management Dashboard’.  Anyone can now access a unique set of common metrics, showing the management performance of workplaces across the UK. It’s a simple way to see how well employers are leading and supporting their people.”

“This knowledge comes from working with thousands of top businesses across the country, from Allianz Insurance, McDonald’s restaurants, to Brompton Bikes. Hundreds of academics, business leaders, and industry experts were involved in the creation of the sixth generation Investors in People standard, which will launch on 15 September.”


The ‘People Management Dashboard’ can be viewed here:

For more information about Investors in People please visit


For more information, please contact Eulogy:

James Steward/Nicola Ward/Emily Slee/Miles Croft

0300 303 3033



The IIP/TBR report is based on a comprehensive study of 8750 business managers, consisting of 4500 IIP accredited businesses and 4250 non-IIP accredited businesses.

This study asked 750 managers a number of questions about their business’ performance alongside their people management programmes. This was then analysed to uncover underlying connections between performance and people management.

ONS data was then used to estimate efficiency gaps in business performance and add monetary values to them.


About Investors in People:

Investors in People is the standard for people management. The international people management standard defines what it takes to lead, support and manage people well for sustainable results.

With a community of 14,000 organisations across 75 countries, successful accreditation against the Standard is the sign of a great employer, an outperforming place to work and a clear commitment to sustained success.

Based on a tried and tested framework and a rigorous process of assessment, organisations that meet the Investors in People Standard proudly display their accreditation to the world because they understand that it’s people that make the difference.


[1] All monetary values are measured in Gross Value Added (GVA), a measure of the contribution to the economy of each individual producer

[2] ‘Other industries’ includes agriculture, energy & mining and transport & storage.  This sector has been created to ensure a sufficient sample size.