The UK economy could get a £48 billion boost if companies made simple changes to how bosses work with staff and use technology.

The study by Goldsmiths, University of London, in partnership with Microsoft, found that a failure to fully embrace technology is harming businesses.

The report revealed that 46 per cent of UK organisations are “endangered”, meaning they are seeing turnover fall by up to 15 per cent and appear financially vulnerable.

The findings put pressure on an economy still recovering from a 19.8 per cent contraction in the second quarter as government measures to tackle the Coronavirus pandemic took their toll. During that period, the UK experienced the largest recession since records began. While GDP grew in July, August and September – this has only made up half of the ground lost during the pandemic.

To put the £48 billion figure into context, the cost of the government’s entire furlough scheme up until mid-August was £35.4 billion. Just 10 per cent of the research’s headline number would create 128,920 full-time jobs paying the average annual adjusted salary rate of £37,428.

The report found that more than half (54 per cent) of UK organisations have seen revenues fall this year, with 22 per cent experiencing a drop greater than 15 per cent. The same proportion (22 per cent) were forced to scrap their existing business model within days of the lockdown in March.

To deal with the unprecedented challenges facing them, the research identified the emergence of two clear strategies: hollow growth and sustainable growth.

Firms pursuing a hollow growth strategy typically extract as much value as possible from people to reduce costs, offer little support to employees to adapt to new conditions, focus technology investments in siloed areas of the business to solve individual challenges, and benchmark future readiness by traditional productivity measures.

Organisations seeking sustainable growth strive to maintain resilience and have a capacity to adapt, adopt leadership defined by empathy and decisiveness, nurture a culture of trust, empowerment and inclusivity, and consider the impact of technology across their organisations as part of their wider strategic approach.

The research revealed that companies striving for sustainable growth - around 15 per cent of firms - are faring much better, with turnover growth of up to 15 per cent; whereas companies exploring hollow growth are typically seeing turnover fall 15 per cent.

The report, which recorded the views of 1,713 senior decision makers and 2,470 employees across the UK, highlighted initial steps organisations can take to put themselves on the path to sustainable growth.

These include addressing the gender pay gap and levels of diversity, paying particular attention to increasing the number of female STEM graduates; speeding up technology transition times by three months; migrating more workloads to the cloud to increase agility; and the creation of ‘innovation clusters’ among technically-literate staff to drive low-cost research and development.

Roxanne Morison, head of digital policy at the CBI, who contributed to the research, said: “The UK has a long tail of low-productivity firms, which face challenging times ahead without changing their business model to suit the digital age – if we got those companies confident in using cloud, digital marketing systems and data, the positive impact on UK productivity would be significant.

“But technology cannot be viewed in isolation, it must be underpinned by progressive leadership, fair and inclusive talent development and adaptability for future change, in order to build a sustainable competitive advantage.”

In light of the research, Microsoft has published a commitment to help address the widening digital talent gap in UK industry. The tech giant will work with organisations across industry to help 1.5 million people build careers in technology and help connect a further 300,000 to tech job opportunities by the end of 2025.

KPMG, Unilever and the Department of Work and Pensions are supporting the campaign and Microsoft is calling on other UK businesses to join in helping create the technology workforce the country needs.

The Get On 2021 campaign builds on Microsoft’s one-year global skills initiative and will train people who are in education, those new to tech and those who have had their jobs impacted by the crisis. It will advance the skills of tech professionals and help leaders who need to embrace new business models and deploy technology to drive organisations forward.

Clare Barclay, chief executive of Microsoft UK, said: “The shape of the UK economy and its workforce is changing; a change only accelerated by the rapid move to digital working in the wake of the disruption we’ve seen this year.

“With hundreds of thousands of people losing their jobs and some traditional sectors heavily impacted, we urgently need to invest in UK technical skills and capability to help realise our competitive potential.”

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