Employee number matters

Currently improving productivity by applying advanced technology is the mainstream; however, we still need to recognize that employee number matters. Based on the 2015 statistical release from UK Department for Business Innovations and Skills, we can see that firms with larger employee numbers generally have higher productivities than firms with smaller employee numbers, as firms with larger employee numbers (over 250 employees) employ 40% of the employment and generate 53% of the total turnovers while firms with smaller employee numbers (under 50 employees) employ 48% of the employment but only generate 33% of the turnovers. With more employees, firms are able to hire specialists of advanced technology that help to improve productivity and employees tend to have specialized skills. On the other hand, when a firm has a limited number of employees, to hire specialists may not satisfy the need of its business. For example, in a small store, hiring a skillful accountant is too expensive and has lower returns than hiring someone who has a GCSE maths certificate and speaks nicely. Moreover, when a lot of people work together, they can learn from each other and sometimes it also creates a competitive environment. These all help to improve productivity. Therefore, improving productivity by applying advanced technology does not mean limiting employee numbers. Actually firms with high employee numbers usually have higher productivities as they employ more specialists.