BUSINESSES are letting profits fly out of the window because they are not managing their staff efficiently, according to one of the country's leading employment experts.

From a total 260 working days in the year (based on five working days a week), more than a third are completely unproductive, said Dr Hugh Billot, Personnel Director of the Ashford-based Human Resource Group.

"Just three 10-minute cigarette breaks a day add up to 16 lost working days a year," he said.

Other culprits for wasting time included extended lunches, sending and receiving personal e-mails, gossiping with colleagues, sick leave and time off to let the gas man in or visit the dentist.

"It's noticeable how rarely people organise appointments at the weekend and instead take time off work, normally not considering it part of their annual leave."

Dr Billot was speaking at a seminar organised by the Kent branch of the Institute of Directors at the Ashford International Hotel on how better use of staff can make businesses more profitable.

He cited James Dyson, founder of the Dyson vacuum cleaner business, who had responded to inflexible UK labour laws by moving his manufacturing overseas -- saving £7 million a year on manufacturing costs and doubling profits to £40 million.

"It's not just manufacturing that is going abroad -- it's affecting service industries, like call centres, too."

Dr Billot outlined how better communications, management, training and monitoring could improve staff performance.

He said a 10 per cent increase in staff utilisation saved, on average, £24,000 in employment costs per 25 employees and added significantly more to productivity.

But he predicted there would be an accelerating trend towards companies adopting more flexible working models by shedding non-essential staff and retaining only a few core employees.

"There are two key workforce categories in employment organisations," he said. "'Core' workers, who are usually full time, long-term employees and 'peripheral' workers, who include part-timers, home-workers, temporary staff and people on fixed term contracts.

"Successful companies are increasingly using the core/peripheral model of manpower and by getting the right mix of staff reduce their costs and respond more effectively to changes in the marketplace."

As well as improved flexibility, the core/peripheral model had other significant benefits for employers.

By using a recruitment specialist to supply workers as and when needed, business could be free of the recurrent problems of finding the right staff.

Seven million workers do not have a qualification at level 2 or above, 8 per cent of employers have unfilled vacancies and 40 per cent report appointing staff who are not quite up to the job.

Dr Billot said: "Globalisation, difficult EU employment laws and the need to control costs mean we face a challenging future.

"I predict that the corporate context of work will change to one of flexible supply chain relationships supported by an increasing proliferation of interdependent non-core satellite businesses."