New research shows there is a ‘majority middle’ of businesses who have a high potential for increased productivity, but are failing to adopt the right management practices or technology.
The report from Be The Business, Raising UK competitiveness: Inside the mindsets of leaders of firms, identifies the middle 60 per cent of UK firms - who are neither the highest performers nor the least productive laggards - as ‘make or break’ for improving productivity.
However, up until now there has been little interest in the mindsets and behaviours of those leading this majority. Based on a study of 1,400 firms, Be The Business found that these firms have the highest potential for making productivity gains, but more than half of business leaders were not confident that they were focusing in the right areas.
In particular, lack of performance measurement and failing to make use of external advice is leading to widespread failure to improve performance, Be The Business said. Too few businesses measure their productivity of compare themselves against other firms, with only 58 per cent having invested in measuring their performance in the past two years.
Despite this, there is a widespread bias towards overconfidence, with 80 per cent of business leaders seeing their firm as equally or more productive than peers. Almost a third do not look externally for support, relying instead on internal expertise only.
Management training is now the biggest investment priority for SMEs, with 85 per cent expecting to invest in management skills in the next two years.
Tony Danker, Chief Executive of Be The Business, said:
“Conventional thinking would suggest that business success would be diffused across our economy over time. But that has failed to happen in Britain for the past decade. The report illustrates that while most of our businesses are keen on improving and growing their business, too few are good at adopting the successful practices of the most productive and competitive firms.
“Some 60 per cent of our businesses are neither leaders nor laggards, but are modest growth businesses who could unlock far more capital and capability to grow. These are the make or break businesses whose success will determine whether we have a productivity recovery and whether we compete successfully as a country in the coming years.”
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