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One in 20 UK SMEs don’t know what productivity is – or how to measure it

SMEs need to get a better grip on productivity, Close Brothers Group suggests after analysing the thoughts of 1,400 UK, French and German decision makers.
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Everyone knows the power of productivity, right? According to Close Brothers Group, one in 20 SMEs aren’t aware of what it means. Of those who acknowledge its importance, nearly one in ten would rather not measure it, while 28 per cent of respondents didn’t know it could be measured in the first place.

While this lack of knowledge was deemed worrisome, it wan’t the only issue the research brought to light. Some ten hours a week are being lost due to red tape, the likes of compliance forms and pension paperwork.

Presenteeism and absenteeism were said to cost employers on average 27.5 days worth of productivity per employee each year. But despite this cost, UK SMEs were the least likely to try and improve matters, Close Brothers Group said.

“The UK’s productivity in the decade since the financial crisis has not been strong,” MD Adrian Sainsbury said. “Issues like these are the reason why we lag 16 per cent behind other members of the G7. Given that the country’s immediate future involves leaving the EU, the productivity gap with our neighbours is being put under increasing scrutiny.”

Part of the report’s purpose was to look at how France and Germany bridged the gap, in the hope of identifying key learnings.

The latter’s Mittelstand is often hailed as “a successful example of SME productivity”. Sainsbury set out the reasons why: “German industry benefits from vocational education, combining academic studies with training for apprentices and close ties between education and business. The Mittelstand has its own longstanding funding vehicle and is supported by a long-established partnership between universities and companies.

“In France, SMEs account for 99.8 per cent of all companies. Nicolas Lecaussin, head of the Institute for Research in Economic and Fiscal Issues, argues SMEs struggled in the past due to France’s centralised economy and civil service links with big firms. However, recent reforms will shake up the labour market by handing more power to employers of all sizes. This is a huge step in a country traditionally protective of worker’s rights and the changes have been welcomed.”

These are but some of the examples alluding to how other G7 countries have boosted productivity among SMEs. At the heart of the report, however, is a calls for parliament to involve SMEs more when it comes to wider initiatives and debate, suggesting it will help convince SMEs “of the importance of improving productivity and its potential impact on business growth and profitability.”

That’s not to say UK bosses are sitting on their hands, as was evidenced by some of Close Brothers Group’s other findings. Some 44 per cent of UK SMEs hope to upskill employees through training, education and workshops. Over half have already invested in new technology and software in the belief that it will add to staff efficiency.

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About Author

Shané Schutte

Shané Schutte is the deputy editor of Real Business, with a particular specialism in employment and business law, human resources, information technology and sales/marketing.

Real Business