Under the above heading, Alison Rose, chief executive of commercial & private banking at NatWest wrote the following article which all SMEs would do well to consider
As we gear up for Brexit, the UK’s flagging productivity performance is continually in the fore of media headlines and economic analysis
Following a further fall in productivity in the first quarter of 2018, policy experts and economists were quick to update their models and offer opinion over blame – however, this economic self-deprecation doesn’t actually make any difference
So what could?
It isn’t that British SMEs don’t have the drive and ambition – nor is it that other countries, such as Germany, the G7’s most productive, are naturally better at enterprise – Britain has an impressive history and vibrant culture when it comes to entrepreneurism – and yet the productivity puzzle persists
Part of the problem may be the academic language of productivity which not only leaves businesses cold, but can feel meaningless, especially for SME
In theory, productivity is a simple equation: output divided by input – but businesses don’t run on theory – they’re focused on the inherently practical
At NatWest, we recently spoke to 2,000 SME leaders about their current business priorities – raising productivity came at the bottom of the list, with only one in five placing it to
It’s clear that there is a persistent disconnect between diagnosing the productivity gap as an economic contagion at the macro level, and the treatment which has to start with businesses – especially SMEs – on the ground
We need to get better at focusing on the treatment side of things by coming up with a more practical perspective – most business leaders I speak to understand the general problem, but what our data shows is that they don’t always see how it applies to them and what they could be doing
This is where advisers and lenders of all shapes and sizes can step in, building partnerships of real value to SMEs
But it also means understanding our customers’ businesses and their needs
Most SME leaders are time-poor and have a vast range of roles and responsibilities, from finance director to the shop floor – and if we don’t make tangible suggestions, focus quickly returns to the day job
As I have learned, the key is to help businesses ask themselves two practical questions:
- Can we cut out waste to become more efficient?
- What are the steps we can take to become a better business?
This moves the conversation on from the theory of productivity to broader strategies that get to the heart of helping the majority of SMEs
Discussions about productivity often centre on manufacturing – we talk about investing in technology and machinery to improve efficiency, so checking that the right tools are being used to produce and sell products is an obvious first step
But for most businesses, their capacity to change, improve and innovate is interwoven with the performance and attitude of their people:
- Innovation is not confined to the laboratory – it includes investing in staff, not just in terms of skills and development, but also their enthusiasm and satisfaction
- Creating the right workplace culture and organisational structure, providing decent, tailored benefits packages, and focusing on employee health and well-being has the ability to improve individual performance, retain talent, and create value
It is these intangible or knowledge-based assets, often inseparable from the people who work in SMEs themselves, which can add billions to the UK economy
Getting better at business is made up of small steps, not silver bullets
And it’s the people who run SMEs who know this best