Why Are SMEs The Weakest Link In UK Productivity ?

4th February 2020
John Mather

Productivity performance of SMEs is the weakest link in the British Economy

The Public Sector and SMEs are the main 2 laggard sectors which have refused to become more Productive & efficient for the last decade.

  • Why are SMEs such laggards?
  • They invest relatively little in their Staff (Training & Management)
  • SMEs are relatively complacent, with less ambitious profit-improvement targets
  • Poor Management, Motivation and direction of staff
  • Poor use & application of new technologies (NOT Expenditure)
  • Inability to measure / record / target Productivity improvements
  • Poor collaboration amongst SMEs to cooperate, work together and learn from one another
  • Few SMEs understand the importance of Productivity, being the cornerstone of Profitability growth, only 1/3rd of SMEs even measure Productivity

When it comes to working practices linked to Productivity, PRESENTEEISM – employees who are present, but not engaged in Productive work – and absenteeism is a well-known cause of Productivity loss. In a recent study British employers lost on average 27.5 days of productive time per employee each year, or more than 10%, which costs the UK economy £73 billion each year in lost productivity.

Despite its’ high cost, UK SMEs are the least likely employers in Europe to take measures to improve Presenteeism. Just 19% of UK SMEs have taken steps compared to 26% of German SMEs and 29% of French SMEs.

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