Businesses fail to lift performance
AFAILURE to adopt performance-improving measures is holding back Welsh business, according to a recent study.
The Productivity Report, by leading academics at Cardiff Metropolitan University that used funding from the Hodge Foundation, found of those surveyed:
■ 60% are achieving a profit below the average ratio for their sector
■ 37% do not have a strategic plan
■ 75% do not have a formal staff reward scheme in place to promote and encourage innovation.
The report comes as new ONS figures show that Wales is once again propping up the productivity league table and remains the least productive region or nation in the UK.
The Productivity Report has been developed by Cardiff Met academics – Professors Brian Morgan and Gerry Holtham, and other members of the Hodge Research Project.
The study sought to provide a better understanding of how firms’ management practises affect productivity. Evidence for the report was gathered following interviews conducted with 74 companies across Wales.
One of the key findings was that many firms in Wales take a fairly ad-hoc approach to strategic planning, with only a few having a full strategic plan in place. These firms also tend to have limited management information systems available to them for measuring performance. Together these deficiencies help explain the productivity distribution in Wales which highlights the prevalence of underperforming firms.
Professor Brian Morgan said: “It is clear that one underlying cause of the productivity gap in Wales relates to managerial skills. The potential benefits from raising productivity are significant, and the knock-on effect that this could have on Welsh living standards is huge. Therefore, improving management performance should be an important candidate for economic policy intervention in Wales over the next few years.”
Ian Price, Director of CBI Wales, said: “The Productivity Report is a vital piece of work that can help drive productivity here in Wales. However, while the recommendations are good, it is imperative that we engage with business leaders to help drive this forward.
“While there are some great organisations in Wales that are doing great work and help contribute to overall productivity, whether that’s within NHS Wales, in our education systems or in business, there is an urgent call for outstanding leadership to help drive change and this research further confirms the need for more leadership training.”
Professor Morgan continued “The Hodge-funded research project shows a positive correlation between employee engagement and productivity (and therefore profitability). Increasing employee engagement is one of the best ways to improve productivity. To help implement the report’s recommendations, Welsh Businesses and the Government should create a new era of partnership to support the economy and create opportunities for business growth.”
Managing Productivity in Welsh Firms will be formally unveiled at the Productivity Summit on March 12, 2020 at Radisson Blu Hotel Cardiff. The event will facilitate debate on issues surrounding productivity and will include a number of keynote speakers, such as Stephen Phipson CBE, Chief Executive of Make UK; Caroline Thompson, Head of Partnerships for Alacrity Foundation; Mike Moran, CEO of Proton PLC; and Maireadh Pedersen, CEO of Quay Pharma.