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Confidence about future success has risen among smaller firms but declined among medium and larger middle market businesses, according to a Pitcher Partners survey.
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Business confidence lifts among smaller firms, survey reveals
22 April 2024
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Fewer smaller middle market businesses have experienced a decline in productivity compared with larger firms and are also more optimistic about the future success of their business, according to a recent Pitcher Partners business survey.
Pitcher Partners’ first Business Radar survey for 2024 indicated that more than half of businesses surveyed were extremely or very concerned about the levels of productivity in their business, which increased to 54 per cent for medium-middle market businesses.
Businesses at the smaller end of the market, on the other hand, said they were faring better in the productivity stakes.
Only 4 per cent of smaller middle-market businesses experienced some decrease in productivity, compared to 15 per cent of larger middle-market businesses and 14 per cent of medium-sized firms.
The survey also indicated that confidence in future success for businesses with fewer than 100 employees lifted to 7.88 points, compared to the 7.64 rating in the previous survey, while confidence dropped for medium and larger middle market businesses.
Gavin Debono, partner at Pitcher Partners Melbourne, said there could be several factors behind the improved productivity performance of smaller middle-market businesses.
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“While productivity is a strategic concern across companies of all sizes, for smaller businesses it can be a matter of survival in a competitive marketplace,” Debono said.
“The advantage they have is that extra level of agility, with the ability to quickly adjust their operations and be adaptive to the needs of the business and customers, which often involves greater use of technology.”
Debono said while larger businesses may have greater resources to invest in technology, smaller businesses need to be more selective and strategic in their technology investments and focus on cost-effective solutions that offer tangible productivity gains.
The survey indicated that the main external factor hindering productivity for smaller businesses is government policies, followed by labour market shortages and supply chain dynamics.
Respondents in the survey mentioned increasing compliance costs and administrative burdens associated with red tape and negotiating complex regulations.
Among the actions that companies were taking to lift productivity, the top two were focused on technology including employing new technology (38 per cent) and introducing new collaboration tools (34 per cent).
Initiatives to get people to work harder still made up a large proportion of responses and included investing in training (28 per cent), changing incentives (26 per cent), exploring working models (25 per cent), and implementing well-being initiatives (22 per cent) and feedback mechanisms (22 per cent).
Debono said unlocking productivity gains should remain a strategic focus for business leaders, but the focus should be on working smarter, not harder, particularly when it comes to people-heavy sectors such as the service industry.
“When your team is working at its peak, your gains are capped and the answer isn’t to push them harder, which can have the opposite effect on productivity,” Debono said.
“Consider strategies and build systems, processes and technology around your people to help them work smarter and more effectively.”
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