Scottish SMEs trail rest of UK in measuring productivity - Close Brothers

Fewer SMEs in Scotland are measuring productivity than the UK average, according to a new report produced by merchant banking group Close Brothers.

The report, entitled The Power of Productivity: The role of SMEs shows that one third of SMEs in Scotland don’t measure productivity compared to 28 per cent of SMEs in the UK overall.

However, of those that don’t measure, almost all (95 per cent) said they would consider measuring productivity in the future compared to 68 per cent of SMEs in the UK.

The report, based on a survey of over 1000 SMEs in the UK highlights the extent of the productivity gap among SMEs and looks at ways SMEs can improve productivity in the future.

The topic of productivity has been an increasingly talked about issue in the UK as Brexit negotiations begin. The UK currently lags 16 per cent behind the other G7 countries. High productivity supports economic growth, therefore in order to remain competitive with other G7 nations, the UK will be looking at ways to improve its productivity levels. A large part of this will be increasing economic output in key areas of the UK such as the ‘Northern Powerhouse’.

The Close Brothers Group report highlights that positively, UK SMEs are making efforts to improve productivity. Over half of SMEs in the UK have invested in new technology and software and one in four plan to do so in the future.

In addition efforts are being made by UK SMEs to improve staff training in order to upskill current employees and mitigate against any future staff shortages. Nearly half (44 per cent) of UK SMEs are upskilling staff through training, education and workshops and half plan to invest in training in the future.

The report also highlighted the need for SMEs to be educated on measuring productivity, as this can help SMEs track their progress and improve output. 15 per cent of the SMEs surveyed in Scotland said they did not have time to measure productivity and a further 6.8 per cent were uncertain how to measure it.

Measuring productivity can be difficult for SMEs who may have limited resources in comparison to larger organisations. A recent study by the University of Gloucestershire found that many UK SMEs were unsure whether their productivity had increased or decreased in the last few years. This was largely because they did not have the mechanisms or the information necessary to measure productivity efficiently.

Adrian Sainsbury, managing director of Close Brothers Group plc, said: “SMEs need to understand how to measure productivity, otherwise it makes it very difficult to manage or improve output. This is particularly important as the UK prepares to leave the EU, amid its current productivity gap with many of its European peers.

“Given the vital importance of SMEs in the UK economy, and the role they can play in boosting productivity, considering how they might better measure and enhance productivity can only be a positive step forwards. This includes understanding the barriers they face and the positive actions they are already taking to combat productivity loss.”