- SMEs in the West Midlands could add £2.96bn to the local economy by introducing a series of productivity improving measures[i]
- Despite this potential gain, productivity falls to the bottom of key business priorities amid political and economic uncertainty
- NatWest research reveals investing in education, training and qualifications, career development and guidance, and offering rewards for good performance will have the biggest impact on productivity in the West Midlands[ii]
- NatWest launches a Productivity Blueprint, outlining the steps businesses can take to improve performance
NatWest today unveils research, conducted by Cebr, which reveals businesses in the West Midlands could add up to £2.96bn a year to the UK economy if they introduced a series of productivity improving measures. Productivity in the UK is under increasing scrutiny following the latest ONS figures, which identified a 0.5% fall in productivity in the first quarter of the year.
Despite this productivity gap, NatWest’s research found SMEs in the West Midlands are uncertain about the actions they need to take to boost business productivity. Even though more than two-thirds (69%) of SME decision makers in the region believe improving productivity is important, two-fifths (40%) don’t know what productivity means in practice, making it difficult for them to identify the steps to improve.
NatWest’s research, ‘Addressing the regional and sector productivity gap’, analysed the productivity of SMEs around the UK to identify potential changes SMEs can make to improve their productivity. Despite the significant potential gains for the West Midland’s economy, the research found that Brexit and political uncertainty mean tackling productivity falls to the bottom of a list of key business priorities[iii], and less than half (43%) of businesses which see productivity as important have targets in place to improve productivity.
To help SMEs in the West Midlands understand how they can improve productivity, NatWest and Cebr identified the following measures with the biggest impact:
Investing in education, training and qualifications, having career development plans in place and offering rewards for good performance were the measures most likely to have the greatest impact on improving productivity in the West Midlands. Despite this, only two fifths (43%[v]) of SMEs in the region said they invest in education training and qualifications, and a quarter (25%) said they provide rewards for good performance. Just over a third (38%) invest in career development and guidance, proving there are significant gains to be made.
Please see below for a regional breakdown detailing how much each UK region could gain by introducing productivity measures:
To provide businesses with guidance on how to improve business performance and work towards closing the productivity gap, the bank has teamed up with beauty business mogul Sharmadean Reid to create a Productivity Blueprint, outlining the measures which have the biggest impact on productivity and including tips and advice from other successful small business leaders across the country.
Additionally NatWest has made available £1 billion in additional lending aimed at SMEs looking to boost performance through investment in productivity-improving measures.
Abe Tilling, NatWest Corporate and Commercial Regional Managing Director for the Midlands and East, said: “From talking to hundreds of our business customers every year in the West Midlands, we know that many small to mid-size businesses struggle to understand how best to improve productivity. That’s why we’ve commissioned this research to better understand the productivity landscape and source best practice in this area to share with our customers.
“It’s crucial that banks, Government, and business leaders tackle this problem head-on, and start putting measures to improve productivity into practice. Our NatWest Productivity Blueprint, created in partnership with business leaders across the country, will help our customers identify what measures they can put in place to improve their business’ productivity and performance.”
Ben Bennett, Health 4 U, said: “Taking the time to really think about our workplace culture has had a huge impact on the happiness of our employees, and also our businesses productivity. But when you’re running your own business it’s often hard to find the time to focus on those things that fall outside of your day-to-day. That’s why I’m partnering what NatWest to create this productivity blueprint. I hope it’ll help other businesses in the region realise there are some really simple steps you can take to really boost your businesses performance.”
Further help can also be found on the NatWest Business Hub launched last month. The Hub provides insight on a wide range of topics, including cashflow, exporting, productivity, e-commerce and keeping safe from scams, to businesses of all sizes and sectors, through editorial articles, videos, podcasts and access to webinars and events.
[i] This gives the total potential increase in output from all SME businesses taking significant steps to improve productivity (which have ever considered it) in the West Midlands. See notes to editors for detail on calculation.
[ii] Assuming that the measures that will have the greatest impact on productivity are the same for SMEs in East Midlands and West Midlands
[iii] Other business priorities were raising revenues, cutting costs, retaining employees, growing client base, improving customer satisfaction
[iv] Average difference in annual productivity between businesses which have implemented policies and those which have considered but not implemented. Figures in table assume the potential productivity impact as well as implemented shares are the same across the Midlands.
[v] On average across the measures
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