Small Business Management Skills Found Lacking

Posted on May 16, 2024. by NTI

The Office for National Statistics (ONS) has polled thousands of companies in order to find out the quality of their decision-making.

Companies with more than 10 employees were chosen by the ONS, and they found that on average, management teams scored 0.57 out of 1 (up from 0.51 in 2020), apparently driven by an improvement in the weaker managers.

The ONS has said that differences in the quality of management practices related significantly to British productivity.

Businesses owned and managed by family members typically scored lower than their peers run by ‘career managers’. Foreign ownership was said to have a positive impact on management practices, particularly if a parent company based in the EU was involved.

Companies receive the highest ranking (of 1) if they continuously review their processes to make improvements, as well as providing training and measuring performance.

The largest proportion of companies said that they were too busy to think about improving their management practices. Others believed that they did not need to improve, and that change would be too expensive.

Employment practices have improved since 2020, according to the ONS. Underperformance amongst employees is managed better, and promotion decisions are based “solely on performance and ability”.

A rather expected finding was that small firms were likely to have significantly less professional management than larger companies. Those involved in manufacturing were also more likely to be poorly managed than service-based companies.

Mark Hart, professor of small business at Aston Business School in Birmingham said the wide range of performance and attitudes to investing in management training reflected the pressure many teams are under at the moment.

“Businesses are still under stress and finding it difficult to stand back and look at performance indicators,” he said. “For some, they don’t know what tools and metrics they need to look at.”

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