Business confidence among smaller companies is increasing, research shows

Pitcher Partners’ first Business Radar survey for 2024 found that more than half of companies surveyed were extremely or very concerned about the level of productivity in their business, which rose to 54 percent for mid-market mid-market companies.

In contrast, companies at the smaller end of the market said they were doing better in terms of productivity.

Only 4 percent of smaller middle-market companies experienced any decline in productivity, compared to 15 percent of larger middle-market companies and 14 percent of mid-market companies.

The survey also found that confidence in future success for companies with fewer than 100 employees rose to 7.88 points, up from the previous survey’s score of 7.64, while confidence fell for medium and larger mid-market companies.

Gavin Debono, partner at Pitcher Partners Melbourne, said there could be several factors behind the improved productivity performance of smaller middle market companies.

“While productivity is a strategic concern for companies of all sizes, for smaller companies it can be a matter of survival in a competitive market,” Debono said.

“The advantage they have is that extra level of flexibility, with the ability to quickly adapt their operations and adapt to the needs of the business and customers, which often involves greater use of technology.”

Debono said that while larger companies may have more resources to invest in technology, smaller companies need to be more selective and strategic in their technology investments, focusing on cost-effective solutions that deliver tangible productivity gains.

The research shows that the most important external factor hindering the productivity of smaller businesses is government policy, followed by labor shortages and supply chain dynamics.

Respondents in the survey cited the increasing compliance costs and administrative burden associated with red tape and negotiating complex regulations.

Of the actions companies took to increase productivity, the top two focused on technology, including deploying new technology (38 percent) and introducing new collaboration tools (34 percent).

Initiatives to get people to work harder still made up a large proportion of responses and included investing in training (28 percent), changing incentives (26 percent), exploring working models (25 percent) and implementing wellbeing initiatives ( 26 percent). 22 percent) and feedback mechanisms (22 percent).

Debono said unlocking productivity gains should remain a strategic focus for business leaders, but the focus should be on working smarter, not harder, especially when it comes to high-resource sectors such as services.

“When your team is working at their peak, profits are limited and the solution is not to push them harder, which can have the opposite effect on productivity,” he said.

“Consider strategies and build systems, processes and technology around your people to help them work smarter and more effectively.”