Family businesses: the answer to UK's 'productivity puzzle'
30th September 2015 | News
The Bank of England’s chief economist, Andy Haldane believes efforts to improve the productivity and efficiency of family-owned businesses could solve a significant part of the productivity puzzle, unlocking the door to future growth and prosperity for the UK economy.
Following a survey of the nation’s family business sector by Families in Business (FiB), Mr Haldane responded to the report from the independent support organisation for family-run firms.
“Productivity has, since the financial crisis, been puzzlingly weak among British businesses – family-owned firms are part of this productivity puzzle, and are part of the solution to it,” said Haldane.
“With so many of the UK’s small and medium-sized firms being family-owned, efforts to improve their efficiency, governance, skills and R&D could work wonders for these firms’ productivity, and for the economy’s health, at a time when it has never been more welcome.”
According to the report, more than a sixth (16 per cent) of family businesses view innovation and development as ‘irrelevant to them’, with two-thirds (66 per cent) admitting they don’t plan or budget for developing and refining their processes.
Yet rather puzzlingly, innovation and technology is ranked as one of the top five challenges family firms say they face, alongside coping with multi-generational structures, risk, purpose, growth, communication and business investment.
Dani Saveker, founder and CEO, FiB, believes family-owned businesses seeking an ‘edge’ in their niche should look beyond their key competitors.
“The best way to stay ahead is to stop trying to beat the competition. Instead, family businesses should innovate and capture new demand, create new buyer value, and make the competition irrelevant,” said Saveker.
“While the family unit continues to change and with it the potential for more generations of one family to be working within it, this presents a fresh set of opportunities, as each generation brings their view of the world on matters such as risk, leadership, communication and innovation.”
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